Q: NFI has announced a Recall against its battery supplier XALT and my guess is that resolution of this issue, which does not seem to have made the front pages(?), along with your own comments on Chinese competition might make a significant difference to NFI prospects. What do you think?
5i Research Answer:
NFI set aside a $229M provision for the issue, but on Dec. 16 signed a deal with XALT that will see it recover 75% to 80% of this. So, this is at least a somewhat positive resolution to a big problem. This was press-released but did not make a lot of news channels. After eight straight days of declines, the stock rose 12.5% yesterday. Based on consensus, EPS is expected to more than double in 2026. Debt is still very high, and it is a small, risky company that has experienced financial stress in past cycles, but if can execute on that expected growth we would expect investors to pay attention.