Kandi Technologies Group (KNDI, Financial) is engaged in designing, developing, manufacturing, and commercializing electrical vehicles (EVs), all-terrain vehicles (ATVs), go-karts, and specialized automobiles related products for the People’s Republic of China (PRC) and global markets.
Numbers at a Glance
Revenue recently rose 92% to $50.6 million as EV sales jumped 193.7% to $40 million as it sold 3,568 units. Adjusted net income was up 259% to $4.6 million, or $0.15 per share. Gross profit increased 152.0% to $11.4 million from $4.5 million in the same period last year. The company ended the year 2013 with $204.30 million in total assets, up from $160.28 million last year. During the year, Kandi generated $14.69 million from operating activities (cash from operations), up sharply from a negative $10.72 million in the previous year. KNDI's market cap is $300 million at $8. If it is perceived to be relevant to the "EV in China" wave, then the upside potential is tremendous.
The company announced that the production of China's pure electric passenger vehicles reached 6,165 units in December of 2013 according to the data reported by Chinaev.org, a site sponsored by Clean Vehicles Productivity Promotion Center.
About the Models
Kandi Brand electric vehicles SMA7000BEV and SMA7001BEV electric vehicle models are included on the lists of "Approved Vehicles" (No.255) and "Recommended Models for Energy Saving & New Energy Vehicle Demonstration and Promotion in China (No. 52)" by the Ministry of Industry and Information Technology of the People's Republic of China ("MIIT").
Kandi Brand SMA7000BEV model & SMA7001BEV model are jointly developed and upgraded by Kandi and Geely Auto based on our old models of JNJ6290EV & JL7001BEV. The old models have a driving range equal or greater than 120 kilometers. Both new models are able to achieve a driving range equal or greater than 150 kilometers after improving technology and manufacturing process. Therefore, these two new models are eligible to receive a higher level of subsidies from national and local governments. According to 2013 Chinas EV subsidies policy, EVs with a driving range below 150 kilometers are entitled for RMB35,000 (approximately USD 5,789) rebate and EVs with a driving range over 150 kilometers are entitled for RMB50,000 (approximately USD8,270) rebate.
Among other products, Kandi makes small electric cars and trucks that cost about a tenth the price of a Tesla Model S sedan. And the big noise from the company was a deal made earlier this year among the city of Hangzhou, Kandi and a battery maker that would make up to 20,000 vehicles available in Hangzhou for hourly rentals of around $3.40. So far the company has delivered just under 5,000 cars at a price of $6,317 per car, less the battery.
What Is on the Cards
Currently, the company is investing heavily in order to build as many towers as possible in order to grow as fast as it can. In the beginning, there were many doubters since China's subsidy programs for clean energy have failed miserably several times in the past; however, things are working out differently now, evidenced by the recent growth of this company. Of course, renting out electric vehicles is just part of Kandi's business model as the company also engages in selling these vehicles.
The Chinese specialized vehicle maker said that its electric car-rental service was profitable, and that it plans to expand it to Beijing and Shanghai. Company Chairman Hu Xiaoming said he meets almost daily with local officials at headquarters in Hangzhou, and that "they are very interested in our model and keen on promoting the use of electric vehicles in their cities."
China is the world's second-biggest economy and fastest-growing one based on volume. Pollution is a huge problem for the rapidly modernizing country. An electric-vehicle network like Kandi's seems to make perfect sense. The company not only solves the problem of a regular car-sharing service, such as easing traffic and parking, but also cuts down on pollution at a time when the government is making that a priority. The central government said it would scrap plans to cut subsidies on electric vehicles and extend the program through 2015, giving Kandi more time to build out its network. The stock has gained more than 300% in the last year as its network has shown more promise, and I'd expect it to keep moving up as the profitable system grows.
Kandi got a boost last summer when the government approved the company's vehicles for subsidies and incentives. The government plans to put 500,000 clean cars on China's roads by the end of 2015 and 5 million by 2020. Kandi is selecting local partners in Shanghai, Beijing and Chengdu, the capital of southwestern Sichuan province, Hu said, without specifying a timeframe. In Hangzhou, the company is working with the local government to add rental stations to public parking lots, hotels, department stores and high-speed train stations, he said. It may take three to five years for the rental network to cover the entire city, Hu said.
To End (So Much Opportunity in China)
The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. Kandi Technologies plans on making 100,000 cars available to the residents of Hangzhou for hourly rental over the next couple of years. It’s also planning to expand into two three other cities during 2014. But instead of having small parking lots with a handful of cars like Zipcar, Kandi is building automated garages. They work like giant vending machines: Put in your card, out pops a car. While it will take time for Kandi to build the 750 such facilities it has planned for Hangzhou, the service is already operating and 50 garages should be in place by March.
The Chinese have begun to fall in love with the automobile as prosperity has rained down over the past two decades. Joining the 120 million already in use, 80 million new cars are expected to hit on China’s roads by the end of the decade. So, this company holds immense potential in this region.
