TPI Composites: High Potential Return Undermined By Multiple Risks

Summary

• TPI Composites faces revenue contraction and liquidity challenges due to regulatory uncertainty and macroeconomic pressures, but management projects improvement starting in H2 FY24 and FY25.
• The company’s restructuring aims to enhance production quality and efficiency, targeting a 90% utilization rate and $100m adjusted EBITDA in FY25.
• High revenue concentration and competition from Chinese manufacturers pose significant risks, potentially impacting TPIC’s financial stability and market share.
• Despite potential for a 30% return, I assign a “hold” rating due to financial instability and competitive pressures, awaiting clearer evidence of recovery.

Westersoe

TPI Composites (NASDAQ:TPIC) is among the leading global manufacturers of wind blades, with an output of 2584 blade sets in FY23. The uncertain regulatory framework and a macroeconomic environment characterized by inflation and high-interest rates resulted in a slowdown

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.