Blink Charging (BLNK) stock had a great run on Tuesday with double digit rally, and ended up the trading day above $14.00. On the other side Daqo New Energy Corp (NYSE: DQ) shares flat-lined. But which stock is a better buy, DQ or BLNK?
While the spotlight is on EV and sustainable energy stocks, EV infrastructure and sustainable energy supplier stocks might present untapped opportunities. Blink charging is an EV charging infrastructure company, and Daqo New Energy is a producer of high-quality silicon, which is the biggest component required for solar panel manufacturing.
Blink Charging was founded in 2009 with the vision to help our transition to sustainable transport. The Miami-headquartered company has deployed over 23000 charging stations since its inception and also operates a cloud-based system allowing drivers/customers to easily find stations and book charging slots. As of 2020, Blink has over 15000 charging stations. The company went public in 2018 and raised $18.25 million via an IPO. The company currently has a market cap of $307 million.
Daqo New Energy Corp. is a China-headquartered company that produces monocrystalline silicon and polysilicon, which are critical components needed in solar panel production. The company was founded in 2008 and has a nameplate silicon production capacity of 70000 tons. The company operates a state-of-the-art production facility in Xinjiang, China. Daqo share prices tanked a mammoth 79% yesterday due to a sharp increase in its short interest. There has been no news coverage about any specific reasons causing the drop in the share price. The company recently cut its Q3 sales guidance due to a rise in silicon prices.
Blink Charging develops its own charging system and deploys them via different ownership structures. All charging systems are connected to the Blink network. Blink offers four different ownership structures, namely, Host Owned, Hybrid Owned, Blink Owned, and Blink as a Service. Under Host Owned, the host covers all expenses and receives all revenues. Under Hybrid Owned, Blink pays all expenses except installation and gets a cut of the revenues. Under Blink Owned, Blink bears all costs and receives all revenues.
Under Blink as a Service, Blink pays for equipment and maintenance while the host pays for electricity and installation under a revenue share model. Blink has attracted lots of commercial host customers as a charging station makes the host location a point-of-interest for EV owners and gives the host a chance to sell other services to customers while they wait for their car to charge.
Daqo is a leading high-purity polysilicon manufacturer based in China. The company produces polysilicon using the CVD(Chemical Vapor Deposition Process) and has developed a closed-loop system to produce polysilicon of high-quality consistently and in a cost-effective manner.
The company’s biggest customers are photovoltaic/solar manufacturers looking for high-quality silicon, who then process the silicon into wafers, cells, modules, etc. The company has a major competitive advantage over some competitors as the Xinjiang region, where the company’s production facilities are located, has much lower electricity and utility costs compared to other industrial and coastal areas, thus giving the company valuable cost-savings.
In Q3, Blink reported revenue of $900000, up 18% YoY, and product sales grew 74% QoQ to $0.6 million. Total revenues for the first three quarters of the year were $3.8 million, up 84% YoY. The company reported an 87% increase in wholly-owned locations. Net loss for the quarter was $3.9 million and cash on hand is $14.9 million.
In Q2’20, Daqo outperformed projections and turned a profit after it saw sales double year-on-year. The company reported a top-line of $133 million and a profit of $2.4 million. The company produced 18,097 tonnes and sold 18,881 tonnes in the quarter. The company has given Q3 sales guidance of 13,643 tonnes and 2020 full-year guidance of 70000-75000 tons. The gross margin for Q1 and Q2 was 37.4% and 20%, respectively. The company attributes the sharp fall in margins to disruptions caused by the pandemic. Daqo has a market cap of $607 million and a P/E of 10.44. Daqo is yet to put out Q3 numbers. Being domiciled in China, Daqo has a huge opportunity as China is expected to top 60GW in annual solar installations by 2025(2x 2019 installations), thus giving the company significant growth opportunities.
Although Blink Energy is reasonably placed for substantial growth due to an increase in EV penetration over the next few years, Daqo has shown a far better track record of scaling its business and profits. Also, the steep price drop in the DQ’s share price yesterday is a significant opportunity for investors who missed the stocks recent rally.