Vmoto Limited

VMT Details

Q2FY21 Performance Highlights: Vmoto Limited (ASX: VMT) engages in manufacturing and commercializing electric two-wheel vehicles, including electric mopeds and motorcycles worldwide.

• The company has recorded an increase in sales by 23% to 7,854 units in Q2FY21 on a pcp basis. Moreover, the international sales stood at 7,503 units in Q2FY21, up by 26% from Q2FY20, supported by strong sales momentum in the business.
• Vmoto has signed a sponsorship and marketing agreement to supply scooters at FIM ENEL MotoE World Cup, the world-class electric motorcycle racing event during the 2021-2023 seasons.
• The company held its first “2021 Vmoto Soco ProDay” event at Misano World Circuit, which featured several world-famous professional motorcycle racers.
• The company's cash position stood at $16.7 million as of 30 June 2021 and with no debt.

Financial Performance (Source: Analysis by Kalkine Group)

Key Risks:

• Supply Risk- Due to the shortage of Semiconductor and chips, the company could face a supply-side constraint during the COVID-19, and still, the uncertainty prevails.
• Impact of COVID-19 pandemic- The delayed distribution and economic slowdown have impacted the company's earnings due to the pandemic.

Outlook: The company is expecting an increase in sales with repeat orders from its existing customers and additional orders from new customers in H2FY21 and beyond. The company intends to collaborate with potential businesses to enhance its product offering, distribution network, and business reach globally.

Stock Recommendation: As per a recent announcement, the company has signed MoU with Bird Group regarding the potential exclusive distribution of VMT’s CUX and CUmini range of two-wheel electric vehicles (EVs) across India. The stock of VMT is trading below its average 52-weeks' levels of $0.325-$0.670. The stock of VMT gave a negative return of ~33.33% in the past one year and a negative return of ~9.09% in the past three months. On a TTM basis, the stock of VMT is trading at an EV/Sales multiple of 1.4x, lower than the industry average (Automobiles & Auto Parts) of 4.3x, thus undervalued. Considering the current trading levels, valuation on a TTM basis, debt-free balance sheet, strategic collaborations, increase in revenue, a global shift towards electric vehicles and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.335, down by ~2.899% as on 9 August 2021.

VMT Daily Technical Chart, Data Source: REFINITIV 

Kip McGrath Education Centres Limited 

KME Details

Business Update: Kip McGrath Education Centres Limited (ASX: KME) is an education center that provides tutoring services to children and offers services to franchisees in the education field globally. The company recently announced that it has been selected by NSW government as one of four providers for its $337 million COVID intensive learning program.

H1FY21 Financial Performance:

• KME has recorded a decline in its revenue by 2.2% to $8.5 million in H1FY21, compared to $8.7 million in H1FY20. However, there is an increase in online tutoring by 800%.
• The company has declared a fully franked interim dividend of 1.0 cents per ordinary share for the year ending 30 June 2021, payable on 24 March 2021. KME is estimating of total dividend amounts to $520,193.
• KME reported a decrease in EBITDA by 6.8% to ~$2.4 million in H1FY21 against ~2.6 million in H1FY20 and it also reported a decline in net profit by 19.3% to ~$0.826 million in H1FY21.
• The cash position of the company stood at $11.82 million as of 31 December 2020.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The company has a significant impact on its revenue due to a reduction in traditional face-to-face lessons during the COVID-19 pandemic, and still, the uncertainty prevails.

Outlook: In the second half of FY21, the company is focused on rolling out new software for the franchisees, incorporating smarter and more effective ways of tutoring. KME has estimated revenue from $25 to $30 million from online tutoring in FY2021.

Stock Recommendation: The stock of KME is trading below its average 52-weeks' levels of $0.890-$1.645. The stock of KME gave a negative return of ~34.78% in the past one year and a negative return of ~14.28% in the past three months. On a TTM basis, the stock of KME is trading at a P/B multiple of 3.3x, lower than the industry average (Consumer Non-Cyclicals) of 8.2x, implying undervaluation. Considering the current trading levels, valuation on a TTM basis, the healthy balance sheet, rise in online tutoring, optimistic outlook, and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $1.115, as on 9 August 2021, 10:59 AM (GMT+10), Sydney, Eastern Australia.

KME Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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