Vmoto China plant targets $100m annual revenue

Perth-based scooter manufacturing and distribution group Vmoto Ltd announced today an annual revenue target of over $100 million a year by 2011 with the Stage 1 of the company's China plant expected to be operationnal by mid year.

The Stage 1 layout will deliver an initial output of 15,000 scooters and 20,000 engines.

Stages 2 and 3 are due to commence later this year and will provide an eventual capacity of a combined total of 200,000 scooter and engine units per annum for export to its global client base in more than 100 nations.

Full announcement below:

An Australian company has commenced construction in China of a sophisticated and advanced scooter assembly plant, targeting annual revenues of over A$100 million a year by 2011 for ASX-listed Vmoto Limited (ASX code "VMT").
Vmoto announced today that work was underway in Nanjing, China, on Stage 1 of the 10,000 square metre plant which was expected to be operational by mid year.
The Stage 1 layout will deliver Perth-based Vmoto - already a successful global distributor of its own scooter brands and All Terrain Vehicles (ATV) - a modern assembly plant in China with an initial output of 15,000 scooters and 20,000 engines.
Stages 2 and 3 are due to commence later this year and will provide an eventual capacity of a combined total of 200,000 scooter and engine units per annum for export to its global client base in more than 100 nations.
"This is a milestone for Vmoto as we are the only Australian scooter manufacturer and are one of the few independent foreign owned enterprises given approval to establish and operate such facilities in China," Vmoto's Managing Director, Mr Patrick Davin, said today.
"Critically, Nanjing, near Shanghai, is one of the fastest growing commercial areas in China. It has a highly mechanised container port only 10 minutes from the new assembly plant and this, combined with our engine build quality and high level of in-house expertise from ex-Honda- Sundiro engineers, provides significant export and sales advantage," Mr Davin said.
"We anticipate achieving full production by the end of 2010.
"On current pricing, that will generate annual revenue in excess of A$100 million."
Pre-orders have already accounted for the entire 15,000 scooter run in the Nanjing plant's maiden start-up period.
"This is without doubt the most significant milestone achieved by the Company to date," Mr Davin said.
"Having our own factory enables Vmoto to be totally self-reliant in relation to future scooter requirements and to have a more hands-on approach in developing our specialised scooter models moving forward.

"The Company also stands to reap significant margin advantages in relation to our scooter purchasing costs which will aid long-term profitability and competitiveness."
Vmoto acquired the three acre Nanjing site for US$750,000 in September last year and will fund the Stage 1 construction schedule internally.
When the plant is completed, Vmoto will be one of only a handful of scooter manufactures worldwide which have their own manufacturing and assembly capability. The Company has appointed the former General Manager of Scooter Operations for Honda Sundiro in China, Mr Li Gang, to head the Nanjing operations.
The site will also embrace by August, all of Vmoto's in-house engine build and scooter assembly operations in China, currently operating from two rented factories.

Stage 1 will employ about 130 people and comprise three production lines capable of 1250 units per month over three different model lines.

The construction start is the latest milestone for the Australian scooter wholesaler and distributor which last year accelerated its move towards becoming a fully vertically integrated international scooter group with the acquisition of a 67% stake in Shanghai Haiya Power Manufacturing Co. Ltd.
This delivered Vmoto majority ownership of Haiya Power's Shanghai factory which produces between 1,000 and 2,000 high performance, environmentally efficient, 4 stroke 50cc and 125cc engines per month, many exported to Korea.
The Australian company had earlier acquired the global operations of Vmoto Motorcycles, owner and distributor throughout Australia, New Zealand, and U.A.E. of the class-leading Vmoto scooter brand and a range of ATVs.
It had also acquired the Shanghai-based Freedomotor Company Limited, one of China's largest independent distributors and exporters of scooters, motorcycles, ATVs and hi-performance off-road karts. Freedomotor has distribution rights in more than 50 countries across Europe, Australia, North America, South America and South Africa.
Mr Davin said Vmoto remained on track to complete by the third quarter of 2008, its final transition to a fully integrated international scooter business - the consolidation of its entire wholesale distribution, retail, marketing, manufacturing and Original Equipment Manufacturer OEM operations, under one global brand.