XL Fleet Corp – Having an industry leadership position for long-term growth.

XL Fleet Corp. (NYSE: XL) is a provider of vehicle electrification solutions to improve vehicle fuel economy. It serves commercial and municipal fleets in North America.

On 30 March 2021, XL expects to release its full-year financial results for FY20.

Investment Rationale – Speculative Buy at USD 11.17

• From a technical standpoint, 14-day RSI (19.58) indicates an oversold position, and thus, the stock price can go up in the short-term.
• The partnership with Curbtender will provide sustainable benefits of electrified vehicles and will open multiple new market opportunities for the Company.
• XL is trusted by over 200 fleet customers and over 130 million customer driven miles, reflecting market leadership position.
• XL has a capital-efficient operating model, which is ready to expand and drive profitability.

Risk Assessments

• XL is exposed to risk associated with early-stage and emerging growth entities.
• The Company is in losses currently and dependent upon external funding for pursuing growth opportunities.

Recent News

4 February 2021: XL partnered with Curbtender to jointly develop a series of battery electric and plug-in hybrid electric commercial trucks.

Financial Highlights for the quarter ended 30 September 2020 (as on 10 November 2020)

 (Source: Company Website)

• On 17 September 2020, Pivotal entered into the merger agreement with XL and MergerSub.
• On 16 July 2019, XL consummated an initial public offer of 23,000,000 Units and generated US$230,000,000 in gross proceeds.
• For Q3 FY20, the Company had a net loss of US$1,826,524, with an operating cost of US$1,871,654.
• For 9M FY20, the Company had a net loss of US$1,417,256, with operating costs of US$2,218,940.

One Year Share Price Chart    

   (Source: Refinitiv, chart created by Kalkine Group)

Valuation Methodology: EV/Sales Approach (NTM) (Illustrative)

Conclusion

XL does not have long-term debt or capital lease obligations, reflecting strong balance sheet position. Moreover, XL is a leading provider of vehicle electrification solution and serves big brands, including the Coca Cola Company, Yale University, Verizon, among others. Furthermore, the Group is experiencing a dramatic demand for sustainable solutions and it has a total addressable market of over USD1 Trillion in North America alone, which significant growth potential. Stock 52 week High and Low were USD 35.00 and USD 9.50, respectively.

 (Source: Company Presentation)

Based on the industry leadership position, recent growth and support from the valuation conducted above, we have given a “Speculative Buy” recommendation on XL Fleet Corp at the closing market price of USD 11.17 (as on 5 March 2021), with a lower double-digit upside potential based 76.21x EV/Sales (approx.) on FY21E Sales (approx.). 

*All forecasted figures and Peer Information have been taken from Refinitiv, Thomson Reuters.

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