BAIYU Holdings seals $60M battery supply deal with US firm

BAIYU Holdings, Inc. (NASDAQ:BYU), a Delaware-incorporated wholesale supplier of metals and minerals, has entered into a substantial agreement with Feng’s Auto Parts Inc., a United States-based auto parts supplier. The contract, signed on August 23, 2024, stipulates the sale of 50,000 sets of electric lithium batteries, with the entire transaction valued at $60 million.

Under the terms of the agreement, Feng’s Auto Parts will procure the batteries at a unit price of $1,200, with a 35% deposit required upon signing and the balance due within two days following product inspection and acceptance. The sale is expected to be finalized around May 2025, with delivery to take place at the port of Los Angeles, where the buyer will be responsible for customs clearance.

The batteries, destined for the automotive industry, must meet American standards and specifications, ranging from 6V to 12V and 100Ah to 300Ah in current capacity. Ownership and risk transfer to the purchaser will occur after the products have been inspected at the port.

This deal signifies a significant step for BAIYU Holdings, which operates under the trade name 07 Trade & Services, and marks an expansion into the electric vehicle sector. The agreement was made through BAIYU's subsidiary, BMYA New Energy Technology Inc., also based in Delaware.

This information is based on a press release statement.

In other recent news, BAIYU Holdings has revealed a series of strategic moves. The company announced an agreement to acquire Shenzhen Jintongyuan Energy Storage Technology Co., Ltd., a key player in the energy storage battery sector in China, for approximately $105 million. This acquisition, expected to close in September, is part of BAIYU's strategic push into the renewable energy storage battery market.

Additionally, BAIYU has outlined a plan to penetrate the global new energy vehicle (NEV) market. The company has partnered with U.S.-based Electra New Energy Vehicle, Inc., planning to take a majority stake of 60% in ENEV. BAIYU's commitment includes an investment of up to $3 million over the next three years.

In terms of corporate governance, BAIYU has seen significant changes. Xiangjun Wang resigned from his position as an independent director, and the company appointed Rongrong (Rita) Jiang, an experienced entrepreneur, as a new independent director. Concurrently, Donghong Xiong, a current director, assumed the role of Chairman of the Nominating and Governance Committee.

The company is expected to handle procurement, manufacturing, and supply chain management for NEV-related products in China, while its partners focus on international market development and order acquisition.

InvestingPro Insights

As BAIYU Holdings, Inc. forges ahead with its substantial contract in the electric vehicle sector, InvestingPro data reveals some intriguing financial metrics. The company is currently trading at a low Price / Book multiple of 0.52, indicating that the stock may be undervalued relative to the company's book value. This could be particularly relevant for investors looking for potential growth opportunities following the announcement of the new agreement. Additionally, BAIYU's stock has experienced a significant return over the last week, with a 12.53% price total return, reflecting investor optimism which could be partly due to the recent deal.

InvestingPro Tips suggest that despite the stock's recent gains, it is trading at a low P/E ratio relative to near-term earnings growth, with a current P/E ratio of 4.39. This implies that the stock could be attractive based on earnings, especially when considering BAIYU's expansion into the burgeoning electric vehicle market. Moreover, the company's stock generally trades with high price volatility, which might appeal to certain investors looking for dynamic trading opportunities.

For those interested in a deeper analysis, InvestingPro offers additional tips that could further inform investment decisions regarding BAIYU Holdings. There are a total of 17 InvestingPro Tips available for BAIYU, which can be accessed for more detailed investment strategies and insights.

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