April 23, 2014 - 3:21pm EST by
2014 2015
Price: 15.80 EPS $0.00 $0.00
Shares Out. (in M): 30 P/E 0.0x 0.0x
Market Cap (in $M): 467 P/FCF 0.0x 0.0x
Net Debt (in $M): 86 EBIT 0 0
TEV (in $M): 554 TEV/EBIT 0.0x 0.0x

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  • Battery
  • China
  • Transportation


Originally recommended by Surf on Dec 10 2012 @ 6.70 and recently closed with a lovely profit

of 100%.

My read on original posting agreed fully with the selection commenting on VIC-




06/06/13 02:21 PM



Own stock and agree with opportunity here.

Feel it is an easy double over next 12 months.

The problem was revenue recognition by two marketing people

trying to make their sales targets. Management would not have   been buyers of

stock on open market, if they where complicit.

In the fullness of time, new financials for past two years by   new accountants,

 then the strong fundamentals should prevail and stock   rerated.



And sometimes you get what you anticipate. Maxwell more than doubled within the year

and it is truly surprising that I am recommending the stock again, a true growth/value investor

that I believe myself to be. The story is simply playing out better than expected!


Bloomberg several weeks ago in a story titled “China Wakes Up” had several eye opening comments:

1.”A July 2013 study found that air pollution in China’s north reduces life expectancy by an

average of five and half years”.

2. “The capital’s tourism industry has also been hit hard by the life threatening smog, with

the number of visitors to Beijing dropping 10% in 2013”.

3.”Most important, the Chinese people are voting with their feet. Almost 2/3 of the country’s

wealthy –those with assets of $1.6 million or more- have left or plan to leave the country,

with the environment one of their most frequently cited reasons, according to the Hurun


4. Environment surpasses land expropriation “…..more than 180,000 popular protests each year”.


This type of pollution is very hard for us as Americans to grasp. China is facing a major crisis

and is finally reacting deliberately. Shutting down 50000 small coal fired furnaces and removing

6 million high polluting cars and trucks have fallen well short of their targets.

We recommended the Uranium Etf several weeks ago as we reasoned a resurgence of nuclear plants

-smog free energy-would continue unabated, with China the stalking horse.

In addition we expect, the continuation and expansion of the hybrid diesel bus program in more cities of

China seems assured.


        But what is the story here?  What makes Maxwell unique? In one word- Ultracapacitors or UC for

short. Battery like in function- they store energy and release it. UCs can be charged and recharged

repeatedly- hundreds of thousands of times and still keep on working. Conventional batteries are

usually exhausted in several hundred charges. UCs take and release a charge in seconds- batteries

can’t- try charging your cellphone, laptop computer quickly etc. Used in combination with actual

batteries, UCs can significantly improve the fuel efficiency in oil and hybrid vehicles and additionally

extend the lifetime of the costly fuel cell and batteries in pure electric cars. They perform in a broad

range of temperatures from -40 to +65 centigrade. The frozen North or the tropics does not inhibit its

 actions, allowing again as many as one million charge and discharge cycles! But they are not a

replacement for batteries at  this point, as the UCs can’t hold as much power as long as a battery.

Used with batteries they absorb the initial startup and abuse that quickly kills batteries. The UCs also

redeliver the stored energy instantaneously for fast and repeated startups. The key to MXWL’s

Ultracapacitor performance lies in the proprietary electrode that they manufacture using their patented

dry process.


         The ultracap is increasingly finding its way in various exciting and growing areas. Last month saw

the publication of “Supercapacitor Market by Materials, Products , Applications and Geography- Analysis

& Forecast (2013-2020)”-  a 253 page report.  Areas highlighted included electric vehicles, smart grids,

consumer electronics  (laptops, cameras, pda’s) and industrial applications (Automated Meter Reading 

Machines, Uninterrupted Power Supply etc). Energy applications would include photovoltaic, wind

turbines, actuators and others. Medical products count defibrillators as a part of the market.


 The report  comments that due to “its fast charging and discharging ability” some additional areas of

application include energy and wireless applications which are expected “to result  in explosive growth

of  the supercapacitor market from 2014”.


 Let us now deal with several of these opportunities Maxwell is pursuing. Probably the best known of all

is the Chinese hybrid bus market. In a Stifel Nicolas presentation on Feb 27, Maxwell’s CEO said that it is

expected that China will buy 60,000 new hybrid buses between this year and next, with Maxwell’s

expected to get $8000+ per bus- over $480 million in new business. While MXWL’s contract

manufacturer can sell its own Ucaps, it must buy the core material from Mxwl. Maxwell is patent rich

and very protective of same, its patents and dry process core material. They spent over $22 million on

R&D last year and work with all the major ucap and energy research universities including MIT and the

various government  funded research labs- (ie  working with UoC Berkeley, using Graphine).


    Another very strong area of potential is the truck business. Advantages allow for fast stop and

retarts, reducing  battery deterioration. As mentioned, UCs can operate in frigid weather allowing

trucks to function in freezing climes- batteries do not. Additionally, by shutting the engine down at

traffic lights and quickly restarting, energy savings  mount up. With many cities now eliminating idling to

reduce pollution (effecting  US Postal Truck, Fedex, UPS etc), we have a ready and growing market. It

was reported that 25 truck fleets were testing the Ucaps for energy savings and pollution mandates.


       Maxwell’s new truck starter product is ready made for the $3 billion North American market from

18  wheelers to delivery vans – now in five fleets.  Currently class 7-8 sleeper trucks are covered.

Maxwell’s Engine Start Module (ESM) is rugged and maintenance free and delivers that power

quick- burst  that big trucks need in frigid areas. The beauty again here is that it allows trucks to

repeatedly stop and start the engine when needed to avoid big city anti-idling pollution laws as well as

saving energy when the engine is shut off. Batteries that die easily in cold weather now are protected by

 a Ucap, allowing for repeated and assured restarts in the frozen environment. Market size for Class 8

Trucks has been estimated alone at $200 million with additional millions for the under 7 Class markets


    Another major opportunity is of course, the car market. Already in the Lamborghini, Mercedes,

Peugeot, Citreon, Mazda and in over 1 million cars on road today, it js just a matter of time before other

manufacturers add this as an OEM item for an estimated $40-65 per car. Stopping at lights and shutting

down the engine saves on pollution and gasoline with the Ucaps allowing an instant restart with the

green light. If Maxwell could capture just 5% of the 40 million global car market, we would add over

$100  million annually. No less than Tesla’s Elon Musk claims that the days of the battery are numbered

and that they will be superceded  by capacitors.


     Other areas of interest would be regenerative braking by which trains, trucks, buses are able to save

the mechanical heat friction in braking and then reusing it as a go forward power for reacceleration.

Maxwell is used by Flextronics to supply ucaps for its energy recuperative systems and by Bomardier

for a similar system for trains. Maxwell’s ultracaps will be used by ABB (NYSE) under its recently

won contract to upgrade Philadelphia area rail lines. By incorporating Maxwell's technology in a

hybrid version of its battery-based ENVILINE braking energy recuperation system, ABB was able to

both increase the system's efficiency and extend battery life. This is potentially over a one billion

dollar market opportunity.


      Further areas of interest include grid stabilization applications, windmill and battery storage, all in

their infancy.


      So now let us attempt to put this all together in market size.

Let us start with the truck (ESM) market which is projected to be $300 million annually.

The Hybrid Bus market appears to at least an annual $200 million

Then the first wild card would be the railroad/train reported to be in excess of $1 billion.

An additional $ 1 billion is estimated from the auto area.

Thus an early guess for many of the obvious uses of ucaps add to $ 2 ½ billion- market size.

If Maxwell can garner 10% of market size by 2016, we have $250 million sales. Recently

running at $150 million of revs offers a reasonable volume growth rate. But lets try this thru the eyes of

management who, of course, has said very little in guidance. However, indeed they seem to have

sent us a message. The current  San Diego facility has $160 million capacity. Two additional lines

in Peoria are planned with similar capacity. The first is almost ready at this point. Thus we have a

capacity of $300 million on line by year end. Finally, another Illinois line is tentatively due on line in


You can do the math.


      If we can do $300 in next year or so, with more opportunities opening up, it would seem a 3 times

revenues would be ok- we have been there before. With 30 million shares we can get to a $30 po.

Trying  this another way, a 5% net after tax would result in an eps of $ 0.50.


     This again has zero to do with any rumored deal with Tesla.

I do not hold a position of employment, directorship, or consultancy with the issuer.
Neither I nor others I advise hold a material investment in the issuer's securities.


1.Annoucement of truck fleets use of UCAPS.
2.Deals with various car oems.
3.Deals with China and hybrid buses.
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