x min read

Kandi Technologies Group Inc (NASDAQ:KNDI) Making A Comeback

Kandi Technologies Group Inc (NASDAQ:KNDI) Making A Comeback
Written by
Jarrod Wesson
Published on
September 1, 2017
Copy URL
Share on LinkedIn
Share on Reddit
Share on Twitter/X
Share on Facebook
InsidrFinancial

Kandi Technologies Group Inc (NASDAQ:KNDI), the manufacturer and marketer of electric vehicles (“EVs”), that we assessed in the article called "Kandi Technologies Group Inc (NASDAQ: KNDI) Is A Turnaround Opportunity" seems to be back. The company is delivering very good news that is making the share price rebound from the lowest level of $3.5.For what reasons?After its recent quarterly earnings report, which was released on August 9, 2017, the company increased the communication efforts to better engage with the investment community. A conference call was organized after the 10-Q was put out, wherein the management effectively responded to the questions about its operating performance. Additionally, the company continued to send good news to the market, such as the political visit to Rugao City to learn about the renewable energy vehicle development.That's not all, we could also read that directors of the company are buying shares, which means that they believe that the common stock is undervalued. We will provide details about this in this article. Have a look now at how it is all impacting the recent share price action. 1 year chart for KNDIBusinessKandi manufactures EVs in Jinhua, China. It was founded in Delaware on March 31, 2004. The biggest question that the market made while assessing this company was why would a Chinese company manufacture EVs. It has an easy answer if we study calmly KNDI's annual report. The government in China is giving incentives to this sector. A few in the US got to know the following new subsidies from these authorities. This is from the company's materials:

  • (1) generous cash subsidies: In 2016, China’s central government subsidized pure electric vehicles by up to RMB 55,000 per unit.
  • (2) charging facility construction support: In September 2015, the State Council revealed “2015-20 charging facility development guidance” to help accelerate new energy vehicle development.
  • (3) free vehicle licenses in quota control cities
  • (4) exemptions from acquisition taxes and excise taxes, which are normally based on engine displacement and price, as well as exemptions from circulation/ownership taxes. Source

Recent DevelopmentsThe most interesting news was the quarterly earnings release that the market received in August. The following were the most remarkable financial accounts for the period ended on June 30, 2017. Please remark the cash and the restricted cash, which, according to the company, is government subsidies.

  • Cash and cash equivalents: $7,407,032
  • Restricted Cash: $22,708,654
  • Amount due from JV Company, net: $138,908,557
  • Investment in JV: $65,258,976
  • Total amount of assets: $427,401,748
  • Total amount of liabilities: $221,385,818

To sum up, the company has plenty of cash, a lot of assets, and little liabilities. Other websites, such as Yahoo Finance, reported the following statistics, which one can note by looking at the balance sheet per share numbers. Thus, we may conclude that the company is undervalued by the market.

  • Total Cash Per Share: 0.15
  • Total Debt: 98.8 million
  • Book Value Per Share: $4.45
  • Share price as of August 31, 2017: $3.85

Regarding the income statement received by the market, the company obtained $27,325,279 in revenues, and $3,756,936 in gross profit. Additionally, the company noted that there are 47,974,974 shares outstanding. which is just slightly higher than the same amount of shares in the same quarter of 2016; 47,601,286.We had a look at the Q&A session that was celebrated after the release of the 10-Q and selected the following text. The current state of the sector in China is noted and the company's goals are also specified.

"The EV industry in China is full of potential. We really hope to grab this opportunity and increase our market share so that the Company can have long-term sustainable growth in the near future and reward our loyal shareholders by delivering the real impressive (inaudible) results, and by 2020 the goal of 200,000 vehicles, I only can say we will be trying to achieve that." Source

Regarding the most recent news received by the market, the following is the most interesting. On August 3, 2017, the company released that its JV with Zhejiang Geely Holding Group was going to present its new model “Global Hawk K17AS” at the Global New Energy Vehicle Expo Conference. Mr. Hu Xiaoming, Chairman of Kandi, was quoted:

“In today’s increasingly internet-focused society, car-sharing is continuing its rapid worldwide growth, and will be the ultimate path for EV development. Kandi will take advantage of this opportunity to break through and become a pioneer in China’s EV industry. The implementation of EV car-sharing is also a practical demonstration of the concept of “two mountains” Source

That's not all. On August 21, 2017, a group of politicians including Mr. Li Qiang, the Party Secretary of Jiangsu Province, visited Rugao City to learn about the progress of renewable energy vehicle development. Since relations with the Chinese Government is key for the business model of KNDI, we selected the following text from the press release:

"Mr. Li also explained to the delegation that Kandi was among the earliest manufacturers and developers of pure electric vehicle in China, and has achieved many milestones in the research and development of electric vehicles. Now, it is time for Kandi to accelerate its growth with Jiangsu government’s strong support." Source

ConclusionThere are several reasons to like KNDI. First of all, the company's financial situation seems quite solid. The book value per share shows that the company is undervalued by the market and reporting revenues. Additionally, the company seems to have good relations with the Chinese Government, which has been giving incentives for the EV sector and to KNDI in particular. The visit of Party Secretary of Jiangsu Province, Mr. Li Qiang, seemed relevant in this regard. Finally, we continue to see insiders buying shares of the company. This is a very good sign. To sum up, keep following KNDI as we expect the share price to keep increasing and represent the company's true valuation.Be sure to check out our coverage on KNDI!We will be updating our subscribers as soon as we know more. For the latest updates on KNDI, sign up below!Image courtesy of khengsiong via FlickrDisclosure: We have no position in KNDI and have not been compensated for this article.

Discover Hidden Gems

Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.