MULN - 4 Stocks To Watch As EV Demand Rebounds
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Contrary to the numerous mainstream reports that EV demand willbe slowing down this year, the market is already showing solid signsof recovery. In China for instance, which is currently the world’sbiggest EV market, EVs drove first-quarter sales growth, rising 31.8%to 2.09 million units, as automakers launched new models and cutprices.
In theUS, the number of newly introduced EV options that can go 300 miles ormore on a single charge, which is considered the threshold for along-range vehicle, increased to 30 models at the beginning of 2024,representing a 500% increase in three years.
It is therefore nosurprise that research firm Fastmarkets forecasts global EV salesgrowth will increase by 36% year-on-year in 2024, marking another yearof consecutive double-digit growth rates.
In other large emerging vehicle markets likeIndia and Southeast Asia, the EV market has been gaining majortraction thanks to increasing government support. Thailand andMalaysia both provide tax support for final EV purchases, while in thePhilippines, as part of its push to develop the country’s EV sector,the government is looking to incentivize the manufacture of fourmillion EV units in the next 10 years.
That means that although EV stocks are downright now, the long-term fundamentals of the broader sector remainstrong, and now would be the perfect time to spot undervaluedcompanies. And it won't be only EV companies that will benefitfrom a rebound in demand; battery stocks will also benefit from thetailwinds of this trend.
With that being said, here are four stocks thatinvestors should consider adding to their watchlist as EV demand picksup again.
VivoPower International (NASDAQ:VVPR) is a sustainableenergy solutions company that believes sustainability doesn’t needto be expensive. This is why it has taken a differentiated approach togetting into the EV market. Through its subsidiary, Tembo, the companyprovides conversion kits with all the parts required to convert avehicle from an internal combustion engine to an EV. Think motors,batteries, transmission, charger, software, and the rest of thecomponents that make the converted vehicle work safely andseamlessly.
Initially, these conversion kits are targeted at some of themost widely used utility vehicle models, including the Landcruiser andHilux, which are designed to function in the harshest and most ruggedterrains. The kits pack a 72kWh battery, which allows a 180 km to 190km range as well as more pulling power and hill climbing capabilitiesthan the diesel equivalent predecessor.
Tembo’s value proposition is simple andstraightforward. Its users will incur lower maintenance andoperational costs, have less downtime, and won’t need expensive fuelinfrastructure.
So far, VivoPower International (NASDAQ:VVPR) hassecured a commitment of 5000+ kits and an order pipeline of 10,000+,illustrating the company’s strong growth prospects. Those includedan MOU in Jordan for 1,000 kits, opening a path to the Middle East,which is the largest Landcruiser market, and a definitive agreement inKenya for 4,000 kits, providing entry into second-hand vehiclesegments.
Furthermore, the company signed a definitive joint ventureagreement with Francisco Motor Corporation in September 2023 todevelop and supply electric utility vehicle (“EUV”)electrification kits for a new generation of electric jeepneys(e-jeepneys) in the Philippines.
In order to better position itself for this comingrecovery, VivoPower International (NASDAQ:VVPR) recentlyrevealed that Tembo would go public via a merger with CactusAcquisition Corp. 1 Limited (CCTS), a NASDAQ-listed SPAC, and changeits name to Tembo Group.
CCTS will issue 83.8 million shares in exchange forTembo shares at $10 per CCTS share, which implies a valuation of Temboof $838 million. The deal, which will be finalized in May, will alsosee 16.76 million Tembo Dividend Shares distributed to VivoPowershareholders, who will receive 5 Tembo Group shares for each VivoPowershare held.
Whatthat means is that even in a base-case scenario where Tembo share’sdebut is at say $1 per share instead of $10, VVPR stock would surge toat least $28 per share.
This incredible upside potential is further reaffirmed by thefact that VivoPower International (NASDAQ:VVPR) received adirect investment of $5 million into Tembo at a pre-money valuation of$120 million from a private investment office of a member of theruling Al Maktoum family of Dubai.
To further illustrate his confidence in thecompany, Vivopower announced that executive chairman and CEO KevinChin is increasing his individual shareholding in the company by146,084 shares (about 4.4% of the outstanding shares) to increase hisshareholding to 12.3%.
Plug Power Inc. (NASDAQ:PLUG) is a global leader inhydrogen fuel-supply solutions and hydrogen applications for materialhandling, power generation, and e-mobility. The company’s end-to-endhydrogen value chain includes electrolyzers to make green hydrogen andthe infrastructure needed to liquefy, store, transport, dispense, andconvert hydrogen into carbon-free electricity.
PLUG recently announcedthat it signed a contract to provide a significant U.S. electricvehicle manufacturer with hydrogen infrastructure and fuel celltechnology for its material handling fleet. The automotive facility isone of the largest in the nation dedicated to electric vehicle andbattery production, and under the agreement, Plug Power will supplythe entire material handling fleet at the facility, includingforklifts and tuggers, with its fuel cell solutions.
The partnership alsoincludes the installation of on-site hydrogen infrastructure, such astwo liquid hydrogen storage tanks and over 10 hydrogen dispensers, tosupport the facility's expansion into hydrogen applications. PlugPower will begin the installation and commissioning of the hydrogeninfrastructure in 2024, with the facility anticipated to be fullyoperational by the first quarter of 2025.
Although the company has not yet achievedprofitability, CFO Paul Middleton gave some interesting insights intowhy the company was facing problems at the JPMorgan 2024 Industrialsconference. Basically, PLUG has been subsidizing the hydrogen fuelmarket as it waits for its own production plants to come on line. TheGeorgia plant finally came on line in January
Enovix Corp.(NASDAQ:ENVX) develops high-performance batteries, leveraging itsmore than 626 technology patents and patent applicationsglobally.
Thecompany recently announced it has been granted 15-year Pioneer Statusfrom the Malaysian Investment Development Authority (MIDA) formanufacturing its batteries in its high-volume manufacturing facilityby the name Fab2.
Enovix’s Pioneer Status application was approved by theGovernment of Malaysia for the manufacture of lithium-ion batterieswithin the country for 15 years, with the primary benefit of thisstatus being an exemption from the payment of income tax, subject tomeeting certain conditions
In July 2023, Enovix and YBS International Berhad,a Malaysia-based investment holding company, signed a Master ServiceAgreement to support Enovix’s Fab2 site. Since then, Enovix has madesignificant progress, establishing Fab2, hiring nearly 100 teammembers and building out approximately 250,000 square feet of factoryspace.
Earlierthis month, the company revealed that it had completed FactoryAcceptance Testing (FAT) for its Gen2 Agility Line and is on track toproduce the first silicon battery samples from Fab2 in the secondquarter of 2024. “SAT (Site Acceptance Test) is also well underway.Both FAT and SAT processes ensure that we only place machines intoservice that meet our specifications for throughput, yield, andmachine uptime," said Ajay Marathe, Chief Operating Officer atEnovix.
Thecompany has had a successful start to the year, reporting a remarkablefourth-quarter revenue increase to $7.4 million, which beat estimatesby an impressive $3.96 million. Moreover, its massive sales grew by575.3% on a year-over-year basis, underscoring its powerfulpositioning in its niche.
Microvast Holdings, Inc. (NASDAQ:MVST) designs, develops, and manufactures lithium-ion battery solutions. Thecompany was founded in 2006 and went public in July 2021 through amerger with SPAC Tuscan Holdings in a deal valued at over $700 millionin cash.
Thecompany recently reported FY 2023 earnings, revealing a significantyear-over-year revenue increase of 49.9% to $306.6 million, with arecord quarterly revenue of $104.6 million in Q4 2023, representing a61.4% increase.
The company's financials, particularly in gross marginimprovement and revenue growth, clearly illustrate its increasingefficiency and market penetration, especially in the EMEA region.Microvast's founder and CEO, Yang Wu, has expressed optimism aboutthe company's trajectory, citing revenue growth in EMEA as apositive sign for continued success in 2024.
Institutional investorsare already taking a keen interest in the company, with Vanguard Grouprecently growing its holdings in the company by 8.9% in the 3rdquarter, according to its most recent 13F filing. The fund owned 12.5million shares of the company’s stock after purchasing an additional1 million shares during the quarter, representing 3.95% of Microvastshares worth $23.6 million.
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