Making Electric Scooters in China for Global Markets

Vmoto is a global two wheel vehicle manufacturing and distribution group, listed on ASX and on the AIM market of the London Stock Exchange. It specialises in high quality “green” two wheel electric powered vehicles and manufactures a range of western designed electric (and some petrol) two wheel vehicles from its low cost manufacturing facilities in Nanjing, China, marketed in Europe through its operation in Bremen, Germany and marketed outside Europe through its operations in Australia.

Vmoto has two primary brands: Vmoto (aimed at the value market in Asia) and E-Max (targeting the Western markets, with a premium end product). VMT also sells to a number of customers on an original equipment manufacturer (“OEM”) basis.

In the September 2013 quarter VMT sold over 11,000 units and launched five new models of electric two wheel vehicles to make a total of eleven now available in the Chinese domestic market. Opening a further three stores in China to make a total of four, it sold over 1,500 Vmoto units in the quarter. VMT also delivered two trial electric four wheel cleaning vehicles to the district government in Nanjing. Scooters were shipped to distributors in Germany, Slovenia, Canada and South Africa and 72 in CKD form to a Malaysian OEM customer which is planning to order 720 units through 2014 for fast food delivery.

VMT was ranked #2 (to Jiangsu Xinri E-Vehicle Co.) in the global electric scooter market in a 4Q13 report http://www.navigantresearch.com/research/navigant-research-leaderboard-report-electric-scooters by US independent research group Navigant Research. The report noted that the worldwide e-scooter market is growing rapidly, with Asia Pacific sales accounting for more than 99% of global sales volume, many of these being low-cost vehicles with relatively few features. Western Europe, a dramatically smaller group of markets, is the second-largest region with significantly higher-priced e-scooters (in 2009, VMT acquired E-Max, a German e-scooter manufacturer, gaining German design technology and patents).

As the only Western branded e-scooter company operating in China, VMT has a competitive advantage. With both premium quality and value for money brands and a network now in 27 countries, and significant room for expansion at its 30,000 sqm Nanjing factory premises VMT is well positioned for growth.

Despite future growth capital requirements, VMT is moving into profit and positive cash flows. It plans to make over 85,000 units in 2014 and 150,000 in 2015, less than half potential production capacity. The Power Eagle contract is expected to ramp up to 72,000 units a year.

On 19 November VMT announced an exclusive contract with the Indonesian sole distributor of Chrysler, Jeep, Dodge and Fiat, with an initial order quantity of 17,500 units in the first five years of an initial 10 year term. Pikes Research projects that Indonesia will become the third largest market in Asia after China and India by 2018.

Half-yearly Performance & Estimates - VMT

Year-end June	1H12 ?A	FY12 A?	FY12A	1H13A	FY13A	FY14E	FY15E
Sales, $m	3.0	8.2	4.6	9.8	25.2	0.00	0.00
EBITDA, $m	-1.2	-1.8	-0.79	-0.15	1.3	0.00	0.00
EBIT, $m	-1.4	-2.3	-1.0	-0.39	0.77	0.00	0.00
Report NPAT, $m	-1.6	-2.5	-1.2	-0.55	0.41
Adj. NPAT, $m					0.41	0.00	0.00
Reported EPS, ¢	0.00	0.00	0.00	0.00	0.00
Adjusted EPS, ¢					0.00	0.00	0.00
EPS %FY/Growth		****%	****%	****%	****%	****%	****%
Dividend, ¢	0	0	0	0	0	0.00	0.00
Franking, %	-	-	-	-	-	-	-
EBITDA Margin	0	-21%	-17%	-1%	5%	******%	******%
NPAT Margin	0	-31%	-27%	-6%	2%	******%	******%
ROE, %	0	-26%	-23%	-6	2%
EBIT/Interest	0.0	-8.5	-5.8	-2.36	2.11
Net Debt / Equity	0	0.24	0.22	0.44	0.06
CashFlow/Sh, ¢	-0.1	0.0	-0.3	-0.1	-0.4	0.00	0.00
Y/E Shares, m	635.3	720.9	896.1	896.1	1,222

Notes

Data sourced from IRESS Market Technology Limited. EPS Growth compared with the pcp is shown in most columns except the first half years which show their percentage of full year EPS. In a handful of cases, unadjusted share splits, or changes between positive and negative values may give strange changes in ratios.

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As at 24/01/2012 : see details at www.vmoto.com

22/12/2011

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