Ariel,
The strong sales growth we are currently seeing from the company in Europe was on the back of a capital raising of just over $2 million early last year. Considering what has been achieved with that $2 million, as well as the $5 million or so currently sitting in the company coffers, it seems unlikely that this company is going to need to initiate a capital raising anywhere near the $10 million mark in the near future.
Personally, I wouldn't necessarily be against a small capital raising, depending on the intended purpose. Afd mentioned in an earlier post that the company had plans to open a European factory, and were the company to go ahead with this, I wouldn't be opposed. I think it would be a positive if this company diversify its asset base, if only to counter the frequent suggestions that this is a 'Chinese' company.
The support the company received during the capital raising early last year was notable, considering the depressed share price at the time. It is curious that there has been a small crowd of investors who have stuck with this company through thick and thin. A special mention to Sentabool, who was one of the first to pick up on the Super Soco potential, and of course, Gottalove, who has been here for 10+ years (no mean feat in itself, and especially given the high levels of agro often displayed on the VMT threads over the years).
The reason I mention this is that it is reminiscent of another well known listed company, Apple. Apple shares went into a downward spiral in the 1990s, but the company survived thanks to the support of 'true believers' who stuck with the company.
I suspect that it is a positive sign when a stock has shareholders who are willing to stick with the company through difficult times, and hopefully the VMT share price will follow a similar course to that of Apple after it escaped the slough of the late 90s.
I have some trouble keeping up with 'busy' threads on Hotcopper, so I probably won't be posting here much in future.
However, I was interested in the discussion as to whether the jump in the share price seen over the past week is a short-term spike, or the commencement of a trend that will continue in the weeks ahead.
The view that the movements in the VMT share price over the past week are more of a 'blip' than a trend are well grounded, at least statistically: when stocks rocket skywards, most of the time, the share price tends to fall back to more modest levels in a matter of weeks.
There are however, occasional exceptions, and you usually find this in instances where it suddenly becomes clear that the price tag of a stock has been sitting well below where it should be, and thus a re-rating is justified. So, does Vmoto fit into this box?.
I think we need a point of comparison here, and I think Harley Davidson is a good contended. Harley Davidson has been listed on the NYSE since 1986, and the current share price is about one hundred times that of the share price just after listing. So an encouraging precedent there for shareholders in this company.
Like Vmoto, Harley recently released their
quarterly results, and this provides us with the opportunity to compare this motorcycle megatherium with the motorcycle minnow.
As you would expect, the updates from the two companies aren't exactly comparable, however both include unit sales figures for the quarter. Harley shipped 58,891 units in the quarter, compared to 3,821 for Vmoto.
So, the units shipped by Vmoto were approximately 6.5% of Harley's total units shipped.
But the market cap of VMT is only 26.5 million, which equates to less than 0.3% of that of Harley Davidson (The Harley Davidson market cap is $5.85 B US, which converts to 8.3 B AUD at the current rate).
We aren't comparing 'apples' with 'apple' here, admittedly, as the price tag of a new Harley ranges from 10K-50K in Australian dollars, whereas the cost of a new super soco bike falls between the 3K and 8K mark. Thus, Vmoto have to shift four or five units for every one that Harley sells.
But even taking this into account, the current VMT market cap looks modest. Even a share price around 0.200 (which would reflect a market cap of about 45 million) would be fairly conservative for VMT, at least on the basis of this comparitive analysis.
Keep in mind also, that Harley Davidson is a bit of a dinosaur, whereas Vmoto is a growth stock. Most of their revenue at the moment is derived from just one geographic region, Europe, and expansion to other regions such as South East Asia and South America could offer significant potential.
So I think there is a strong argument that there could be more upside for this stock in the short term.
(20min delay)