ChargePoint Holdings, Inc.

ChargePoint Holdings, Inc. (NYSE: CHPT) provides a comprehensive portfolio of charging solutions which helps businesses and drivers to charge their EV vehicles across North America and Europe.

Key Updates:

• Higher dependence on one segment: The company operates through two segments, namely Network Charging Systems and Subscriptions, while the majority of income comes from the former one. Moreover, on a Geographic basis, the company’s business depends upon the North American geography and have a little presence in Europe. Hence, over-dependence on a particular segment would weigh high on the company’s risk profile.

Source: Company Presentation

• Increase in Operating Expenses results in a shrinking bottom-line: In the recent quarters, the company reported higher operating expenses, which has resulted in higher operating losses. Notably, in Q4FY21, loss from operations stood at USD 35.320 million, higher than USD 32.456 million in Q4FY20. In the recent quarters, the last quarter witnessed the highest operating expense, while operating expense stood 99% of the total revenue in Q4FY21, which remains a key concern.

 Source: Company Presentation

• Launch of New Android Auto™ application: Recently, the company reported the launch of a new Android Auto app, which would allow the driver to check the status of the charging station and would provide a convenient time for vehicle charging.

Q4FY21 Financial Highlights:

• CHPT announced its quarterly result, wherein the company reported total revenue of USD 42.391 million, declined from USD 43.244 million in Q4FY20.
• The company reported its gross profit of USD 8.903 million v/s USD 8.837 million in the previous corresponding period (pcp), supported by a lower cost of revenue (USD 33.488 million v/s USD 34.407 million in pcp).
• The quarter was marked by higher Research and development expense and a surge in General and administrative cost.
• Net loss widened to USD 90.747 million from a loss of USD 33.811 million in pcp. Increase in net loss was primarily due to a loss from change in fair value of redeemable convertible preferred stock warrant liability amounting USD 54.824 million.

Q4FY21 Income Statement Highlights (Source: Company Report)

Risks: The EV charging segment is still in the nascent stage, and the company is witnessing a higher accumulated deficit on account of constant losses. Continuation of the above trend would dampen the financial flexibility of the company.

One-Year Price Chart (as on May 04, 2021). Source: Refinitiv (Thomson Reuters)

Stock Recommendation:

The company operates in the Electric Vehicle segment and provide charging assistance to electric driven cars and other vehicles. The segment has enough potential depending upon the consumer’s shifts towards the clean energy segment from fossil fuels. However, the transition is time-consuming, and the exact tenure is unknown. Meanwhile, due to the rising costs, the company is witnessing losses on a constant basis, which remains a key concern for the company. The stock of CHPT corrected ~22% and ~39% in the last one month and three months, respectively. On the valuation front, the stock is trading at a forward EV to Sales multiple of ~30.6x, which is significantly higher than the industry median of 5.1x. Considering the aforesaid facts, we recommend an ‘Avoid’ rating on the stock at the last closing price of USD 23.12 on May 04, 2021.

Hyliion Holdings Corp

Hyliion Holdings Corp (NYSE: HYLN) produces electrified powertrain systems for commercial vehicles. The company focuses on reducing the carbon intensity and greenhouse gas emissions of the transportation sector by providing electrified powertrain solutions for Class 8 commercial vehicles at the lowest total cost of ownership. It is currently developing two powertrain systems: Hybrid system and Hypertruck ERX system.

Key highlights

• Introducing next-generation battery module: The company recently unveiled a next-generation battery module that combines Toshiba's LTO cells with its patented technology innovations to have up to five times the cycle life of a traditional EV battery, which can be recharged in under eight minutes, and has a cooling efficiency of more than 40% over the previous device. It enables a higher charge rate and more extended sustained power output.
• Achieved forecasted volumes for 2020: The group surpassed previously forecasted volumes for 2020, including installing seven Hybrid electric units in the fourth quarter and 20 Hybrid electric units for the full year 2020, thanks to agile management and prudent measures.
• Introducing new products:The company designed and developed the next-generation hybrid system, debuting in 2021. The device would include a next-generation battery pack, a custom e-axle solution, and improved onboard data analytics capabilities.

Financial overview of Q4 2020

Source: Company

• The company did not generate any revenue in the reported period.
• On the back of higher R&D expenses and higher SG&A expenses the company increased its operating loss to USD 10.3 million in the reported period, against USD 3.3 million in the previous corresponding period.
• The company is investing in R&D to execute its product development roadmap, while SG&A expenses increased due to personnel and public company related costs.
• Non-operating expense driven by USD 10.1 million loss on extinguishment of debt in connection with the Business Combination.
• Net loss stood at USD 20.5 million in Q4 2020, against USD 4.0 million in pcp.
• Cash and cash equivalents stood at USD 390 million, while short and long-term investments stood at USD 238 million at the end of FY 2020.

Risks associated with investment

In the short term, the Company’s financial performance is exposed to the COVID-19 pandemic, causing an unprecedented level of disruption. The adverse US federal income tax regimes and fluctuating exchange rates could also affect financial performance.

One-year Price Chart (as on May 04, 2021). Source: Refinitiv (Thomson Reuters)

Stock recommendation

The Company has entered 2021 with strong financial and operational resources. Moreover, the Company is optimistic about its prospects after the strategic combination with Tortoise. It is focused to position itself for long-term growth by capturing the market for the electrification of class 8 vehicles. Overall, the Board stays confident in HYLN's ability to emerge from such an unprecedented period. Furthermore, the Company would be introducing new products in 2021, which would likely to drive the top and bottom line. Based on the decent growth prospects, we have given a "Buy" recommendation on the stocks at the closing price of USD 9.27 on May 4, 2021.

Triterras, Inc.

Triterras, Inc. (NASDAQ: TRIT) is a leading fintech company focused on trade and trade finance which operates through Kratos™—one of the world’s largest commodity trading and trade finance platforms that connects and enables commodity traders to trade and source capital from lenders directly online. 

Key Updates:

• Change in Management: Recently, the company reported the appointment of Yong-Moon Kim, Jayapal Ramasamy and Lilian Koh to the company’s board of directors, effective immediately after the resignation of Directors Matthew Richards and Vanessa Slowey. With the above changes, TRIT’s board of directors would consist of eight members, within which five of them would be independent.
• First Half FY21 Highlights: The company reported a ~USD 5 billion of total trade and trade finance volume during the first half of FY21. This represents an additional USD 2.1 billion of volume from the USD 2.9 billion of total transaction volume reported in the first four months of its fiscal year 2020. For the first Half the group reported total revenue of USD 23.7 million, while net income was recorded at USD 14.2 million.

Source: Company Reports

• Financial Estimates: For the third quarter of FY21, the company expects its revenue at around USD 17 million, while net income is expected at USD 10 million. On a year-to-date basis, the company expects its top line at USD 40.7 million, while the bottom line is anticipated at USD 24.2 million. As per the management guidance, FY21 revenue would remain in the range of USD 56.6 million, while net income would likely to be at USD 32.9 million.

Risks: The company’s operations are in a nascent stage, and the continuity of the business depends on the consumer preference to choose the particular platform for commodity trading and other trades.

One-Year Price Chart (as on May 04, 2021). Source: Refinitiv (Thomson Reuters)

Stock Recommendation:

The stock of TRIT corrected ~7% and ~31% in the last one month and six months, respectively. The company operates through the online trading platform, Kratos™, and has given estimates of upcoming financials. Meanwhile, the company is yet to provide any financial statements for the periods. Hence, we prefer to remain on the sideline due to the lack of financials. On the valuation front, the stock is trading at a forward EV to Sales multiple of 5.4x compared to the industry (Financials) median of 3.4x. Hence, considering the above facts, we recommend an ‘Avoid’ rating on the stock of TRIT at the last closing price of USD 6.94 on May 04, 2021.