Luceco reports 11.9% revenue growth driven by EV charger demand

Luceco reported 11.9% y/y revenue growth for 2025 and adjusted EPS up 20% y/y, with net income of £20.3m, operating profit £31.6m and pretax profit £24.7m. EV charger sales surged 84.7%, identified as the primary driver of revenue and profit, while improved manufacturing efficiency (notably in China) widened margins. The D-Line and CMD acquisitions contributed to revenue growth and early synergies. Management expects adjusted operating profit to exceed £37m in 2026, signaling continued profitable growth.

Analysis

Luceco’s operational setup—asset-light product engineering paired with in-house China manufacturing—creates a structural edge versus peers that outsource critical power-electronics assembly. Second-order beneficiaries include SiC/IGBT component suppliers and contract manufacturers that can scale with rising charger unit volumes; conversely, network-focused charging operators and low-margin importers are exposed to margin compression as hardware commoditizes.

Near-term catalysts to watch are order-backlog composition (fleet vs residential), gross-margin cadence by factory, and concrete cadence on cross-sell/aftermarket services from the recent acquisitions; these will resolve within the next 3–12 months and determine whether current momentum is operationally durable. Key tail risks that could reverse the trend include abrupt subsidy rollbacks in core markets, a China export/tariff shock, or a sustained raw-material spike (copper/steel/semiconductors) that erodes the manufacturing advantage.

Tactically, the most attractive trade is a calibrated long in Luceco to capture margin normalisation and acquisition synergies, paired against short exposure to capital-light charging-network peers whose valuations assume rapid gross-margin improvement. Options can be used to skew upside while capping downside if you believe the market will re-rate on follow-through guidance and order wins within 6–18 months.

The consensus narrative focuses on volume growth but underweights the durability of margin expansion and the risk of pricing competition as more low-cost entrants scale. If Luceco converts a larger share of revenue to recurring aftermarket and service margins, upside is underappreciated; if not, expect meaningful re-rating once raw-volume comps ease and buyers shift to lowest-cost hardware providers.

Key Decisions for Investors

• Long LUCEL (initiate 1–2% NAV position, add to 3% on confirmation of sequential margin expansion): target 12-month return +35% vs downside protected by a 20% stop-loss; thesis: capture execution of manufacturing leverage and M&A synergies.
• Pair trade — Long LUCEL / Short CHPT or BLNK (equal notional, 6–12 month horizon): expect LUCEL to outperform charging-network peers as hardware margins expand; risk/reward ~2:1 if LUCEL sustains margin expansion and network ops continue to burn cash.
• Long-dated call spread on LUCEL (buy 12–18 month LEAP call, sell a higher strike 24-month call to fund): limited cash outlay, asymmetric upside to capture re-rating on service mix improvement; use if conviction in 6–18 month operational proof points.
• Short pure-play charging operators (BLNK, CHPT) sized 0.5–1% NAV each (3–6 month tactical): short into any rally absent margin-accretive manufacturing partnerships; stop if they announce meaningful vertical integration or margin-guaranteeing contracts.
• Long selective component suppliers (WOLF, STM, ABB) 3–6 month trade (0.5–1% NAV): buy exposure to higher content per charger and secure-supply OEM wins; expect 15–25% upside if Luceco and peers accelerate procurement of SiC/IGBT components.