Some people did talk about the stock ...
While KNDI (KNDI) appears quite cheap at 1.5x 2020 sales, I am quite skeptical about the company’s future. Both the Coronavirus and the decline in the oil price are not great for the stock. The company has not clearly stated it in the last annual report. Besides, the way KNDI presents its net income figure does not look good to me. Adding the most recent debt conversion and sale of assets, KNDI is not a buy, but may be a short.
Kandi Technologies And The Most Recent Sales Report
Kandi Technologies designs, manufactures and commercializes electric vehicle products (“EV”) in China.
I know that American investors are sometimes skeptical about financial figures communicated by the Chinese companies. While I understand their concerns, analysts should continue to assess the numbers released by Chinese companies. In 2019, the company’s most relevant products were EV parts, which represented 81% of the total amount of sales. Besides, 81% of the total sales originated from China. As mentioned in the last annual report, I appreciate that the amount of sales from one of the company’s affiliate companies was reduced to 11.7% of the revenue. With that, I encourage investors to review the amount of sales from affiliated companies. We don’t know Kandi’s influence over these parties. Remark that in 2018, the total amount of sales from an affiliate was equal to 43%.
With regards to the bottom line, investors need to be very careful. The company included two non-recurring items; the gain from equity dilution in the affiliate company and gain from equity sale. Including these two items, we get a net loss of -$7.18 million. However, if we don’t take into account these gains, I get a net loss of approximately -$31 million. It is a bit worrying. As compared to 2019, net losses multiplied by more than 5x. In my view, the fact that Kandi did not want to show the net income without non-recurring items makes it even worse.
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