VMT undervalued, page-360

Hello Hou,

Vmoto rightly IMO concentrates on the big picture in terms of its disclosures.

The company doesn't disclose the breakdown between the BtoB and BtoC unit sales, or in fact what it sells directly or through the distribution network.

What has been disclosed is that Vmoto makes a bigger margin on International sales than it does on the cheaper bikes it sells into the Chinese market but the quantum of that is not disclosed for commercial reasons

For commercial reasons also it discloses only what it needs to disclose which is what its GP and NP are on total sales.

This is all we are able to deduce from all other manufacturers and In my opinion what we as investors should be focused on. The good news is that Vmoto are getting into the top percentile in that space.

My guess is that the margin we make on all the product we flog through distributors is the same.

I imagine we are able to pick up some of the distributors margin if we are able to sell BtoB directly to business clients which I think is the norm.

The parts we sell to the likes of Revolt would also be direct and likely only attract a small pass through margin which would be normal business practice as they are a no effort added volume exercise.

I think its very likely that there is also different margins on sales to distributors where we own a share of the distributor as we do with VmotoSoco Italy. Joint venturing distribution would I guess be motivated by the need to share profit and risk to get a commitment hence the reduced margin at the wholesale level.

The distributor gets profitable quicker but becomes less profitable over time if all goes well.