KEBO Power supply 2019: becoming a smart energy company

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SolarEdge Technologies (SEDG)Another impressive quarter was reported, with strong growth in all regions and products, gross margin expansion and operating leverage. The company reported that in the second quarter, SolarEdge led revenue to a year-on-year increase of 65% and gross profit margin in the usual target range of 36% to 38%. In addition, the company announced an asset purchase agreement with Gamatronic Electronics Industry Co. , Ltd. An Israeli company that develops, manufactures and sells uninterrupted <a href="https://www.kebopower.com/relay-vs-sparks" target="_blank">power</a> supplies (UPS)When the input power supply fails, the electrical equipment that provides the emergency power supply for the electrical appliance. It is very convincing that since the beginning of this year, SolarEdge has begun to describe itself as a \"global leader in smart energy\" rather than a \"global leader in photovoltaic inverters, power optimizers, and modules-Its traditional bread \"level monitoring service\"and-Butter businessIn the press release announcing the purchase agreement, SolarEdge again used the \"smart energy\" language. In the following content, we analyzed the financial situation of Gamatronic, the comments on the acquisition and the diversified initiatives of other recent companies to stay away from the solar inverter business, and updated our valuation and marketReminder: SolarEdge has been the core holder of the IW portfolio since August 2015. In February 2018, we presented a long-term case to the investment community. In the three months since then, the stock has appreciated by more than 30%. Before proceeding, we invite investors to familiarize themselves with our long term paper as we will update later on the valuation concepts and models introduced at that time. Gamatonic UPS product line (Source: Fox Temple University)Gamatronic, headquartered in the Har HaHotzvim industrial zone in Jerusalem, was established in 1970 and began trading on the Tel Aviv Stock Exchange in 1994 with the stock code GAMT. Today, the company sells products in the United States, China, Europe, South Africa and Latin America, but the sales channels seem to be too scattered, and operating expenses have exceeded Gross profit every year in the past two years. Gamatronic reported net income in 2017-6. 3 million NIS (-$1. 8 million)Income is 65. 7 million NIS ($18. 4 million). 2017 of revenue fell by 13% year on year, but gross profit margin increased significantly from 28. 1% in 2016 to 36. 2%, the operating loss in 2017 was 9. 3 million NIS ($2. 6 million)in 2016 to 4. 5 million NIS ($1. 3 million)In 2017, the cash flow from operations was close to a breakthrougheven. Gamatonic IFRS finance (source: TASE)At the earnings call, SolarEdge CEO Guy Sella accused Gamatronic of lacking profitability in sales and marketing (S&M)The diagnosis was confirmed by the financial statements, which were inefficient. Gamatronic 2017 gross profit margin 36. 2% 36-of SolarEdge-The target range of the solar inverter business is 38%, but operating expenses account for 40% of revenue in 2016 and 43% in 2017. SolarEdge purchased all of Gamatronic\'s assets for $11, including intellectual property, brand and tangible assets. 5 million, two more-In each year after the closure, the year earned reserves of 50% and 33% of the net income of the business. We do not believe that this revenue will exceed $500, bringing the total acquisition price to about $12 million. SolarEdge paid 0 for $12 million. Sales of 65 × 2017 and 0. 5x shareholder equity, which is a very attractive price if SolarEdge is able to control operating expenses and restore the business to profitability, if SolarEdge ultimately grows the new business unit to a meaningful share of $7, this is an absolute deal. There are 7 billion UPS businesses worldwide. Although in the current size, Gamatronic is just a drop of SolarEdge (Initial contribution to a total income of less than 3%)We see the announcement as proof of management discipline and value. Conscious approach to capital allocation. SolarEdge bought another Israeli company in the neighboring field at a discounted price, which has a considerable TAM, which limits downside space while providing ample room for appreciation. (The core of the UPS system is an inverter that converts the DC power supply from the battery to the AC power supply of the appliance)SolarEdge has proven to be able to add value quickly since its inceptionOrganic growth. Now, the company has the opportunity to demonstrate its ability to integrate and reverse acquisitions. If successful, the business will become a blueprint for future acquisitions that will help accelerate shareholder value creation. The agreement is subject to custom closing conditions and is expected to end at 2018 at the end of the second quarter. During the earnings call, management provided guidance for the marginal positive EPS contribution for the full year of 2018, as SolarEdge cut back on excess costs, including compliance costs associated with listed companies. One of the top priorities will be to invest in sales and marketing to take advantage of what SolarEdge sees as a powerful product and restore growth to the sector. SolarEdge is expected to launch a new generation with HD in 18 to 24 months-Wave topology and CEO Guy Serra saw hundreds of millions of dollars in UPS revenue in about three years. Management pointed out that the UPS market is not as competitive as the solar inverter market and expects the new topology, as well as the superior operation of economies of scale and SolarEdge, will result in a gross profit margin greater than the core solar inverter unit, while operating expenses as a small part of revenue should be consistent with income from other business units. The acquisition of Gamatronic\'s assets will serve as the basis for the new business unit and can be seen as the third in a series of latest announcements by SolarEdge to expand beyond the solar electronics market. On July 2017, SolarEdge announced the first photovoltaic inverterElectric car charger. Last week, it announced a power grid service and a virtual power plant (VPP)Provide differentiated solutions for products and lay the first cornerstone of becoming a high-end productMargin recurring business. In our previous article on SolarEdge, we evaluated the company with the value of profitability (EPV)According to a first-quarter earnings report of 2018, shares traded at $60/share prices, well above $45 after the 2017 results in the fourth quarter. At the same time, several factors have increased our estimate of EPV: Our revised estimate of profitability is $2. 83/share. Using a 8% discount rate, the value of the revenue capacity is $35. 4/share, before accounting for $8/share of distributable cash. Therefore, the EPV of shareholders, including excess cash, is $43. 4/share. So at $60/share prices, today\'s stock trading is 38% more premium than the conservative EPV. This makes the stock a little more expensive than in February (When the premium is 27%)But it is not expensive because the growth prospects are accelerating. As our users know, we recently added Alphabet (GOOG)(GOOGL)Enter the IW portfolio for about $1,000/share (The original long paper here)And estimate the power yield of its forward return, or zero-The p/e ratio increased by 2018, reaching the market price of about 5. 5%. Given Google\'s growth prospects for middle to high teens in the high ROC, we \'ve pushed this forward further. The opportunity cost of technology investment or Google\'s barrier, the yield is 5%. More specifically, we believe that for technology investments with similar growth prospects like Google, attractive in today\'s market should provide at least £ 5. 5% + yield on revenue. SolarEdge $60 per share, $52 per sharecash. Our revised profitability is $2. 83/share is based on a 2018 yield and operating margin for the first quarter. To compare with Google\'s barriers, we need to estimate the next 12-month figure. Use a conservative multiple of 1. 3x (30% growth)Raise profitability to $3. 68/share, the yield on forward return power is 7% (3. 68/52). That number is 250 basis points higher than Google\'s barrier. On the other hand, SolarEdge\'s growth prospects, while considerable, are far less than Alphabet. Its competitive position is more fragile. To sum up, the margin of 250 basis points seems to be fair, and we reiterate our positive view of SolarEdge shares while acknowledging that the security margin has declined from 3 months ago. We advise investors to maintain long positions. To learn about future research and stock selection first, Click follow on the right side of our logo \". We will update our paper after the second quarter earnings call in June. In the meantime, we will continue to publish research on potential stock selection and other positions in our portfolio. Disclosure: I am/We are SEDG, GOOGL. This article was written by myself and expressed my views. I was not compensated. I have no business relationship with any stock company mentioned in this article.

KEBO Power supply 2019: becoming a smart energy company

1 KEBO Power supply 2019: becoming a smart energy company Wed Nov 06, 2019 9:11 am

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