Image source: Kandi Technologies Group.
Kandi Technologies Group (KNDI 0.99%) saw its second-quarter sales jump after it received certain tax exemption approvals for its electronic vehicles by the Chinese government, but subsidy delays could cause auto parts manufacturer to miss its full-year targets.
Kandi Technologies results: The raw numbers
| Metric |
Q2 2016 |
Q2 2015 |
Growth (YOY) |
|---|---|---|---|
|
Revenue |
$55.2 million |
$48 million |
15.1% |
|
Gross profit |
$8.5 million |
$6.5 million |
30.2% |
|
Net income |
$2.8 million |
$5.4 million |
(48.5%) |
Data source: Kandi Technologies Q2 2016 earnings press release.
What happened with Kandi Technologies this quarter?
Total revenue rose 15.1% year over year to $55.2 million, with electric vehicle (EV) parts sales up 15.4% to $53.8 million.
Kandi Electric Vehicles Group Co. -- a joint venture in which Kandi Technologies Group has a 50% stake -- sold 7,200 EV products in the second quarter, a 61.9% increase compared to the year-ago period.
"After more than three months of waiting, the JV Company finally obtained the approval for a purchase tax exemption for its 'Global Hawk' EV products and had a positive sales performance in May and June," said Chairman and CEO Xiaoming Hu in a press release.
Kandi's gross margin increased to 15.3% from 13.3% in Q2 2015. Operating margin, however, fell to negative 4.3% from 3.1% in the prior year quarter, as total operating expenses ballooned 140% to $10.8 million, with most of the increase coming from higher stock compensation expense.
All told, net income declined to $2.8 million from $5.4 million in the second quarter of 2015, and earnings per share fell 50% to $0.06.
"We have performed very well financially during the second quarter of 2016," added CFO Cheng Wang. "Our margin improved compared to the same quarter last year, and our non-GAAP net income reached $10.5 million, a 114.8% increase compared to $4.9 million in the same period of 2015."
Looking forward
Hu said during a conference call with analysts that delays in government subsidies could make it difficult for Kandi to hit its full-year guidance for sales of at least 35,000 electronic vehicle products in 2016:
We had thought that JV Company would receive the national government subsidy at the end of the second quarter, but this subsidy payment has been delayed. The delay in receiving central government subsidy caused a big challenge for JV Company to achieve the whole year product and sales plan, which may also impact Kandi EV parts sales in the year of 2016.
Still, Hu remains optimistic regarding the future of China's electronic vehicle market.
"Nevertheless, we are still very confident in EV market growth in China," said Hu.
