Greenland Technologies Holding Corporation GTEC; Buy - $13 PT
Action Summary –22 May 2023
Analyst Theodore R. O’Neill – Beats on top and bottom line - Reiterate our Buy rating and $13 price target.
? Solid beat to estimates. GTEC reported 1Q23 revenue and EPS of $22.1MM and $0.11, respectively. We had
been looking for revenue and an EPS loss of $20MM and $0.09, respectively. The consensus was for revenue
and an EPS loss of $20.6MM and $0.02, respectively. Compared to our estimates the favorable $0.20 variance
was primarily due to higher sales, higher margins from product mix and lower expenses.
? But growth in China remains muted. The company was able to report better EPS than expected partly due to
a solid mix of higher end transmissions for EV industrial equipment, but sales growth in its China market remains
muted. We are lowering our 2023 revenue and EPS estimates to $97.1MM and $0.07, respectively from
$121.5MM and $0.10, respectively. We are initiating 2024 revenue and EPS estimates of $142MM and $0.16,
respectively.
? Outlook for its EV construction equipment remains positive. With fleet demos requested from multiple blue-chip
customers, its presence in the U.S. market is the key to significant growth. The construction equipment market
in the U.S. is robust for ICE based equipment and we think it is massive for EV based equipment.
? Attractive valuation. We believe the shares are undervalued on an absolute and relative basis. Our $13 US
price target is based on the discounted value of all future earnings according to our estimates. Relative to peers,
the shares appear inexpensive. The shares are selling well below book value and the book value is rising.
5/19 price: $1.45 USD Market cap: $18.8 million Multiple of book: 0.22 EV/2024 Sales: 0.31
Shares outstanding: 13
million
Insider ownership: 49% 3-mo avg. trading volume:
50,000
Risks/Valuation
• Risks include product development, competition, new product introductions, and warranty claims.
• Our $13 price target is derived using a discounted future earnings model.
Company description: Greenland Technologies Holding Corporation (NASDAQ: GTEC) is a developer and manufacturer of
drivetrain systems for material handling machineries and electric vehicles, as well as electric industrial vehicles.
