VMT 0.00% 14.5¢ vmoto limited

India, page-4

  1. 124 Posts.
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    Hi Everyone. I have stayed away for a bit, as frankly I was getting bored with all the chatter about the SP and bots without any constructive input. To me the most exciting development so far this year is the new focus on India. Inchiquin wrote a great piece on this earlier. Although for now the MoU is still a 'bird in the bush' (apologies), companies don't go to the trouble without wanting the plan to succeed. Bird is a substantial family held and run company, with core focus on aviation and travel, so no surprise if it is hungry for new revenue streams. They have some good distribution franchises and I would be hopeful that the evaluation will be successful.

    There is lately a growing recognition that India is the largest 2-wheel market in the World, which also equates to the largest E2V potential. 'Made in China' is not a popular tag in India, so my guess is that if this gets going there will be pressure for increased local input, which probably means more than just assembly, but eventually (hopefully) manufacture. It would be a great opportunity to properly penetrate the largest potential market and simultaneously offset reliance on the single-source Chinese supply chain. I have looked through the new presentation for investors, and there is a lot of emphasis on the new bikes, but what investors really care about is return on investment and that means making what sells and selling what you make, all at a good and sustainable margin. (Model-T type philosophy.)

    I think we have to look to the 1Q trading results as the next main stimulus, as everything else that the company puts out continues to be short on facts, dates, pricing and so forth. It will be important to extract the major one-off orders from the 1Q data once it arrives, and look more deeply at how the expanded B2C distribution network is performing. There are a lot of channels out there now, but are they performing and is the Company feeding and promoting the pipeline sufficiently ? The Annual Report for 2020 confirmed a very good year, but only within the existing vision. VMT is still a minnow in the market. As expected, control of the Company has further consolidated even with the expansion of the issued capital, and to get the full picture you need to go beyond the top twenty investors report. Management (and close allies) have a strong and growing holding, but so too do the other key investors who, together with the management group probably now control ~60% of the company. There is growth in the major nominee holdings, some but not all of which represents smaller investors, but major investors within those holdings have also increased their foothold.

    The reason I focus on this is because it suggests that a hostile takeover would be very unlikely to succeed, that a deal purely supported by management would also struggle to succeed, and that any agreed takeover would need to be at a very favourable level in order to account for the reasonable forward expectations of current investors. It seems to me that investors remain under-rewarded vs the company's recent focus on attracting corporate investors and rewarding management, and I would persist in the assertion that a move towards paying a small dividend and then using the existing investor base to raise future funding is the way forward. That and a listing on another exchange.

    I have largely given-up on looking for better guidance from the Company, and wonder what has happened with the efforts to attract a much-needed new Chairman to provide strategic rather than operational leadership. There are lots of good reasons to be confident, but I suspect that it may continue to be a bemusing and frustrating ride for some time to come. Best to you all. 2000.
 
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Last trade - 16.10pm 28/03/2024 (20 minute delay) ?
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