Kandi Says Sales Declined on Regulatory Changes, but Expects Turnaround Soon
The stock of the Chinese electric vehicle maker inched down 18 cents Thursday after the company posted a 40 percent decline in revenue.
The stock of Kandi Technologies Group Inc. (Nasdaq: KNDI) inched down 18 cents Thursday to $3.92 per American depositary share after the Chinese electric vehicle (EV) parts manufacturer posted a decline in revenue in the second quarter.
The firm said its revenue for the quarter ending June 30 fell 40 percent year-over-year to $16.4 million. Its biggest revenue driver - EV parts sales - decreased 41 percent to $15.5 million. Kandi said it sold $800,000 worth of off-road vehicles during the three months, 24 percent less than a year ago.
The company attributed the decrease in sales to policy changes in China.
"Due to the 2018 government subsidy policy adjustments in product structure requirements, the JV Company discontinued the manufacturing and selling of its EV products with a driving range of less than 200km and shifted its focus to the development of new EV models with a driving range exceeding 300km," said Xiaoming Hu, the company's founder, chairman and CEO.
Hu said he expects sales to recover soon since Beijing recently approved Kandi's K23, K27, and K28 models.
The company's joint venture with Geely Automobile Holdings Ltd., the Chinese automaker that owns Volvo, sold 1,802 products, generating $2.4 million for Kandi and offsetting the decline.
Kandi posted $1.4 million in net income for the quarter, or 3 cents per fully diluted share, up from an $11.6 million loss in the second quarter of 2017. Earnings were boosted by an increase in joint venture profits and a decrease in research and development spending.
Despite the Sino-U.S. trade war, Kandi has begun to expand into the U.S. market this year. In June, the company purchased a vehicle distributor located near Dallas and shipped three prototypes.
In an earnings call with analysts, Hu said that Kandi's electric SUV, the K28 (also known as the Geely EX-3), will cost around $20,000 in the U.S. after a $10,000 tax credit.
Kandi was founded in 2002 and is based in the city of Jinhua in Zhejiang province. The company went public on the Nasdaq in 2007 through a reverse merger. The company's stock has declined nearly 40 percent year-to-date.