Ann: Share Purchase Plan closes heavily oversubscribed, page-38

In some previous posts, I mentioned an unusual pattern of buying in relation to this stock, which seems to occur a few times a week.

I sometimes wonder if I am imaging this, but noticed it again yesterday:

♦ At 12:10:41, the share price rose from 0.210 to 0.215 on the back of a purchase of a block of shares worth $10,193.

♦ At 3:53:43, in what looks like a second strike, a buyer again pushed the share price up from 0.210 to 0.215, snapping up shares $10,750 in one go.

♦ Finally, at the very last moment, 4:10:51, in a similar pattern, one buyer grabbed $8,600 worth of shares.

♦ And maybe, something similar again today: I noticed that at 1:26:54 one buyer gobbled up a block of shares worth exactly $10K that was sitting at 0.200. And once again, at 3:10:05, the share price moved from 0.195 to 0.200 after a buyer moved on a block of shares worth $9,194 that was sitting at 0.200.

Superficially, this pattern looks a bit like the manner in which a fund manager accumulates, gradually buying up batches of shares over the course of day. Alternatively, it is possible it might just be just a wealthy individual who operates in a professional manner.

In summary, it is probably unwise to pay too much attention to the quantities of buy/sell orders that you see sitting on market, as there is reason to suspect that there is a substantial buyer hiding off screen, steadily accumulating blocks of shares in a stealthy manner.

Going on to the topic of this thread, there were two aspects in relation to the recent Share Purchase Plan that I found quite encouraging:

1) Firstly, as with the previous Share Purchase Plan back in 2018, the 2020 SPP was once again oversubscribed.

In early 2018, the company was aiming to raise $750,000 from shareholders but ended up with $962,500. This time round, the target was $1 million, and they ended up with $3.95 million.

I think it is always a good sign when companies have supportive shareholders; a famous example was Apple, which was able to turn around in the 1990s, in part thanks to its loyal shareholder base.

But more to the point, consider how well the company has deployed the funds that were raised back in 2018. The total raised was just over $2 million ($962,500 from shareholders and $1.25 million from institutional investors).

With that $2 million, the company was able to build a strong presence in Europe, even becoming the most popular electric motorcycle brand in a number of European countries.

And for those who took part in the 2018 SPP, the shares received have nearly quadrupled in value in just over two years.

If they could do all of that with just over $2 million, you'd have to assume the $3.95 million they just raised could go a long way as well.

2) The second point is perhaps more significant: I think the conduct of the management during the SPP indicates that there is integrity at the top level of the company.

In early April, just after Vmoto released the share purchase plan announcement, one poster appeared on this thread, suggesting that the management were dodgy based on the fluctuating structure of the SPP, in which the issue price is calculated based on the share price at specific dates.

To be fair to the poster, I think it is probably true that morally dubious executives would be attracted to this sort of SPP structure, given that there are probably ways they would be able to manipulate the share price through various shenanigans.

For this reason, I was interested to see how the SPP panned out, keeping an eye out for any untoward conduct on the part of the management.

Encouragingly, I didn't see any real evidence that the management were not conducting themselves without integrity during the process.

It is true that on the last day of the VWAP calculation period, the company released the (long awaited) figures relating to the first quarter of 2020, which seemed to fire up the share price. A few posters at the time suggested that the timing of this release indicated that the management were being tricky.

In reality, the fact the company released a positive announcement to try and bolster the company share price during the VWAP period should have been a surprise no one... or at least, to no one who was paying attention.

What is really surprising about this is that they waited to the very last day before releasing the positive 'quarterly update' announcement, most here were expecting that announcement around two weeks earlier.

So it seems, if anything, the management did the absolute bare minimum to ramp the share price through positive news during the VWAP calculation period.

The other thing that struck me was that Charles Chen fully participated in the SPP, even though, as VYR noted previously, he lost out as a result of the process, as his holding in the company ended up getting diluted.

So essentially, it seems Chen has put the interests of the 'shareholder body' ahead of his own private interests.

Over the years, Charles Chen has regularly been the subject of critical comments on this forum, the general tone being that Chinese executives such as Chen are not to be trusted.

This constant criticism irked me, as the implication seemed to be that the company would be better off with an Australian MD.

Only the most naive of investors would be unaware of the unethical behavior that sometimes goes on in the Chinese corporate world. But it is equally naive to assume that Australian executives necessarily exist on some sort of higher moral plane than their Chinese counterparts.

I've previously worked in a number of Australian organisations, including in listed companies, and I know from experience that many Australian executives are quite unimpressive. By this I don't just mean they are 'pretty average', in some cases they actually damage the companies they work for as a result of their bullying behavior and/or general incompetence.

I think this problem comes about because Australia is a 'small pond', with a limited talent pool. But China is the opposite: it is a huge pond with a vast talent pool to tap into.

I don't want to gild the lily, China's corporate world does not operate under the same standards Australia, and the poor corporate governance in China encourages unethical behavior.

However, assuming that a Chinese executive has got some integrity, they are probably going to make a highly effective managing director, simply because the talent pool is so large in that country.

I increasingly suspect that this is the case with Charles Chen: his track record as MD of this company suggests that not only that he has got integrity, he is also highly effective as an MD.