They absolutely smashed the financials for FY21.

• Total revenue of $86.2M, up 41% on FY20 (The market cap is $100M you have got to be joking... That is 1x sales for the Price to sales experts)
• NPAT of $8M (that is a P/E ratio of 12 which now starting to make sense as the company has shown profitability & revenue growth in the last 2 financial years)
• Total sales of 31,275 units of electric motorcycles/mopeds, delivered for FY21, up 33% on FY20.
• International sales made up 29,945 units. That is close to 100% you will ever get haha. Clearly they are focusing on growth in China :D Let's underestimate demand in Europe.
• During production, they generated positive operating cash flows using the indirect method. Unlike the direct method, you are going from Profits to Operating cash flows much like in US GAAP instead of IFRS. My hunch is that they are planning to list in US markets.
• They have $13M worth of inventory now while growing at 41% of sales. That is incredible for a manufacturing company. Prepayments also went up; where customers are paying cash to Vmoto before the delivery of the product/service. In this case, it is a product, not a service as it is an e-scooter/bike.
• Trade & Other payment liabilities went up and I do not know why, it is the one negative thing in the balance sheet. Especially when we are talking about current liabilities.
• 

I am still stumped as to why the equity value of the business remains at $100M... They pretty much did everything an investor would want.

I really like the execution of Vmoto. A lot has changed since my last straw and they are proving me wrong every quarter. The most surprising thing is that the market is not giving a high multiple as they view it as a "Chinese company". The company is beyond China and are actually growing rapidly in Europe. Mr Market has a massive blind spot. In my last straw, I was forecasting 25K scooters sold for FY21 but the latest quarterly makes it 23K scooters with 1 more quarter to go. The financial year for Vmoto is Jan - Dec. Basically Q3FY21 results blew my forecast away.

They still have a Bird Group contract to fulfil which is a minimum of 10K scooter order. I believe there is testing done before the bulk order. There is a lot to like and without doing too much analysis I have a feeling that the company is undervalued. The only number I am changing is revenue growth for the valuation.

Remember to back your analysis with conviction and not forget about it. I missed out with Vmoto, a good lesson learned. 

My bull case was very optimistic on future growth and now the market has caught up to reality. The reality being, the market is seeing 150K scooters sold equating to revenues of $300M and 7% operating margin in 2030. The valuation matches with my assumptions. 

Future catalysts would be entirely driven by outperformance by management. In other words, if they can either increase margins or grow faster, then the valuation must go higher. With the 25% revenue growth rate to 2030, I am assuming 25,000 scooters sold in FY21. So far, in 1HFY21 they sold 10,510. I predict a strong second half. The question is will management deliver Q3 results even stronger than what the market is expecting? If so, then it will blow out my forecast. Management reporting anything above 10,000 scooters in Q3 will significantly increase the valuation.    

My checklist for growth investments 

1.  Does the comapny operate in a large market? Yes, electric vehicle market is estimated to be around US$40B with roughly 5% attributed to scooters. 
   1. Will the market grow? it is estimated that the electric vehicle market has been increasing 50% each year since 2017. I expect the growth rate to sustain till 2030, when half the vehicles in the world would be electric. 
2. Are they profitable? Yes. Their net income is $301,674 from Jan 1 - June 30 which is roughly 250% increase when compared during the same period in 2018. The rise in profit is caused entirely by sales of scooters. They have been able to sell more scooters this half year (Jan 1 - June 30) than almost all of 2018. When looking at the numbers, the second half of 2018 had the most sales thus, the second half of 2019 is expected to achieve similar revenue targets. 
3. Do they have positive operational cashflows? Yes they have positive operational cashflows since H2 2018. The cashflow have grown from -$767,402 in June 2018 to $301,674 in June 2019. H2 2018 operating cashflow was $1,034,285 and I expect similar numbers for 2019. Their second half histrocally had the most sales.  
4. Do they have a strong balance sheet? They grew their cash orgnically without incurring too much borrowing from $4,193,790 to $5,145,679. I suspect that short term borrowing of $1,053,918 is used to scale the manufacuting facility to meet demand. The balance sheet is well maintained with more current assets than liabilities.
5. What is their long term strategy? Their strategy as stated by Charles Chen, CEO "to make Vmoto the most profitable business, especially having high end customers in the international market,"
   1. Can they realisitically achieve that? Vmoto is among many electric scooter companies across APAC that have recieved substantial funding to scale production and meet demand. I am not sure if they would be the most profitable business when future competitors arrive but they do have the first mover advantage. 
6. Can I trust management to deliver? Charles is commited to grow the company in the long run and he thinks in 5 year timeframes to meet consumer demand in the future. I believe Vmoto will be one of among many that will benefit from the transition to electric vehicles in 2030.

From just 6 questions I am confident that VMoto is undervalued. In saying that, further research needs to be done to appropriately value the business. This would be (competitor analysis, business forecast (sales forecast in different geographies), moat analysis and finally intrinisic valuation based on conservative assumptions). 

Further important questions to answer 

1. Do they have a moat in the electric scooter market?
2. Who do they compete with (listed and unlisted)?
   1. How many electric scooters are made by competitors? 
3. How much could VMoto be worth in 2030 when 1/2 of automobiles is projected to be electric? 

https://www.afr.com/world/asia/the-australian-start-up-riding-the-global-e-scooter-craze-20191011-p52zvn

The most important paragraphs in the article are;

"The company made a $362,000 profit in the six months ending June 30, 2019. In 2018, the start-up made a $917,563 loss which was a recovery on the $8 million loss a year earlier. It expects to launch new models of two-wheel electric vehicles this month.

The factory, built in 2008, has two assembly lines: one for international exports, and one for domestic consumption which can produce 300 to 450 units per day. 

The electric vehicle market has been increasing 50 per cent each year since 2017, but less than 5 per cent for the two-wheeler market. There are big possibilities and a big space to grow."

The financials of the company is very robust and they now have positive operational cashflows from the recent Appendix 4C Q1 FY20 report.