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SK's avatar

Excelling writeup JP. With respect to vmoto, what do you think the moat is? Generally, manufacturing is a capital intensive low margin business. How can they sustain themselves against well capitalised behemoths with almost every 2 wheeler manufacturer getting into electric now?

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JP Picard's avatar

Hey mate,

Thanks for the comment. I think what you've highlighted here has always been the achilles heel of Vmoto. I've worried for them about competitors entering the market. I remember reading quite a while back about Vespa kick-off production of the Vespa Elettrica.

If there is a moat for Vmoto, I think it may be in their deeply engrained relationships with their B2B customers. These customers make a large part of their business and likely get very favourable buying conditions.

In any case, there's no escaping low margins which you mention.

I suppose the counter argument here is that current valuations are not pricing in a whole lot of growth. If they can prove a return to growth (recent quarterly was negative), then shareholders may be well positioned.

Hoping this helps, thanks for the comment again mate!

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