Ideanomics Inc. - Analyst Report -Target $1.82

▪ Strong industry partnerships: IDEX has strategic partnership agreements with leading Chinese fleet operators such as iUnicorn, Yunnan Energy Investment Group, Golden Concord (GCL Group), Jiangsu Linghao Network Technology Co., Sichuan Shenwu Yunli Transportation Services Co., and Beijing Silk Road Rainbow Car Rental Group Co. These agreements provide IDEX a presence across key EV hubs in China and are the source of its ~$2 billion order pipeline. The company has also partnered with leading EV manufacturers and financing solutions providers to enable smooth order fulfilment, and with PetroChina to provide energy solutions to fleet operators. These partnerships strengthen IDEX’s execution capabilities and establish its presence across multiple segments, a key competitive advantage.


▪ Scale: IDEX has started operations in select provinces in China including Chengdu, Yunnan, Guanxi etc. This still leaves it with significant room for expansion within China. The company has also established its presence in Malaysia and has plans to gradually expand to other ASEAN markets and countries around the globe to set up the first-of-its kind financing and sourcing platform for commercial EVs.


▪ Strong fundamentals and cheap valuation make a compelling investment case. We expect IDEX’s topline to climb from $39 million in CY20 (back-half ended) to $89 million in CY22. Gross margin will remain stable around ~95% while EBITDA margin is likely to expand from ~23% in CY20 to ~32% in CY22 as the company benefits from economies of scale. More importantly, IDEX will generate positive FCF starting this year and its RoE will reach 28% by CY22. We model CY22 EPS of $0.12 and apply a conservative 15x PE multiple to arrive at an intrinsic value of $1.82/share.


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The value of replacing the BXGI fleet will reach the equivalent of several billion dollars in local currency over the five-year period. To finance this purchase, BXGI has secured between RMB 800 million and 1 billion (USD 113 million and 140 million). Working with its consortium of financial partners, MEG will assist BXGI with securing the balance of the financing. The fund is expected to close in the third quarter and proceeds will be used to purchase electric buses, MEG will also secure financing partners to underwrite the lease financing and any back-end ABS refinancing programs, in addition to vehicle procurement services. This agreement involves various divisions within MEG's comprehensive EV solutions and leverages all of its S2F2C model – vehicle procurement, financial services, and energy sales. MEG will receive group buying fees on vehicle procurement and origination fees related to the placement of lease financing, in addition to a portion of energy sales from BXGI's electric fleet.

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