I should correct a mistake that slipped into my previous post here last week: I stated that Niu had sold 106,000 units last year, however the figure I quoted was for the last quarter of 2019 rather than for the entire year.
The number of units sold for the entire year was 421,327 (Niu Technologies 2019 Annual Report, pg 73) compared to Vmoto's 19,971 units over the same period (Vmoto 2019 Annual Report, pg 3).
It is encouraging that the number of units sold by Vmoto last year were less than 5% of the total sold by Niu, despite the fact that the products offered by this company seem to be on par with those of Niu: indeed, we know that in at least a few countries Super Soco are leaving Niu in the dust in the popularity stakes. Certainly, the disparity in unit sales highlights the significant upside potential for this stock.
Regarding the latest announcement, if I was going to hazard a guess as to what the capital raising is about, I think I would go with one of Afd's suggestions: perhaps something to do with Revolt Motors of India.
The announcement mentioning the capital raising seemed a bit left field, and so I have been wondering if it might be related to a policy initiative announced in India last week.
On Friday, Delhi's Chief Minister Arvind Kejriwal initiated a new electric vehicle policy, aimed at reducing air pollution and boosting the creation of jobs in India's capital city.
The following extract is from an
Indian auto website, and it details the policy specifics:
New Delhi: The Government of National Capital Territory of Delhi (GNCTD) on Friday approved the Delhi Electric Vehicle Policy 2020 with an objective to establish it as the EV capital of India and accelerate the pace of adoption across vehicle segments, especially in the mass category of two-wheelers, public/shared transport vehicles and good carriers.
The policy which will remain valid for a period of three years seeks to drive the rapid adoption of Battery Electric Vehicles (BEVs) so that they contribute to 25 percent of all new vehicle registrations by 2020.
The fiscal incentives being offered would be in addition to the demand incentives available in the central government’s FAME II scheme.It comes as a huge blow Internal Combustion Engine (ICE) vehicles as additional taxation has been implemented for fund promotion of EVs.
A cess on the sale of diesel is already applicable in the NCT of Delhi at 25 paise per litre. Additional road tax will be levied on diesel and petrol vehicles, especially luxury cars. The notice further added that an appropriate congestion fee will be levied on all trips taken using cab aggregator and ride-hailing services.
The report then highlights the incentives on offer for different classes of electric vehicle. The paragraph below is a summary of the incentives on offer for the electric two-wheeler segment:
...The demand generation incentives offered for two-wheelers will be based on battery capacity. It will be available only for electric two-wheelers with advanced batteries.
A purchase incentive of Rs 5000 per kWh of battery capacity will be provided per vehicle to the registered owner and subject to a maximum incentive of Rs 30,000 per vehicle.
The registered owner of electric two-wheelers will also be eligible for a scrapping incentive for scrapping and de-registering old ICE two-wheelers registered in Delhi...
Apparently, Delhi the first region in the country to have a dedicated policy to promote electric mobility, and so it would not be unreasonable to assume that other Indian cities are likely to follow this course as well. But even taken in isolation, the impact of the policy is still of some significance for the EV industry, considering that the Greater Delhi region has a population larger than that of Australia.
This policy initiative by the government of Delhi will almost certainly boost sales for Revolt, and we already know there is some kind of relationship between Super Soco and Revolt.
Long-term holders might recall the following passage, which is from a
report about Revolt that featured on the 'Electrec' website late last year:
...If the Revolt bikes look familiar to you, it might be because they borrow heavily from the Super SOCO line of Chinese electric motorcycles. In fact, Revolt is reportedly working in a partnership with Super SOCO to produce the electric motorcycle in India. It wouldn’t be the first time that Super SOCO has partnered with other brands. The company teamed up with Ducati earlier this year to rework its electric scooter into a Ducati-badged scooter...
If Vmoto Soco are supplying the knock-down kits from which the Revolt bikes are assembled, the new EV initiative in Delhi would of course have an impact on this company as well.
Were the Vmoto Soco group and Revolt to join forces, this combination would represent a pretty powerful growth engine, potentially blindsiding larger rivals. I also think a move into India would attract the interest of the broader market.
Anyway, if it turns out that the capital raising is in some way related to Revolt Motors, I tend to think that would be positive development.
(20min delay)