Why the Vmoto (ASX:VMT) share price just soared 12% higher

The Vmoto Ltd (ASX: VMT) share price is soaring today. This comes after the company announced a profit guidance for the 2020 financial year.

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Vmoto Ltd (ASX: VMT) shares were soaring in morning trade today. This comes after the company announced positive profit guidance for the 2020 financial year. In early trade, the Vmoto share price rocketed by 11.8% to 42.5 cents before partially retracing. At the time of writing, Vmoto shares are up 5.3% to 40 cents.

In comparison, the All Ordinaries Index (ASX: XAO) is down 0.3% to 6,900 points.

Quick take on Vmoto

Vmoto is a leading global scooter manufacturer and distribution group specialising in electric powered, two-wheel vehicles. According to the company, its products have chic European design and German engineering.

Vmoto is also involved in the manufacture and distribution of petrol scooters and four-wheel all-terrain vehicles.

During the year, Vmoto undertook an extensive strategic review of operations with the intention of simplifying the company’s structure. This allowed management to focus on international sales and marketing of its electric two-wheel vehicle products.

What’s driving the Vmoto share price?

The Vmoto share price is today surging higher after the company advised that, despite challenging market conditions, it has sped up execution of its international strategy. In light of this, Vmoto is projecting to record a net profit after tax between $3.2 million to $3.4 million. The forecast FY20 result will significantly eclipse FY19’s net profit after tax of $1.3 million.

Vmoto highlighted a number of milestone accomplishments throughout the year that will contribute to the underlying financial performance. These included:

  • Receiving committed orders of 4,300 units from strategic ride-share customer, Go Sharing.
  • Securing additional international distributors to a total of 50 international B2C distributors across 62 countries.
  • Achieving strong growth across B2B operations, through the use of increased popularity in delivery and ride-sharing services.

Managing director commentary

Mr Charles Chen, Vmoto’s managing director, commented on the company’s financial performance, saying:

I am delighted to announce we will deliver a significant increase in NPAT for this financial year when compared to 2019. The COVID-19 outbreak has provided great uncertainty and disruption for businesses globally but we are agile and responded quickly by making small changes to our international strategy, which has proven to be incredibly fruitful.

We look forward to continuing this growth trajectory in 2021.

Vmoto share price summary

The Vmoto share price has fallen more than 40% since reaching its all-time high of 67 cents in September. Although when looking at the beginning of the year before COVID-19 struck, the company’s share price is up more than 66%.

Vmoto has a market capitalisation of $115.8 million and a price-to-earnings (P/E) ratio of 30.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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