Energy Absolute Public Company Limited (SET: EA) saw its share price drop to three-year low on Monday as talks in the market pointed out to the company failing to meet delivery targets for its electric vehicle sales, following the report by Bloomberg that indicated EA’s shortfall in cash flow.
Bloomberg reported last week that the aggressive expansion into electric vehicles and batteries has triggered concern about debt burdens, pointing out that EA’s share price tumbled more than 54% this year and is the worst performer among the 131 companies in the MSCI Southeast Asia Index.
Bloomberg stated that EA has spent billions to build new production facilities for batteries as well as electric buses, ferries and trains, which has been subsidized by the government to pursue clean energy and lower emission. Still, the investments and electric vehicle expansion have piled on debt and sales of products on credit.
After the report, talks were circulated around the market, raising concerns of lower-than-expected deliveries of EV from Nex Point Public Company Limited (SET: NEX), EA’s subsidiary, while Beyond Securities Public Company Limited (SET: BYD), as a EV bus operator, could not pay the bill to NEX. The market was also concerned about negative trade accounts receivable that showed a contraction of 690 million baht at the end of the second quarter, compared to 1.02 billion baht of gain at the end of the second quarter last year.
Mr. Amorn Sapthaweekul, Director of EA, told “Kaohoon” that low cash flow and negative trade accounts receivable were due to the company stocking EV and battery, which accounts around 3.5-4 billion baht when combined.
“EA originally is a power producer that does not need inventory for its product, but the company started to invest in EV heavily this year, and that comes with higher stocks for EV-related products,” Amorn told Kaohoon.
The director said that sales of EV and battery will start to flow and grow, while the company could retain its stock at the same level.
As for the deliveries that said the company only shipped 40 vehicles in the third quarter, the director testified as a false report. He pointed out that the company delivered more than 200 vehicles in the previous quarter, mostly tractors, not EV buses. The low number of around 40 units could be a registered number of buses, but is not related to EA and NEX as a producer and seller.
Mr. Amorn said that BYD is facing shortage of drivers, but that would resolve in the future and the company is receiving a full payment from BYD.
In addition, the director added that the third quarter results should be under FX pressure, which should cut EA’s profit in a small amount, while EV prices have been cut due to higher competition in the market. Still, Mr. Amorn reaffirmed that the 3Q23 results will remain strong.
The share price of EA closed at THB41.75 on Monday, dropping THB3.25 or 7.22% with a trading value of 1,803 million baht, the highest in two months.
