Profitably adaptation into EV market proves lucrative for electronics company

The electric vehicle (EV) revolution is dependent on many different moving parts, and an ASX-listed company that manufactures highly efficient energy conversion products is capitalising on this movement.

Rectifier Technologies Ltd (ASX: RFT) has been a key contributor to the power electronics industry since 1992, and have since refined their product offering with new developments that have allowed it to penetrate the rapidly growing market for energy transition technologies. Their routes trace back to telecommunications, but now are predominantly built on EV charging stations.

Rectifier noted that they had experienced remarkable growth from FY22 to FY23, boosting revenue 144.2% to $39.81 million from $16.3 million. This was combined with a robust growth in earnings, which increased 1,212.5% to $6.46 million from $492,000.

The company is carefully scaling up manufacturing capacity in line with their increasing order volumes, and planned to take their 140 staff members up to 205 members during FY23.

Luke Winchester has owned RFT through various different investment vehicles since 2014, and it is now also a holding in his fund, Merewhether Capital. Their core business, now being rectifiers in electric vehicle chargers, was not the company’s focus a decade ago, nor was it initially in Luke’s investment case for the company. However, management has clearly demonstrated their ability to adapt to industry developments with much needed technologies, and then scale their entry into the market profitably, which is something that many ASX-listed small cap companies struggle to do.

The company designed and manufacturers the RT22, a 50kW rectifier designed for EV’s that is more efficient and compact than its peers. It also reduces the overall deployment cost of high powered DC fast chargers, which is crucial to the uptake of EVs and prices the technology at a point which is suitable for public infrastructure – which is expected to constitute a large percentage of EV charging infrastructure. Unlike AC chargers, DC charges perform their power conversion within the charger, which allows their compact nature.

EV chargers are constantly developing to achieve greater efficiency, and every percentage point of greater charging productivity means a world of difference. DC chargers are modular, so they can be stacked for more charging power.

Rectifiers larger than ever order book and chunky contracts with reputable customers is something that excites Luke. He cited RFT’s $28 million with Tritium and their $32 million contract with i-charging as the mechanisms that underpin revenue growth leading into FY24. Future growth into more powerful fast chargers that are needed for trucks, buses and other heavy vehicles is something that RFT is also continuously working on with industry peers through collaborative sector bodies.

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