Ann: Vmoto Enters Strategic Agreement with Charged Asia, page-32

A couple of observations:

Affordability:

You can own a Bike on a Monthly subscription of Rp 1,650,000 and all you have to pay on top is battery replacement costs.

Rp 1,650,000 a month is Rp 19.8 m.p.a . It.s worth noting that about 60% of the population earn less than that so probably only attractive as a lifestyle purchase to a very small percentage.

I guess it's, at this stage, all about B2B and replacing ICE bikes with electric because of cost savings.

I guess it also allows a low skilled worker to become a self employed taxi or delivery rider.

Margins:

None of the bikes wear a Super Soco badge. The Rimau carries a Vmoto brand. Does this mean that they are not part of the Emax Super Soco JV.?. Likely so I think.

Based on an analysis of the 2021 accounts when there was only Emax and Super Socco products it seems that each of the steps up the price chain are targeting a GP of 25% and the costs of the knocked down components averages circa $2,100.

Then $2,100 + manufacturers margin = $2,620 + VMT's distribution margin = $3,273 + local distributors margin = $4,000 + dealers margin = average retail price $5,000 +or- government charges/subsidies and on road costs.

When critical mass is reached the target net margins appear to be 10% so the NPs on a perfect day would be

manufacturing $240
Vmt distribution $300
Local distributor $360
Dealer $450


In the Charged Alliance VMT are talked about as an OEM and initially supply 80% of the Knocked components it will be interesting to see if they are targeting 80% of $240 = Circa $200 and 8% of what charged make or something more or less.

If they are successful, when the 230,000 unit capacity factory is running full 230,000 X $200 = $46m

Charged would likely be targeting 2x to 3x that so *5 of what they can potentially make isn't peanuts.

Risks:

There would seem to be little risk for VMT except if it gets too deep in the whole as a creditor. It doesn't have a track record of doing that.

The big risk for charged is the 6 month minimum subscription. If times get really tough and a lot of bikes come back they could suffer from massive financial indigestion and potential failure.

In that situation the creditors (lets hope VMT have that covered) and lenders would possible lose a lot and VMT could pick up the pieces and make sure that when the bikes go out the door its end of story for Charged and there is no comming back.