Luceco reports 11.9% revenue growth driven by EV charger demand

Revenue grew 11.9% y/y for 2025 while adjusted EPS rose 20%, with net income of £20.30m. EV charger sales surged 84.7%, driving revenue and profit growth; operating profit was £31.60m and pretax profit £24.70m, helped by China manufacturing efficiencies and early synergies from D‑Line and CMD acquisitions. Management expects adjusted operating profit to exceed £37m in 2026, a positive outlook likely to support a modestly positive stock reaction.

Analysis

This set of results is best read as proof-of-concept for a vertically integrated, scale-driven play in the EV charging supply chain rather than a one-off product-cycle uptick. With margin expansion driven by manufacturing efficiency and roll-up synergies, the structural lever is not just charger units sold but the operating leverage on fixed-cost manufacturing and aftermarket services (installation, software subscriptions, warranties) that convert mid-single-digit gross margin improvements into high-teens EBIT gains over 12–24 months.

Second-order winners include suppliers of high-current power electronics, grid-edge battery/storage vendors, and copper-intensive upstream miners; losers are smaller European OEMs without low-cost Asian manufacturing footprints or software-enabled service bundles. A sustained shift toward smart, networked chargers shifts economics from a low-margin hardware market toward recurring revenue SaaS/telemetry, increasing lifetime customer value by 2–3x if uptime and network effects are executed well.

Key risks that could reverse the move are rapid commoditization of smart features by OEMs (reducing ASPs), policy reversals in subsidy regimes within 6–18 months, and component/copper inflation that reclaims the margin delta. Monitor contract wins/losses with fast installers and announced capacity expansions in China; a single large distributor contract lost or a tariff shock could trim projected EBIT expansion by >300–500bps in a single reporting cycle.

Key Decisions for Investors

• Luceco (LSE: LUCE) – Buy 6–12 month core equity exposure (0.5–1.5% NAV). Thesis: capture continued margin expansion and roll-up synergies; target +25–35% total return in 12 months, stop -12% from entry. Size as conviction/earnings-release dependent.
• SMCI (SMCI) – Buy 9–15 month call spread (bullish skew to leverage) sized 0.5% NAV risk. Rationale: edge and cloud compute demand from smart-charging networks and fleet telematics should lift server spend; expect asymmetric payoff if enterprise charging deployments accelerate. Risk: semiconductor supply shocks and AI sentiment swings; target 3:1 reward:risk.
• Pair trade – Long CHPT (ChargePoint) / Short BLNK (Blink) over 6–18 months, equal notional. Rationale: prefer capitalized networks with deeper service offerings and balance sheets over smaller players likely to need dilution; anticipated spread capture 20–40% if execution clarifies. Risk: idiosyncratic EV adoption slowdowns and funding environment tightening.
• Copper exposure – Buy FCX 9–12 month call spread or allocate to physical copper (2–3% NAV directional). Rationale: incremental charger and grid upgrade buildouts are a durable demand kicker for copper; if adoption continues, expect 10–20% price tailwind to producers. Hedge with a 15–20% stop to limit drawdown from macro demand shocks.