Another HEVI Product Win; Planned Corporate Spin-Off Looks to Unlock Value
HEVI to be a standalone pure-play industrial EV company. The company announced plans to spin off its drivetrain systems business into a separate, independently managed, and publicly traded company on the OTC market. Shareholders will receive shares in the new drivetrain company (expected to be tax-free), leaving Greenland Technologies to focus on the industrial EV market through its HEVI brand. Spin-off will allow investors to value each business independently. Based on consensus, the current combined company trades at a P/E of ~10.8x 2024E, 9.3x 2023E, and 7.3x 2022A, below standalone manufacturing comparables as well as standalone EV companies. We expect the separation of the businesses will also attract a wider range of investors and isolate concerns around geopolitical risks/markets in China from the traction that HEVI is gaining in the US market. Significant HEVI product award from a new customer. East Energy, a developer and operator of multiple renewable energy and waste projects, announced it will purchase a total of three HEVI electric-powered units for two of its subsidiaries, Carolina Poultry Power RG2, LLC and Carolina Poultry Power RG3, LLC. The companies will receive two GEL-5000s and one GEL-1800 all-electric loaders, with delivery scheduled for later this year. We expect that the successful deployment of the HEVI product could lead to additional awards from East Energy as well as other renewable project developers and operators. The units will be assembled in the recently opened 54,000-square-foot assembly facility in Baltimore, Maryland. Momentum building in the HEVI business. This win is the largest to date and follows the Port of Baltimore win in the fall of 2023 and the announcement of three established companies signing on as authorized service providers who can support the HEVI product. We see the commitments of well-known companies to deploy HEVI products, along with the growing support network, as making it easier for smaller and more risk-averse companies and municipalities to go with HEVI’s ell-electric products. Moreover, it shows the success of the company’s demonstration program strategy as both of the HEVI wins came from onsite demonstrations. The pace of HEVI demonstrations has been accelerating. The company added another five demo units in 2023 to reach more potential customer sites and it continues to work with United Rentals on a pilot project signed in 2023. The company is also working to develop additional pilot programs with other national rental companies and major municipalities.
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