Sevcon Inc. – Nasdaq: SEV
Early today, Sevcon, Inc. today reported that it has been contracted by a major manufacturer of electric vehicles for an on-road development & production program. This is Sevcon’s sixth major project in the development pipeline and almost doubles the company’s project backlog. Shares (Nasdaq: SEV) are up over 17%.
Sevcon is a global supplier of control and power solutions for zero-emission, electric and hybrid vehicles and had been working with the customer throughout 2016 to help optimize the drivetrain for the project. Start of production is expected to be in the fall of 2018. Over the initial three-year production period, revenues are likely to total in the range of $150 to $200 million. The agreement contains two near-term milestones, including the initial product sample and proof-of-concept in the current second quarter of fiscal 2017, and performance testing in the customer’s vehicle in the fourth quarter of fiscal 2017.
Sevcon has a presence in the USA, Europe, and Asia but derives most of its revenues from Europe and is based in the UK. Sevcon shares are listed on the Nasdaq and trade under ticker symbol SEV. SEV shares are very thinly traded. Prior to today the average daily volume did not exceed 9,000. However, by early afternoon trading today over 450,000 shares had traded hands and SEV has gained over 20% since Friday’s close.
Knowledgeable industry sources believe the counter-party to the agreement is the Zhejiang Geely Holding Group (Geely). Geely has been one of the China’s top 500 companies for ten consecutive years and has been ranked in the top 10 automobile manufacturers for eight consecutive years. They are most noted for their acquisition of Volvo in 2010. Additionally, they purchased Manganese Bronze Holdings PLC, the holding company of the company that manufactures the British Black Cabs. Geely also bought, in 2014, Emerald Automotive – a British electric car start-up manufacturer. The company boasts of over $23 billion in annual revenues.
Investors or traders should take note of the high level of institutional ownership of SEV – over 50%. Combined with the historically ultra-thin trading volumes, this is a stock that could present challenges if one wanted a quick exit while holding onto gains or minimizing losses.
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.
|Last Price a/o 2:03 PM EST||$ 16.51|
|Market Cap (mlns)||$ 47.69|
|Shares Outstanding (mlns)||3.53|
|Share Float (mlns)||3.45|
|Short Interest Ratio||0.56|