HoonSmart.com >> Who made the accurate prediction? 'Nex Point' (NEX) falls 65% in May 1-23, major shareholder forced to sell Analysts cut earnings forecast Thanchart Securities sharply lowered the appropriate price to 4.50 baht from the original price of 15 baht. Bualuang Securities lowered its core profit target for 2024 with an elevator from 1,367 million baht to 703 million baht. In contrast, Beyond Securities maintained its appropriate value of 17.8 baht, forecasting profits of up to 1.355 million baht. Recently, Next signed a memorandum of understanding with DAYUN to produce and distribute Small SUVs in Thailand only.
On May 23, 2024, NEX stock price continued to decline during the day, reaching a low of 2.86 baht before rising to close at 3.16 baht, down 0.90 baht or -22.17% with a heavy trading value of 1,934.04 million baht since inception. In May (1-23), the price fell sharply by 65.27% or 5.94 baht per share from the level of 9.10 baht at the end of April 2024. As a result, large shareholders who used it as collateral to apply for a loan to purchase shares (margin) were forced to sell (forced selling), including analysts who were forced to lower their earnings estimates and price targets.
Thanchart Securities lowered its recommendation on NEX shares from “buy” to “hold” and lowered its earnings forecasts by 38%, 58% and 60% over the period 2024-2026, along with lowering its price target to 4.50 baht from the previous baht.
The reason is disappointing net profit in the first quarter of 2024 and also starting to see continued increased uncertainty. From customers not within the company's group After the majority of sales in 2023 will come from bus services operated by companies in the group and including the decline in demand for commercial electric vehicles (CEV) in the market, sales assumptions have been reduced to 2,000 units per year in 2024-2026 From original estimates of 3,000 units, 4,000 units, and 4,500 units, industry price competition risks arising from a downward trend in EV prices worldwide. This could impact NEX's profit margin and accounts receivable, which rose to 5,600 million baht in the first quarter from 2,200 million baht in the previous quarter. This indicates that the majority of sales at the beginning of the year were not paid in full.
However, the share price fell to 12 times P/E in 2024, reflecting Thanchart Securities' new growth estimates.
“NEX's stock price fluctuated significantly after the first quarter earnings announcement when referring to information from the SEC. At the end of March and 2024, the concentration of shares in the margin account was high at 401 million shares, or 19.8% of the total Number of shares This makes one wonder if they are forced to sell the shares used as security. This may be the main reason why the stock price has declined sharply although the price has recovered somewhat but we see that the high concentration ratio still poses a volatility risk Sharp prices in the future.
Beyond Securities, a company in the NEX Group, maintains a Buy recommendation with a fundamental value of 17.8 baht and believes NEX is very interesting. Based on 1) trading at 6.1x P/E estimates for the year, compared to 20-30x comparable global interest rate averages, 2) sequentially stronger quarterly net profit trend from 49 million baht in Q1 2024 to 100 million baht in the second quarter, 600 million baht in the third quarter, and 700 million baht in the fourth quarter, based on orders for safe electric vehicle deliveries in the following quarter and 3) growth trends regarding the sale of long-term guaranteed electric vehicle production to Absolute Assembly (AAB), It is a manufacturing facility owned by NEX (40%) and EA (60%).
“Waiting for a long-term sale agreement to end the low stock price. After the stock price surged last week, NEX stock price fell again today significantly. With investors so concerned about the doomed EV earnings growth outlook, we believe investors will need to be patient for NEX to maintain its stable sales promise in the short and long term. So that investors can regain confidence in earnings growth again.
From fox hunting to hibernation sales strategy, starting from June 24, NEX is expected to change its production and sales strategy to focus on medium- and large-margin “demand” outperforming high-margin and low-volume self-driving electric vehicle sales. In June and July Total orders for safe commercial electric vehicles coming in will range from 3,000 to 5,000 units this year, with annual orders of 40,000-60,000 Orders will be based on 5-10 year contracts.
NEX's 2023-1/24 net profit stumble was due to disruptions in production (through NEX's 40%-owned AAB plant), marketing (more than 1,000 e-buses delayed) and sales. New electric vehicle orders delayed) However, NEX's strategy is taking a complete turn. By changing the direction by cooperating with many partners in 2024, including 1. On February 24, an electronic truck was delivered to Amphon Food. 2. Last March, tractors were sold to PTTGC subsidiary GC Marketing & Procurement. 3. In April – the end of the year, a 423 kWh electric tractor was delivered to Montri Transport. It is a major logistics subcontractor to Tipco Asphalt (TASCO). In addition to the sales agreement, NEX also signed a long-term development contract with Toyota Tsusho-Denso to develop Thailand's first hydrogen car
So far, the Authority has succeeded in repurchasing 26,277,700 shares, representing 1.3% of the total shares. With a total value of 252.08 million baht, which does not exceed the original maximum limit of NEX's share buyback budget announced on November 10, 2024.
Bualuang Securities expects NEX shares to trade at a 2024 P/E of 25.2 times, noting that Thailand's shift to commercial electric vehicles remains an important trend. But we need to wait for more information about NEX's growth prospects before revising our guidance and price target. After the first quarter, first-quarter net profit was lower than expected at 184 million baht, mainly due to lower than expected gross profit margin and related companies reporting losses. Expect a small profit share in the second quarter
There is also some uncertainty regarding the delivery of EV buses to Thai Smile. It cut its assumptions for electric vehicle deliveries this year to just 3,000 units, split into 800 electric pickups, 2,200 minivans and tractors (trucks), lowering its headline-year earnings forecast. In 2024, it decreased significantly from 1,367 million baht to 703 million baht.
Mr. Kanis Srivajiraprabha, CEO of Next Point, revealed that the company has signed a Memorandum of Understanding (MOU) to invest in setting up a Mini Electric Vehicle or Mini SUV assembly line for DAYUN only in Thailand. Ready to open to dealers to market and sell additional DAYUN vehicles. The Mini SUV has a compact exterior design. But the interior is spacious and there are modern facilities. It also has an independent suspension system with four-wheel springs for increased traction on the road. The launch price is expected to be less than 490,000 baht to penetrate the market of students and full-time employees.
DAYUN Group is a Chinese company. Which mainly focuses on the production and assembly of commercial vehicles and has begun to produce small electric vehicles. Soft Price, which can sell more than 20,000 cars, currently has a registered capital of more than 5,000 million baht. This collaboration will mainly focus on the production and assembly of small SUVs, with the aim of finally focusing on the ECO CAR range in Thailand. There are approximately 100,000 registered vehicles.
“NEX is a leader in the commercial electric vehicle market. We have expertise in both batteries and maintenance. This initiative to enter the economic small electric vehicle market together with DAYUN will help expand the group's electric vehicle production base. Including penetrating new markets to strengthen the corporate group. It helps Thailand enter the green society faster. Currently, the company has already imported prototype cars to test run in Thailand and is expected to be imported for distribution during the third quarter of this year and will continue to expand production in Thailand This includes bringing in other models of electric cars to strengthen the team in the future.”
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