I've often got the impression over the years is that there is a large number of investors who view Vmoto through jaundiced eyes, and are quick to dismiss the company.
Partly, this seems to stem from a perception that the company is a slightly dubious 'Chinese' company, the suggestion here being that the company is run by Chinese crooks out to fleece doe-eyed Australian investors.
This is lazy analysis, if you can even call it that. A cursory glance at the names of the top 20 holder list suggests that the major holders are probably a mix of Chinese and Australian investors, with the largest single holder only owning around 5% of the shares in Vmoto.
But I suspect the low esteem in which Vmoto is held in certain investor circles could also be a legacy of a rather unflattering picture of the company that was presented in a popular book published several years ago, 'Bulls, Bears & a Croupier', by the former Fund Manager, Matthew Kidman.
In one chapter of the book, Kidman describes a visit by himself and Chris Stott to the Vmoto Perth office back in 2009, which struck him (as he describes it) as a cross between a US college frat house and an Aussie mechanic's garage. Confusingly, he also claimed that for some reason, a life sized cardboard cut out of a bikini-clad Megan Gale had been set up in the interview room, and seemed to gaze down on them during their chat with the then company CEO. As a consequence of this odd encounter, he concludes that:
...both Chris and I soon knew that we would never invest in V-Moto. In addition to the shock we received when we toured the office, the company was in an early phase of its development and had failed to make any meaningful profits. It needed money to put its business plan into operation and from our point of view it was a company that had listed far too early in its development. V-Moto did raise $6 million at 20 cents a share a few months after out visit*. Today it trades at just 2 cents a share...
Kidman's book was published back in 2011, but from time to time over the past couple of years I have spotted it in the investment area of bookshops. First impressions count, and I have sometimes wondered how many prospective investors might have been put off by the company for good, after having first been introduced to the company by Kidman's description.
Kidman judged that Vmoto had listed far too early in its development, and certainly the share price performance has been a disappointment since. So it is worth asking if, after a decade of disappointment, are shareholders naive to view the recent share price movements as the start of a new direction?.
There was an interesting piece in the Intelligent Investor that caught my eye earlier this year, and I think could provide a few insights as to where Vmoto currently stands.
The
article, titled 'How to spot the next 100-bagger' examined the factors that laid the groundwork for the surge in the share price of tech stock Altium, which rose from a low of less than 0.10 in mid 2011, to over $20 at time of writing.
It seemed to me that there were some echoes of Vmoto's recent history in the description by the Intelligent Investor Analyst of the key moments that led to the turn around in Altium.
He describes, for example, how back in 2012, Altium's longstanding management was booted out, a circumstance which is reminiscent of events at Vmoto not so long ago. Altium also became more collaborative, engaging with a computer design company called Solidworks, to enhance productivity. This brings to mind Vmoto's partnership with Super Soco.
The Analyst concludes that investors should pay heed to three lessons of Altium's rise, namely: 1.) that established businesses are a better bet, 2). Don't ignore revenue, and 3). Seek out moat builders.
Having been in operation for over ten years now, and with that surge in international sales we saw in the last quarter, Vmoto is now ticking the first two of those boxes.
Many investors who are already familiar with Vmoto made up their minds about this stock long ago and won't be paying attention. Others, who are more open minded, might be able to take advantage of this apathy. My own feeling is that Vmoto is likely at the start of a long-term change in direction, and anyone who manages to get in under 0.10 probably won't be disappointed looking back.
*The capital raising mentioned here was to fund the acquisition of the E-Max electric scooter company in late 2009.
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