Electrical products distributor and services provider, IPD Group Ltd (ASX: IPG) was listed in December 2021 and is an ASX rarity: the company has seen sustained share price growth since its IPO despite the market turmoil of 2022, especially in small caps.
Last week our head of Australian Equities, Ron Shamgar held an investor briefing where he discussed IPD, below we share our write up and the video of his views on the business and its outlook over the next 12 months.
IPD Group operates in two primary business areas: the distribution of electrical products and the provision of electrical services. The Company serves as a distributor for electrical product manufacturers, typically based overseas, who want to distribute their products in Australia. This division is responsible for the majority of the Company’s revenue. Additionally, IPD Group offers a variety of services including installation and commissioning, calibration and testing, maintenance, repairs, and refurbishment. The services division contributes to approximately 10% of the company’s revenue.
While IPD Group’s business and share price performance has been stellar over the past 12 months, the company is still flying under the radar and is well positioned to benefit from structural tailwinds in years to come.
As the world continues to take steps towards reducing carbon emissions, one area of business that is expected to experience exponential growth is the electric vehicle (EV) market. As a vertically integrated provider of end-to-end solutions to the Australian EV market, IPD Group is in a prime position to take advantage of this trend.
While EV charging solutions currently account for a smaller part of IPD’s business, this is expected to change rapidly in the coming years. In April 2022, IPD Group acquired Gemtek Group, a turn-key energy management and EV solutions provider, to expand its offerings in the electric vehicle charging market. IPD Group also distributes ABB’s electric vehicle chargers, which positions the company as a leader in this space.
According to recent data, Australian EV sales almost doubled in 2022, with 3.8% of all new cars purchased being electric. As more consumers switch to electric vehicles, the demand for EV charging solutions is set to skyrocket. In 2022, there were 4,943 public chargers in Australia, but only 464 of these were fast chargers. This means that Australia needs approximately 20 times more public chargers in 2030 compared to today to meet the growing demand for EV charging infrastructure.
With its acquisition of Gemtek and its distribution of ABB’s electric vehicle chargers, IPD Group is well-positioned to take advantage of the growing demand for EV charging solutions. The company’s end-to-end solutions for EV charging will be critical to the success of the EV market in Australia. As more consumers make the switch to electric vehicles, IPD Group will play an important role in building the infrastructure needed to support this growing market.
While IPD Group may be seen as an unexciting industrial company by some investors, the reality is that it is exposed to a number of areas poised for growth. The company boasts a robust balance sheet, consistently generates profits and is paying out a reasonable dividend. We think IPD Group’s stable financial position and potential for growth make it a wise choice for those seeking a small cap with big potential.
