Vmoto Limited

VMT Details

New product launch: Vmoto Limited (ASX: VMT) is a global company engaged in the manufacturing and distribution of high-quality electric-powered two-wheels scooters. It operates through three brands: Vmoto (focused on Asia market), E-Max (targeting on international B2B markets) and Super Soco (a third-party brand for international B2C markets). Vmoto has established a strong distribution network in over 50 countries. It has a market capitalization of ~AU$130.80 million as on 20^th April 2021.

As per the presentation released on 13 April 2021, the company launched 3 new variants of the B2C electric two-wheeler vehicle models on 23 February 2021 that was live-streamed from Milan, Italy. The launches were: new TS model, the new TC model as well as a CUmini model.

As per the release dated 13 April 2021, the company will hold annual general meeting of its shareholders at 10:00am (WST) on Thursday, 13 May 2021.

On 15 March 2021, the company announced that it had signed an MOU with India’s largest travel technology company, Bird Group, for exclusive distribution of VMT’s CUX and CUmini range of scooters in India. The minimum order in the first year will be 10,000 units that reflects a total sales of ~AU$13.8 million

FY20 Results Update: The company for FY20 reported an increase of 33.6% in total revenue to $61.0 million versus $45.7 million in the FY19 led by strong growth in demand for scooter from China that grew by 27.9% YoY to $53.1 million. Further, EBITDA jumped by 100.9% YoY to $5.8 million. Finally, net profit after tax increased significantly by 181.0% YoY to $3.7 million.

FY20 Financial Performance (Source: Company Reports)

Key Risks:

The company is exposed to high competition risk due to low entry barriers and the global thrust towards clean energy vehicles. The company is facing high competition from competitors who possesses greater financial, research and development, marketing, distribution and other resources. The next big risk that the company faces is technological obsolescence. Any adverse technological obsolescence may impact the financial results. The company addresses this risk via continued investment towards R&D, patent appropriate as well as necessary R&D results, recruitment of competent technicians and regularly monitoring the market.

Further, the company has signed a joint investment agreement with Super Soco to form a manufacturing company in the name of ‘Nanjing Vmoto Soco Intelligent Technology Co, Ltd’. Therefore, any adverse circumstances of Super Soco could have an impact on the company’s financial results.  

Outlook:

The management of the company is closely monitoring the COVID-19 related developments and accordingly adapting itself to combat the likely fallout on the performance. The company has cemented its international growth strategy and is expecting the growth momentum to extend further that would get reflected in the performance of 2021 financial result. It has secured new order worth $13 million in January 2021, with its B2B customer, Greenmo Group. Towards the end of enhancing its product distribution network, the company is constantly looking for new geographies. The company is also investing in organic growth to expand its new product range and is evaluating and developing a new electric three-wheeler vehicle. In line with this, the company is in discussion with top European industrial design company to design new electric two-wheel vehicle models.

Technical Overview: 

Monthly Chart:

(Source: Refinitiv (Thomson Reuters)) 

Note: The yellow color line represents the trend line while the sky blue color line in the chart depicts RSI (14-period). The green and purple color lines represent the 21-period SMA and 50-period SMA respectively. 

VMT prices are trapped in a symmetrical triangle pattern from past 8 months. RSI (14) is hovering near to ~63 levels that is supportive for the stock prices. Prices are trading above 21-period and 50-period SMA that indicates the trend of the stock is upwards. Immediate support levels are $0.43 and $0.35 while immediate resistance levels appears to be at $0.51 and $0.61.

Stock Recommendation: The stock has a 52-week low and high of $0.135 and $0.67, respectively and is currently trading above the average of 52-week high-low range. The stock has witnessed a fall of ~3.09% in 3 months and by ~11.3% in 6 months. However, the stock has increased by 16.04% in 9 months and jumped by triple-digit by ~213.33% in 1 year.

Considering the current trading levels, company’s thrust to expand the existing product line and distribution channel, increasing the market presence across geographies and focus on new products in the electric vehicle sphere, we give a “Speculative Buy” rating on the stock at the current market price of $0.470 per share on 20^th April 2021.

VMT Daily Technical Chart (Source: Refinitiv (Thomson Reuters))

Note: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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