Is Kandi Technologies a Good Buy?

Kandi Technologies (KNDI) is seeing tremendous improvement in its financials, driven by this strong growth in the electric vehicles in China. This is driving its share price momentum. In fact, Kandi recorded an increase of 14.3% to $50.2 million in its revenue for the third-quarter of 2015, as compared to $44.2 million for the third-quarter of 2014. The increase in revenue was mainly due to the increase in EV parts sales during the quarter with the battery sales accounting for the majority of the EV parts sales.

Kandi continues to improve its costs structure.
For instance, the company witnessed a 0.6% improvement in its gross margin sequentially. This is a result of Kandi’s effective costs control from battery packing production. In fact, its gross margin during the quarter rose 1.6% year-on-year due to the margin improvement from EV parts, which was mainly contributed by effective cost control and the scaled production.

The company expects the sales for this model K17 to start in the late fourth-quarter. The company is seeing tremendous increase in the pre-sale deposits and expecting the product to drive growth for EV in the future.

Meanwhile, the government initiatives with respect to NEVs are very encouraging. In fact, the government released a number of requirements to support the development of China’s EV industry, including the moving traffic controls and purchase quotas pure electric vehicles, encouraging government purchases, and promoting EV car-share programs.

More importantly, the government is also providing incentives to the manufacturing of EVs in the region. For instance, Kandi received about $44.3 million national subsidy for pure EV sales during the third and fourth quarters of fiscal 2014. In fact, the government prepaid about $59.6 million of national subsidy for pure EV sales in 2015 to Kandi Technologies group. With this new support and policies from the central government the business prospects and potential for the New Electric Vehicles remains pretty robust in the region that should enhance its growth in the future.

Conclusion

Kandi is making substantial progress with respect to expanding manufacturing. Also, its efforts of practicing effective cost control measures and the scaled production for EV part are pretty encouraging that should drive its growth. Moreover, the market for electric vehicles is expected to grow at a higher cliff than in the past that should drive its growth in the future. Therefore, the investors should maximize on the year-to-date drop and buy more of the shares.
Published on Jan 19, 2016
By Vinay Singh

Copyrighted 2016. Content published with author's permission.

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