ChargePoint Holdings, Inc.

CHPT Details

ChargePoint Holdings, Inc. (NYSE: CHPT) creates, manufactures, and distributes networked electric vehicle (EV) charging system infrastructure and provides cloud-based services via subscription that enable customers to find, reserve, authenticate, and pay for EV charging sessions. In addition, its network offers business, fleet, and residential customers a variety of web-based interfaces. CHPT makes money through selling Networked Charging Systems, Cloud Services, and extended parts and labor warranties, all of which are generally paid for upfront. As of September 17, 2021, the company's market capitalization stood at USD 6.68 billion.

Inorganic Endeavors to Strengthen Capacities: CHPT paid EUR 75 million in cash to acquire ViriCiti, a prominent developer of electrification solutions for eBus and commercial fleets, on August 11, 2021. CHPT will be able to expedite the electrification of fleet and commercial segments in North America and Europe due to this transaction. In addition, CHPT stated on July 20, 2021, that it has inked a formal deal to buy has.to.be, a prominent European developer of charging software platforms, for EUR 250 million in cash. The transaction is scheduled to close in 2021. The acquisition aims to strengthen CHPT's market leadership and accelerate electrification across Europe.

H1FY22 Results: The company reported a sharp uptick of 42.66% in total revenues to USD 96.63 million during H1FY22 (ended July 31, 2021) compared to USD 67.73 million during H1FY21, primarily due to an increase in revenues across both networked charging systems and subscription segments. Its net losses were also reduced to USD 2.65 million during H1FY22 from USD 65.39 million reported in H1FY21. As of July 31, 2021, the company's cash and cash equivalents amounted to USD 618.09 million, with no outstanding debt.

Revenue Mix (Source: Q2FY22 Results, September 01, 2021)

Key Risks: The manufacturing of CHPT's charging stations is reliant on a small number of suppliers. In addition, a single vendor supplies part of the company's goods and components. As a result, any breach of contract by this vendor might harm the company's operations. Furthermore, CHPT's income is focused on the infrastructure required to charge EVs, a highly competitive and rapidly shifting market. Accordingly, any significant technological developments in the industry or customer needs and the introduction of competitor goods with new capabilities or technologies might harm the company's operational performance in the future.

Outlook: CHPT indicated in its Q2FY22 press release that it expects USD 60-65 million revenues in Q3FY22 (ending October 31, 2021). In addition, it has raised its revenue forecast for FY22 (ending January 31, 2022) to USD 225-235 million.

Valuation Methodology: Price/Sales per share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CHPT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CHPT's stock price fell 40.79% in the past nine months and is currently leaning towards the lower band of its 52-week range of USD 11.11 to USD 49.48. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 45.21. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 26.11. Considering the significant correction in the stock price, strategic acquisitions, improvement in the top and bottom line, positive outlook, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 21.31, up 2.95% as of September 17, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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