Kempower - EV fast-charging fairytale

Jag postade redan denna i en annan kedja, men värt att nämnas även här! I en artikel av David Flatbacke-Karlsson för Unga Aktiesparare, lyfter
Nordea förvaltaren fram 3 bolag på Helsingforsbörsen, där Kempower är ett av dem:

3 spännande aktier: “Kvalitet till rea” - Unga Aktiesparare

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I think it’s perfectly fine if a company makes significant investments for the future and profitability temporarily declines. However, I wonder how the company will manage to maintain a good level of profitability as competition intensifies and competitors evolve. How will the company succeed in the global market in the future? Even after this drop in stock price, can it still be considered cheap? :thinking:

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That’s a very interesting question! From a competition perspective, I believe the market will concentrate among the top players, such as Tesla, Alpitronic and Kempower. There’s significant barriers to entry in this market why some companies will be left behind and only relatively small number of companies will dominate the market (compared to AC charging where there’s high number of players).

Margin levels could of course suffer along with shifts in demand. If the electrification of transportation slows down, that could force competitors to sell products for lower prices and weaker margins to fill their utilisation rates. However, there’s a limit to this coming from the profitability of charging manufacturers. Most are still unprofitable so they might not be able to push prices down too much. Kempower is probably the most profitable company in the industry with a differing product offering and is therefore favourably positioned to a potential price war.

Looking to the valuation, the stock is expensive with current earnings. One should take into account that the current earnings suffer from 2 large factory investments (US and Lahti2) which do not yet generate material revenue. If the sales growth guided by the company starts to materialize in H2 2024, that would mean rapid earnings growth and value-generation in the coming years. Looking to risks to this scenario, a weak market demand is the most likely one. I do not expect Kempower’s product-related advantages to vanish anytime soon.

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Thank you for your excellent and comprehensive responses! :slight_smile:

I’m satisfied with your answers. Sometimes I’ve thought that Tesla will quickly dominate, especially with other automotive companies that can do anything with their incredible resources. Well… “the others” would have already joined in if it were easy and particularly profitable for them.

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