NaaS Accelerates Ahead With Focus On EV Infrastructure Operators

NaaS Technology Inc. NAAS, the first U.S.-listed EV charging service company in China, has demonstrated remarkable growth and operational efficiency in its recent performance. In January, Naas has revised its revenue guidance for the full year of 2023 to be in the range of RMB310 million (US$44 million) to RMB330 million (US$46 million), indicating a year-over-year growth of 234% to 256%.

Market Expansion and Strategic Focus

As of September 30, 2023, NaaS had successfully connected 767,611 chargers spanning 73,710 charging stations. This significant achievement represents a substantial 41.6% and 50.0% share of China’s public charging market for chargers and charging stations, respectively. 

The company is growing rapidly. Its revenue surged by over 500% in the third quarter last year, driven by its energy solutions business. This segment, which often involves infrastructure design and operations for business clients such as charging stations, surpassed the charging services business to become a primary revenue driver.

Right now, NaaS offers comprehensive solutions to energy asset owners. These solutions encompass charging services, energy solutions, and innovative initiatives, supporting every phase of an energy asset’s lifecycle and facilitating the ongoing energy transition.

NaaS, backed by U.S. private equity giant Bain Capital, made an even more remarkable announcement with its 2024 forecast. The company expects its revenue to increase up to six-fold next year, signaling strong confidence in its growth trajectory.

The driving force behind NaaS’ success is the vibrant Chinese EV market, which boasted 18 million new energy vehicles (NEVs) on its roads as of September. This information, shared by a member of the Chinese Academy of Engineering at an industry event, demonstrates the market’s robustness.

To support these NEVs, China maintains a network of approximately 150,000 charging stations, with NaaS serving about half of them, as reported by industry data from CIC. This significant market share highlights NaaS pivotal role in the rapidly expanding EV ecosystem in China.

As mentioned earlier, over the years, NaaS has strategically shifted its focus from charging services to energy solutions, particularly targeting infrastructure operators. This transition is evident in its revenue mix, with the energy solutions business experiencing substantial growth compared to the charging services segment.

According to its earnings report, NaaS's energy solutions revenues increased from RMB0.3 million year over year to RMB138.8 million (US$19.0 million) in the third quarter of 2023. The increase was primarily driven by revenues from the ongoing delivery of energy solution projects to provide renewable energy generation, energy management and storage solutions.

Moreover, the company’s expansion outside Mainland China is also gaining traction, with nearly a third of its revenue already coming from international markets. The recent acquisition of Sinopower Hong Kong further strengthens NaaS capabilities in new energy and charging services.

Financial Performance and Valuation

NaaS stock performance has shown promise, with a price-to-sales (P/S) ratio dropping to 2.4 using the midpoint of its sales forecast for 2024. This compares favorably to industry counterparts like Tesla (P/S ratio of 8) and Charge Point (P/S ratio of 1.6).

The company’s gross profit margin improved to 27.4% in the third quarter of 2023 from 6.1% the previous year, showcasing enhanced operational efficiency. Despite a non-IFRS loss, NaaS net margin has improved significantly.

Future Outlook and Investment Considerations

With its positive NTR, revised revenue guidance, strong growth trajectory, strategic acquisitions, and focus on operational excellence, NaaS is a company to look out for those in the rapidly growing EV industry, particularly in China and international markets. The company’s expansion into energy solutions and international markets diversifies its revenue streams and positions it as a key player in the EV charging sector.

This post was authored by an external contributor and does not represent Benzinga’s opinions and has not been edited for content. This contains sponsored content and is for informational purposes only and not intended to be investing advice.