Have finally bought a sizable stack after researching it for almost 6 months; so have a reason to ask a question here. If we believe that the financial and sales reports are factually correct, why there is such a negative sentiment?
1) Yes, the company has missed the target (both top and bottom line)
2) Yes, there is an uncertainty in terms of regulation of electric scooter usage in some of Chinese cities
3) Yes, there are still some disclosure issues and I personally dont understand why we have such a large "receivables". I question if the company uses trade rebates with its distributors, and the actual sales recorded are not the actual sales.
4) Yes, there is an inherent risk of the predominantly "Chinese" company (in terms of the sales and management)... Just look at the number of Chinese small caps de-listed from UK this year
But
1) for less than 15 mln market cap, we get the company which has a very reasonable chance to get back to profitability by the end of 2017;
2) sales should go up based on the growing consumer demand for electric scooters, even if the company market share will not be increasing.
3) No significant investment is required; so a low probability of Cap raising or running out of cash (almost AUD 5 mln as per the latest financial statement)
4) a reasonable quality product, as far as I could research. Though, I admit I could not find it in Switzerland to have a test ride.
would it be reasonable to assume that though a downside risk exists, the upside potential and a probability outweighs? I am especially interested in the opinion of those who believe the company will bust. Please, share your logic/reasoning...
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