VMT (ASX) Ann: FY18 Earnings Guidance Update

Originally posted by Inchiquin: ↑

I think Kitty makes a good point regarding the oil price.

If you look over the quarterly sales reports of this company over the years, it does seem that there is at least a loose relationship between sales performance of the company and fluctuations in the oil price, and as such my enthusiasm for this company tempers a little when the oil price dips.

Considering the the performance limitations of the TC and TS models, with speed capped at 45 kph, it is in some ways surprising that the company sales were so strong in 2018. Reading between the lines in the announcements last year, it would seem that these two models made up the lion's share of sales over the past year.

The subsidies for electric motorcycles in some countries might have lent a hand in bolstering sales, but surely the elevated oil price over the first three-quarters of 2018 would have been the primary factor behind the solid sales growth.

For people who rely on a motorcycle for work, such as the ubiquitous food delivery drivers, the cost savings of an electric motorcycle compared to the petrol alternative effectively translates to more money in pocket at the end of each week, and so for many prospective customers, favourable comparative economics would surely override concerns about the speed limitations.

The same logic would suggest that the recent drop in petrol prices might have an adverse flow on impact on the number of units shifted by the company over recent months.

Having said that, one positive that I wouldn't overlook is that the new Super Soco TC Max model seems to be getting very positive reviews on numerous industry websites: just this morning, I noticed new reviews of the TC Max on the Italian website Moto.IT and on a French Motorcycle site. It seems that the Harley Davidson electric motorcycle, the Livewire, is a frequent point of comparison. Worth bearing in mind that Harley Davidson is a multi-billion dollar company.

Interestingly, the French website notes that the distribution network is projected to grow from 94 points of sale in 2018 to 200 by the end of 2019, which would seem to support the comments from Charles Chen in that video that was posted here earlier.

There doesn't appear to be anything on the TC Max on the company website at current, however I am assuming that Vmoto also has distribution rights for the TC Max model, as it was mentioned in the May 2018 Presentation (pg 12). Interestingly, as with the CU, they seem to be a little behind schedule with the release of the TC Max, and the graphic in that announcement suggested that it was set to be released at the end of 2018, but reports on various websites state it will not be ready for sale for a few months more.

All things considered, the indications are that the next sales update is likely to disappoint, although I think things will improve in time.

My long-term optimism is grounded on two key assumptions: Firstly, the new models, the TC Max and Super Soco CU, are likely to prove to be more popular than the previous models, TC and TS models, due to improved performance (in the case of the TC Max) and, in the case of the CU model, due to the low price and the design.

Secondly, my feeling is that the oil price should improve before long: given the poor oil supply-side outlook, I don't think the current oil price slump will last as long as the previous one.

When these two ducks are both in line, I think that should set the company in train for a rebound in both sales and share price.

Expand

Come April we are no longer only in the cheap 45 Klm / hour product range.

For those not watching closely we sold 5000 units in the first half at an average wholesale price of $1,723 and 15.7% ( $271/unit) GP margin.

Super Soco TC-Max 125.
100 Klm/hr
€4599 ( $7,400 ) Wholesale maybe $5000??? (Listed new car dealers seem to have a GP margin around 20% to 25% )
Won't have to sell to many TC-max 125 to fly past positive EBITDA to NPAT
The TC max is a new product point not a substitution so should add not replace sales.
Forecast to have 200 points of sale vs 94. What should that do to sales volumes???
There's a good chance that Niels clouds might be blown away.

No.	Vol.	Price($)
2	3923	11.0¢

No.

Vol.

Price($)

3923

11.0¢

Price($)	Vol.	No.
12.0¢	256575	6

Price($)

Vol.

No.

12.0¢

256575

No.	Vol.	Price($)
2	115000	0.072
1	50000	0.071
2	60000	0.070
1	15509	0.069
1	145671	0.067

No.

Vol.

Price($)

115000

0.072

50000

0.071

60000

0.070

15509

0.069

145671

0.067

Price($)	Vol.	No.
0.076	80000	1
0.077	57665	1
0.078	38280	2
0.079	100000	1
0.080	219315	2

Price($)

Vol.

No.

0.076

80000

0.077

57665

0.078

38280

0.079

100000

0.080

219315

(20min delay)
Last 12.0¢		Change 0.005(4.35%)		Mkt cap ! $50.18M

Open	High	Low	Value	Volume
11.0¢	12.0¢	11.0¢	$9.777K	86.27K

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