ChargePoint Holdings, Inc.

CHPT Details

ChargePoint Holdings, Inc. (NYSE: CHPT) develops and markets networked electric vehicle (EV) charging system infrastructure and cloud-based services that enable users to find, reserve, authenticate, and transact EV charging sessions. It provides an open platform that connects with its system hardware and other manufacturers, linking systems through an intelligent network that gives real-time charging session information. Its network connects charging system owners, fleet managers, drivers, and utilities to a range of web-based portals.

Latest News:

• Recent Collaborations: On February 10, 2022, CHPT and Sonepar had announced a strategic agreement in France. Sonepar is a global leader in distributing electrical supplies, solutions, and related services for electricians, installers, and end-users. By mid-2022, Sonepar's France network, which includes over 500 locations, six distribution centres, and headquarters, will have over 1,400 charging stations. There are 53,667 public charging stations in France as of December 31, 2021. Sonepar and CHPT will significantly improve public access across the country due to this agreement and the inclusion of 1,400 charging stations. CHPT has become the exclusive EV Charging software partner for all charging devices installed in the Sonepar network in France as a result of this partnership.

Q3FY22 Results

• Solid Revenue Growth: The company reported a sharp uptick of 78.84% in revenue to USD 65.03 million in Q3FY22 (ended October 31, 2021) from USD 36.37 million in Q3FY21, owing to significant growth across the commercial, fleet, and residential verticals in North America and Europe.
• Net Losses Extended: However, its net loss for Q3FY22 expanded to USD 69.44 million from USD 40.89 million reported in Q3FY21.
• Strong Balance Sheet: CHPT exited the quarter with a cash balance of USD 365.49 million and no outstanding debt.

Key Risks

• Supplier Concentration Risk: CHPT depends on a limited number of suppliers to manufacture its charging stations. Also, some of its products and components are sourced from a single vendor. Therefore, any failure on the contractual obligation by vendors could harm its operations.

• Dependency over faster EV adoption: The future of CHPT is based on businesses and customers adopting electric vehicles. As a result, any reduction in EV demand or slow EV industry growth could jeopardise the company's financial and operational performance.

Outlook

• Revenue Guidance: CHPT expects to clock revenues of USD 73 – 78 million in Q4FY22 (ending January 31, 2021) as of Q3FY22. Its revenue target for FY22 has also been revised to USD 235–240 million.

Valuation Methodology: Price/Sales Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

CHPT's stock price has fallen 40.63% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 11.21 to USD 38.50. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 17.80.

Considering the significant correction in the stock price, collaboration with Sonepar in France, solid balance sheet, positive outlook, associated risks, and current valuation, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 14.45, down 5.68% as of February 17, 2022.

Three-Year Technical Price Chart (as on February 17, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.