VEE (ASX) Ann: VEEM Reports Strong Profit Growth for 1HFY24

Originally posted by RedHammer ↑

Instos still won't touch it due to the low free float. Of the 135M on issue, the founders hold 50%, Perennial hold now just under 10% so that leaves about 50M to 30M free float as this thing is just too thinly traded. There has even been a 1 share sold day!!! Many Instos need a significant free float for them to even bother getting their clients onto it without moving the market and its just not possible at this level. That leaves only 2 options. Instos will push the Founders and or Perennial will have to sell down. Or the management will issue more shares and dilute the entire register via a capital raise. Both are bad news for shareholders.

Placement quick deals = 15% to 20% fall in share price which will bring it back to $1.24 and then it will take another half year to recover. A capital raise is almost a certainty if the results of the data confirm initial findings of the 20% or so fuel consumption reductions. Then Veem will be motivated to buy a ton of machines to pump out the propellers to meet the likely ambitious sales volume targets.The max cap raise w/o shareholder approval is 15% every six months so this is 20.25M shares. In order to hurry it along they are usually placed at a 15% discount price from $1.55 brings it to $1.32. So $1.32 x 20.25M = $26.73M cap raise in the next 3 months or so. This $27M may not be enough to get all the machines and employees, training so another one may be needed in another 3 to 6 months after that if Veem want to give themselves a good chance of meeting the targets.

And now the bad news. The TAM (Total addressable market) of $2.6B is immaterial if they can't even sell enough to meet the 3 year initial honeymoon period, and then it does not stop there, as every year or half year the sales volume will also be benchmarked on their targets by Sharrow. Talk about kicking goals on a constant moving goal post! So if Sharrow determines that Veem can't make the sales or for whatever reason, they will simply say thanks for doing all your work tooling your CnC machines, you are just too far from our European and USA markets, we will go elsewhere and find someone closer to those markets and then Veem shareholders will be paper bag holders.If you think the 17year patent will provide any protection, think again. It won't take long for a manufacturer in China to make their own at 1/20 the cost Veem are selling and make 100 times more in volume. Just ask Bill Gates how well international copyright worked for Microsoft in Asia.

I could be wrong and Veem will shoot to $2 to $3 in the next 6 months and everyone will be happy, however I still expect 1 to 2 cap raises within the year.To hold or not to hold...

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Reminds me when at Microsoft's own shop in Kathmandu in the late 1990's, the staff were selling pirate copy Windows and Office under the counter.

Don't like your negative thread but I guess the scenario you suggest is a partial malfunctioning of the "outrageous success" scenario. I think we all wouldn't mind having that sort of problem. Also with outrageous success, the company can always borrow more as well, and if they're at sales of approaching $100M pa, surely increasing debt from $27M to $60M is pretty safe.

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(20min delay)
Last $1.73		Change -0.010(0.57%)		Mkt cap ! $234.8M

Open	High	Low	Value	Volume
$1.74	$1.74	$1.70	$106.3K	61.88K

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