Company: Compleo Charging Solutions
List: XETRA, Frankfurt
Market cap: € 39 MEUR at time of publication
Share price: € 7.14 at time of publication
Industry: Electric charging solutions
Market size: $25 Billion USD
Compleo charging solutions has truly been one of the worst performing ESGFIRE stocks this year. Our position is currently down over 55 % and the share is down 90 % over the last 12 month. We think there are three reasons for the downward valuation of the company in the last 12 months.
1. Valuations have come down considerably on the overall growth stock segment.
2. The market is worried about Compleo’s ability to achieve profitability in reasonable time.
3. The market is worried about the recent management changes where many senior staff seemingly forcibly have been removed.
We will adress these three reasons separately:
1. Compleo is currenly valued at less than 0,4 sales for 2022. Any quick comparison on peers would show that this is far below the sector average. However the reason for this is probably linked to our next point.
2. Compleo had a wider net loss in Q2 2022 than in previous quarters, the company slightly lowered guidance for 2022 and had a cash balance of slightly over 30 million Euros in the bank at end of Q2 2022. R&D costs were 10 million euros higher for the quarter which is one reason for the bigger net loss. The company should be funded with current cash balance until end of Q1 2023 if R&D costs are reduced. There has been decisions to realign production to one facility which is said to dramatically lower costs. There is also discussions on how to lift value from the software division which is doing extremely well in Compleo.
3. Two board members and the CEO have left the company recently. Official reasons being that they have different views on how to progress the company and ” the gap in the strategic direction how to lift value out of our software business.” We also think that the board was very unhappy with how previous management have been burning cash over the last year. We fear there may be a significant restructuring in the company and if worst comes to worst the company may go bankrupt however we are definately not there yet and we do not plan on acting in panic.
Compleo has many challenges right now the main ones is how to faster achieve profitability and this may be solved either by selling the software division, taking in more capital or acquiring bank loans. The realignment of production from two factories to one is also going to lower costs.
We do not think it would be wise to panic sell this position yet, mostly because we do expect significant announcements on 16th of november along the Q3 report and also because it would not make sense to realize the loss on our position yet. However if ESGFIRE does not see a credible solution on how to get the company on the right profitable path before christmas of 2022 we will sell and take our losses no matter the cost. We can also see that GSA capital partners have increased their short position which surely has contributed to the downward movement of the stock. If you have a big risk tolerance current levels surely are attractive to increase on but we will ourselves excercise extreme caution for now.
Qoute from latest release below:
“The newly formed board of directors is now consistently pushing ahead with the strategic realignment of the Compleo Group. The first key points of the new strategy will be announced in the context of the third quarter results on 16 November 2022.”
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