Capacity:A brilliant bit of communication without any wasted words that explains why the existing factories capacity has dropped from 400K units in the Power Eagle days, when they were assembling cheap product for the Chinese market, to 150k today .
Vmoto version 2 is
* producing much more expensive product that would spend longer on the assembly lines.
*Getting involved in more sophisticated manufacturing processes.
* Manufacturing other products like swap stations
* Renting space to Strategic suppliers.
* Increasing R and D staff.
Needing more capacity than 150K by Sept next year adds weight to Graziano's sales budget of 120k units in 2024.
At 35% compound growth it will take another 3 years to get to the two factory capacity of 300k units.
Asset Values :The new factory is costing $14m the old one which is similar size is carried at $3.2m so the nett tangible Assets at June are understated by $10m plus
Rental Income:It looks like renting space to strategic partners has already begun and is why the existing factory getting too small fast.
In the first half of 23 Rental income increased by $350k to $480k
Based on market rents it looks like the old building is fully utilised and the only room for increase in production is to run three shifts a day.
Funding:They have everything sorted.
A $7m loan on $34m of property is peanuts given they are planing to rent a lot of it.
Interest circa $230k Current rent on old factory $960K
Share Pric
My Take:Great to have a depressed market when an unexpectedly good HY report drops. I managed to pick up a pile without having to kick the price too much after that announcement.
When the SP fell again before this announcement dropped I couldn't believe it and when the announcement pointed out that the new factory was half realestate investment to support strategic suppliers and maintaining manufacturing capacity at circa 300k units pa I couldn't resist buying a few more.
The price will drop again as it seems few others share my enthusiasm and I'm getting my portfolio out of balance again.
It's easy to understand VMT and where its going and great to remember that In a "risk on" market the punters loose their fear, pile in and drive the price up. A big PER coming soon.IMHO.
