The firm’s investment thesis is driven by the following key factors:

1. Industry Leadership in the EV Charging Platform

NAAS is a leading electric vehicle (EV) charging platform in China, boasting a strong market presence in both network scale and user base. As of Q3 2024, the company had connected approximately 100,000 charging stations and 1.15 million chargers, accounting for 35% of the total public chargers in China. its platform served approximately 14 million transaction users, covering 50% of the country’s EV owners. In Q3 alone, NaaS facilitated 1.3 billion kWh of charging volume and 50 million transactions. With its robust supply and demand integration, uSMART Securities expects NaaS to further enhance network efficiency and maintain its market leadership.

2. Profitability Breakthrough through an Asset-Light Business Model

NAAS’s strategic focus on asset-light, platform-based business model is accelerating the path to profitability. In 2024, the company shifted its focus to platform-based charging interconnectivity services, leading in substantial margin growth. Gross profit margin surged from 19% in 4Q 2023 to 57% in 3Q 2024, while non-IFRS net profit margin improved dramatically from -525% to 46% over the same period. This accelerated NAAS’ path to profitability ahead of schedule. Looking ahead, as economies of scale continue to expand, NAAS is expected to further improve its financial performance, transitioning from a cash-burning startup into a fundamentally driven growth company.

3. AI- Driven Data Monetization Opportunities

NAAS is uniquely positioned to capitalize on data monetization in the AI era. With 35% of public chargers and 50% of EV users in China, the company has developed the NAAS Energy Fintech (NEF) system, leveraging proprietary AI algorithms to explore potential opportunities:

- Dynamic Pricing: Adjusts service fees in real-time based on demand and electricity prices, enhancing price elasticity and increasing customer retention.

- Intelligent Asset Management: Uses AI-driven site selection and real-time monitoring to improve charging station efficiency and utilization.

- Grid Load Balancing: Supports governments and regulators in peak shaving and demand response

With China's EV adoption accelerating into 2025, NAAS is poised to further explore commercialization opportunities in these areas.

4.  Attractive Valuation Amid Sustainable Profitability

NaaS presents a compelling valuation, particularly as it approaches full-year break-even in 2025. This shift in profitability allows for a transition in valuation methodology from a startup-focused P/S ratio to a broader mix of P/S, PEG, and P/E multiples. Based on projected 2025 revenue of RMB 229 million and a 1.4x P/S ratio aligned with US-listed peer companies, uSMART Securities gives NAAS a “Buy” with a target price of US$3.20 per ADS.