Company: Compleo Charging Solutions
List: XETRA, Frankfurt
Market cap: € 150 MEUR at time of publication
Share price: € 26,3 at time of publication
Industry: Electric charging solutions
Market size: $25 Billion USD
Compleo continue to deliver on their impressive growth plan and the Q1 report was in line with our expectations and the company also reaffirmed their sales target of 115-135 MEUR for 2022.
The markets sour reaction of sending down the stock currently by 11 % seems like a big overreaction to us especially since the company has been proactive in building inventories to offset problems with supply chain issues as we elaborate on below. We therefore have increased our position today slightly and we intend to increase the position further if the share price should continue to drop . As we describe below Compleo is also very attractive valued compared to industry peers . The weak share price performance is likely related to market sentiment and not the company’s actual performance .
Compleo has so far been able to offset any supply chain issues by keeping substantial build up of inventories and finished goods . This has ofcourse had a negative impact on their bottom line and cash flow from operations but we think this is a very wise step to take since they’re selling products with reasonable margins. Cash flow from operations improved considerably from -6,2 MEUR to -2,4 MEUR. We also see in their report that inventories has increased from 21 MEUR to 36,3 MEUR quarter on quarter.
Another note worth reading is the section below gross profit which gives us the impression that the cost suit has been set and that the company expects their gross margin to keep increasing as sales increase since the organization has been grown to fit the target of half a billion euros in sales in 2025.
Compleo expects the strong growth in sales of electric car and electrification to remain stable in Europe and Germany despite supply chain issues and the Corona pandemic situation in China. The company does not currently see any indications or expectations in regulatory , competitive or economic environment that could conflict their growth strategy, this feels reassuring. However they are unable to asses impact of the war in Ukraine at the moment .
Compleo reaffirms their sales target of between 115-135 MEUR for 2022 which is about 100 % higher than the sales of 57.5 MEUR for 2021.
The company states that they for the coming years expect a significant increase in profitability. The company plans to increase ebitda margins to 10-15 % . If they reach their target of 500 MEUR in sales by 2025 which is less than 3 years away it would equal an EBITDA of 50-75 MEUR.
Valuation is an important metric of all investments . Although our primary reason for investing in compleo was our confidence in the management team and their growth plan it’s impossible not to mention the HUGE valuation differences in the charging station sector
Below is a EV/SALES multiple comparison of industry Peers for 2022:
Compleo Charging solutions : 1,03 X
Chargepoint holding inc: 17,6 X
Blink charging Co: 13,6 X
Nuvve Holding Corp: 4,66
Wallbox NV: 8,76 X
Beam Global: 7,02 X
Volta Inc: 6,09 X
Garo: 4,22 X
The only , although not small, risk is that cash and cash equivalents was at just 16 MEUR at the end of the first quarter of 2022 as compared to 28 MEUR in the same quarter in 2021. Financing risk is a clear risk that al investors need to be aware of . The company would face considerable dilution if forced to do a capital injection at the current all time lows in the stock price . We think the reward outweighs the risk in this seeing as they company is valued extremely cheap compared to competitors and also considering our big faith in the competent management which has been able to cope with supply chain issues in a exemplary way that more companies should aim to learn .
Remember Investing 101
How a company is performing fundamentally does not always correlate with the stock price!
Link to full press release:
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