FREE

Fireside Chat Highlights Product Traction and Optimistic Outlook for 2024

We recently hosted President and Chief Executive Officer Raymond Wang for a fireside chat, which included a discussion of the milestones reached in 2023, the strength of the core transmission business, and the improving outlook for 2024 in both the transmission and HEVI businesses. A replay of the event is available on-demand and the full transcript is included in this report. CEO’s conviction levels have “never been higher”. On the call, Wang stated that his conviction levels for the company’s outlook have never been higher. He pointed to the track record of profitability and the improving margin outlook for the transmission business as well as the recent traction and sales outlook for the company’s HEVI product line. We note that earlier this year, Wang made an open market purchase of ~$100,000 and owns approximately 3.3% of Greenland Technologies’ public float. Catalysts to watch for in 2024. The company expects to see further margin growth in 2024 on the back of a higher margin product mix and increased efficiencies in the transmission business. The HEVI product line is also expected to see meaningful product adoption in the mid-Atlantic region, and we look for announcements around the recently announced HEVI Energy division, which should help support the growth of HEVI and add incremental revenues. It was a year of milestones for the company. In the HEVI division, the company announced the first product win, expanded its demonstration programs with municipalities and national rental companies (including United Rentals), and launched HEVI Energy. The ongoing evolution of the transmission product line drove consolidated gross margins to record levels, with expectations of further growth in 2024. The company also saw cash balances grow to a record $24.3 million or about $1.75/share on the back of continued strong operating results. The strength of the transmission business is overlooked by many investors. Greenland is the leading supplier of transmissions and drivetrains for material handling equipment to global OEMs. Since its founding, the company has consistently invested in R&D and shown its ability to produce more complex and higher-value products. On the call, Wang highlighted the margin growth over the years as new innovative products enter the mix and is excited by the newest line of transmission products for battery powered forklifts, which should help drive margins higher in 2024. Strong cash balance gives a platform for growth and provides potential options to enhance shareholder value. Unrestricted cash at 3Q23 was $21.5 million (~$1.50/share), up from $15.2 million at 2Q23. We see the balance sheet strength and the profitable transmission business as important attributes for GTEC as the HEVI business begins to establish itself in the US construction equipment market.