Kandi Technologies Group Inc (NASDAQ:KNDI) Rewards Those Who Bought The Dip
Energy

Kandi Technologies Group Inc (NASDAQ:KNDI) Rewards Those Who Bought The Dip

Today, we will again talk about Kandi Technologies Group Inc (NASDAQ:KNDI), the manufacturer and marketer of electric vehicles (“EVs”), because the stock has turned into a big winner for Insider Financial subscribers. The stock price jumped from $3.50 to over $5 a share.

One year stock chart for Kandi Technologies Group Inc NASDAQ:KNDI

1 year chart for KNDI

It seems that the market finally took into consideration what we said in our previous reports. The share price was undervalued as compared to its book value per share and the company was delivering very good news about its operating performance and its satisfactory relationship with the Chinese Government.

It is true that a new announcement was made in the month of September. It was released that KNDI has sold 3,213 units of electric vehicle products in August, but the increase in the share price seems more the result of the steps taken in previous months.

We are revisiting KNDI’s business model for those who got to know the company now. Kandi manufactures EVs, and quads. The company benefits from subsidies given by the Chinese Government for manufacturing in China. Just to give some figures, on April 24, 2017, the company announced the receipt of payments from the Chinese Government; in total approximately US$87.6 million for the manufacturing of its EVs.

In previous pieces, we have talked extensively about the opportunity that represents investing in this industry right now . We will not repeat it again, but those who want to know more are encouraged to check our previous work on the subject.

Recent Developments

On September 5, 2017, the company announced the sale of 3,213 units of electric vehicle products in the month of August. It seems that the company has been able to come back to normal production after some problems that occurred last year. This is what the CEO, Mr. Hu Xiaoming, said about it:

“Our business was heavily impacted last year due to the confusion surrounding the reusable battery exchange model. We have been working diligently to resume the normal production gradually. We believe that we will regain our leading market position in the EV industry by the year end.” Source

Release of the latest 10-Q

We had a look again today at the financial figures released in the latest 10-Q. We need to remember that the company shows quite a solid balance sheet, with plenty of cash and a lot of assets. The most interesting are the net receivables; $200 million.

Why?

Because these are payments that the Government of China will need to pay for the EVs manufactured and sold. We believe that it is the biggest catalyst for this company. We don’t know when they will be paid, but when it will happen, the share price will definitely jump.

Period Ending 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Current Assets (All numbers in thousands)
Cash And Cash Equivalents 30,115.686 16,266.443 25,193.298 17,930.465
Short Term Investments 82.371 4,463.097
Net Receivables 200,844.319 194,578.71 218,137.572 202,491.911
Inventory 13,427.455 14,742.642 11,914.11 15,519.976
Other Current Assets 4,319.89 4,011.087 4,317.855 746.748
Total Current Assets 248,707.35 229,681.253 264,025.932 236,689.1
Long Term Investments 96,632.981 106,044.755 78,820.737 89,146.017
Property Plant and Equipment 57,189.035 51,057.118 42,248.623 73,784.81
Goodwill 322.591 322.591 322.591 322.591
Intangible Assets 12,275.376 12,183.437 12,188.931 12,776.639
Accumulated Amortization
Other Assets 7,880.223 8,045.747 42,091.371 8,914.927
Deferred Long Term Asset Charges 4,394.192 3,196.909
Total Assets 427,401.748 410,531.81 439,698.185 421,634.084

Source

Have a look now at the liabilities shown and note that the net asset is positive.

Accounts Payable (All numbers in thousands) 118,088.284 111,635.173 122,210.095 117,338.288
Short/Current Long Term Debt 69,297.743 51,270.164 49,062.39 38,770
Other Current Liabilities 4,498.655 1,518.275 6,405.422 15,068.219
Total Current Liabilities 191,884.682 164,423.612 177,677.907 171,176.507
Long Term Debt 29,501.136 29,025.343 28,794.172
Other Liabilities 4,620.488
Deferred Long Term Liability Charges 878.639 1,284.335
Minority Interest
Negative Goodwill
Total Liabilities 221,385.818 193,448.955 207,350.718 172,460.842

Source

Market participants

On top of it, as we have said in previous articles, insiders are holding their shares. We did not see any of the following directors selling their stakes.

Insider Shares Date Reported
HU XIAOMING 1,138,077 Apr 12, 2016
YU HENRY 82,336 May 17, 2017
LEWIN JERRY 50,000 Aug 9, 2016
QIAN JINGSONG 49,000 Apr 12, 2016
WANG CHENG(HENRY) 9,610 Nov 15, 2016
MEI BING 2,500 Feb 23, 2017

Source

Furthermore, several big players maintain large stakes in the company.

Holder Shares Date Reported % Out Value
Susquehanna International Group, LLP 530,833 Jun 29, 2017 1.11% 2,256,040
Invesco Ltd. 244,040 Jun 29, 2017 0.51% 1,037,170
Bank of Montreal/Can/ 150,200 Jun 29, 2017 0.31% 638,350
Oz Management, L.L.C. 139,700 Jun 29, 2017 0.29% 593,725
Group One Trading, L.P. 132,654 Jun 29, 2017 0.28% 563,779

Source

Conclusion

After noting that Kandi Technologies Group Inc. was being undervalued by the market, we finally commence to see that the market has corrected some of KNDI’s undervaluation. The book value per share is $4.29 and the share price as of September 14, 2017 is $4.77. Thus, it now makes more sense now. We still believe that the share price could increase even more if the Government of China pays the subsidies owed to the company. We will, of course, be monitoring the situation closely.

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 Flickr

Disclosure: We have no position in KNDI and have not been compensated for this article.

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Kandi Technologies Group Inc (NASDAQ:KNDI) Rewards Those Who Bought The Dip
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