Kandi Technologies Group Inc. (KNDI, Financial), headquartered in Jinhua, Zhejiang Province, China, is engaged in the research and development, manufacturing and sales of various vehicle products.
Kandi has established itself as one of China's leading manufacturers of pure electric vehicle (EV) products (through its joint venture), EV parts and off-road vehicles. It is involved in designing, developing, manufacturing and commercializing EV, go-karts, all-terrain vehicles (ATVs) and specialized automobile-related products for the People’s Republic of China and global markets.
The company conducts its primary business operations through its wholly owned subsidiary, Zhejiang Kandi Vehicles Co. Ltd. (Kandi Vehicles) and the partial and wholly owned subsidiaries of Kandi Vehicles. As part of its strategic objective to become a leader in the EV market in China, the company focuses on fuel efficient, pure EV parts manufacturing with a particular emphasis on expanding its market share in China.
Its subsidiary, Kandi Vehicles, is nationally recognized as a high-tech enterprise by the Chinese government and is ranked as a top 500 company in the machinery industry in China. It is one of the largest all-terrain vehicle manufacturers in the world and launched China’s first pure EV way back in August 2008.
China is one of the fastest-growing economies in the world, and Kandi is a hit, posting strong fourth-quarter and full-year results. During the year, there was a successful launch of the direct sales program.
Fourth-quarter results
Total revenues grew by 11.2% and were $58.8 million for the fourth quarter of 2015 (which was $52.9 million during the prior-year quarter).
Electric Vehicle (“EV”) parts sales increased by 51.6% and were $57.5 million for the fourth quarter of 2015 (which was $37.9 million during the prior-year quarter).
Kandi Electric Vehicles Group Co. Ltd. (the "JV company") sold 12,100 EV products in the fourth quarter, a 231% increase compared with the same period last year. Total EV products sales comprised 6,474 EV products to the Micro Public Transportation (“MPT”) program and 5,626 EV products through the distribution channel under the direct sales program.
GAAP net income for the fourth quarter of 2015 was $0.8 million, or 2 cents per fully diluted share (which was $1.7 million or 7 cents per fully diluted share during the prior-year quarter).
Non-GAAP adjusted net income, which excludes stock award expenses and changes in the fair value of financial derivatives, was $13.9 million in the fourth quarter of 2015 (which $4 million during the prior-year quarter). Non-GAAP adjusted earnings per share was approximately 30 cents per fully diluted share for the fourth quarter of 2015 (which was 9 cents per fully diluted share during the prior-year quarter).
Total operating expenses in the fourth quarter were $13.9 million ($3 million during the prior-year quarter).
Strong attributes of the fourth quarter
- Achievement of excellent growth in EV parts and EV sales.
- Focus on strong operational results.
- Improvement of environmental conditions.
- Focus on easing traffic congestion and energy crisis.
- Multiple expansion initiatives to satisfy municipal and consumer demand.
Expectations for 2016
The company expects the following:
- For the first quarter of 2016, Kandi expects net revenues to be in the range of $46 million to $48 million.
- Gross margin in the range of 13.5% to 14.5%. For full-year 2016, Kandi expects net revenues to be in the range of $270 million to $300 million.
- The company also expects the JV company to deliver a total of 35,000 or more EV products in the full year of 2016.
Focus at the moment
- Continued strong cost savings.
- Free cash flow productivity.
- Product innovation.
- Improvement in top-line growth.
- Operating.
- Profit margin expansion.
- Sales growth.
On a concluding note
With a market capitalization of $423.4 million, the company is favorably positioned in the industry. It is the leading pure EV products provider in China. Its Micro Public Transportation Program takes advantage of Kandi’s existing EV products, technology and infrastructure and further stimulates the expansion of the EV markets to urban communities.
The company is currently focusing on efficiency, and this is going to fuel its future growth. It is constantly concentrating on emerging markets where it has tremendous potential in store. This company is a buy.
Disclosure: I do not hold any position in the company.
