There's no doubt that supply chain issues are the big unknown...

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21/07/21

14:27

Post #: 54662630
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Originally posted by kickit2me ↑

I think expectations of large numbers already being shipped are misplaced.

There are two lines of thought I have that relate to that:

The first, and most important, is the obvious Covid effect that HP have suffered with production. The Dragonfly Max was to be launched in April. What we now know is that the first of these models, ordered through Customize & Buy, will ship Early September. 5 months delay (at the HP end) in getting the product out that the buds are going to be first required for bundling.
While I continue to believe HP are all in on these buds, and will over time order and sell millions, I just don't think the volume is happening as yet.

Second, I think Nuheara's production volumes could also have been affected by Covid. Malaysia has been hit pretty hard by the second wave of Covid. While Salutica haven't announced anything (that I can find) since November 2020, I have to think that production would not be optimal.

Many, many companies and businesses have been affected directly and indirectly by Covid. I can't see how our production for HP won't be affected by that.

On a positive note, DTC sales have not seemed to be adversely affected by Covid. And we did appear to have stocked up well on MAX, given their supply to our ORP partners recently. So perhaps where we are behind with HP, we may be ahead with DTC sales of MAX.

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There's no doubt that supply chain issues are the big unknown here, but assuming they impacted HP's Dragonfly production and not the buds, HP would still need to build their inventory levels. There's no way I can see NUH being able to to meet JIT order volumes based on HP's size and scale. Even 10-20k / mth won't touch the sides if they intend to sell them separately in the run up to Christmas. How many would they need just to stock fill the channel in the US alone? 200-300k?

The recent hiring of 3 quality (and expensive, no doubt) staff says something about their confidence in the future.

I know many of us longs have a right to be sceptical of another poor quarter, and rightly so, but even if the numbers are lower than expected we should get some very upbeat commentary imo.

Strong sales of the Max and even 10k units of HP stock will be enough to show good growth. I still expect better volume from HP, but we'll have to wait and see.

Maybe being optimistic, but I still think they could easily surprise on the upside.

GLTA

NUH Price at posting: 4.0¢ Sentiment: Buy Disclosure: Held
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