Hi Pods,I'm out of action for anything other than keeping up to...

Hi Pods,

I'm out of action for anything other than keeping up to speed on my equity investments following a second back injury in less than 12 months. Posting keeps my mind busy.

I read with interest the article you posted about Charged and the difference in price and specs between their CPX (AKA Rimau) and the Super Soco branded CPX that are shipped around the world as completed units. He pointed out a few but not all the reasons why the Rimau is cheaper. The main driver that makes selling flat packs imperative is import duties and local content requirements for Government subsidies. Interesting that he concluded with "it may sound like I'm sticking it to Super Soco pretty hard, but in truth, they aren't doing anything wrong; they are just playing the game by the rules."

Your statement that the margin on a flat pack sales is biscuits is true in a $ sense but it's all about volume. You could likewise say the margin on the manufacturers price of a completed bike is 2 or 3 biscuits.

Unlike VMT, charged aren't restrained by good corporate governance when it comes to making forecasts. If they do anything like 10m units in 10 years
and get stage 3 of the factory producing 800k units a year there are ship loads of biscuits on offer.

How much is a biscuit worth. The starting price for a charged Rimeau is Rp 48m i.e. Au$ 4850. If they have a GP margin the same as VMT at 27%, their Cost of goods (flat packs and other parts) would be $3540. Vmt are providing 60% with a plan to reduce that to 50%. So let's say the flat pack costs $1770 and VMT make a NPAT of 12% i.e. $212. Selling 800,000 a year would be a nice big earner of $170mpa. Even if push comes to shove and they only sell a tenth of their lofty ambitions involvement with them makes a lot of sense.

Pleased to note that as Ni Hisin aren't proposing to do the Bikes as a Service capital hungry stuff the MOU is about a JV for Assembly and Distribution to paying customers with point of sale profits.