WDT - Wellington Drive Technologies

[zigzag]

It is a pedigree mutt..which is now being acknowledged, perforce, by pussies.

What is your problem Columbus? Craic seemed to be a prisoner of the 1980's. You gone on and on about dogs and mutts. You seem to have some weird canine fixation/fetish. I really think you should see someone about it. Even when confronted by a by a tiger, you still see a dog. It's becoming increasingly obvious that you are barking up the wrong tree. Get some professional help!

[Lizard]

No, I have not said that it "would not become profitable". I have said that it would not be worth paying up for the market capitalisation attributed to it unless it was able to achieve sales of that magnitude within 3-4 years. I don't see that as incompatible with what Ross Green has said.

From my post of 30 August:

If it helps, $30 revenue/unit, 10m units, $300m/yr revenue, price/sales=1 (this is based on typical mid-cycle manufacturing and currently compares favourably with companies like FPA or SKL - however, optimists might like to pick higher!), $300m market cap in 4 years time or $1/share - so 25%pa off a price of around 40cps. At 31cps, you can drop the figure down to sales of about 8m units per year in 4 years time.

That may be simple (and I've presented the workings back-to-front), but I am happy with that level of calculation at this point in time. You are welcome to examine the numbers and draw your own conclusions as to whether they are fair or not.

My estimates may turn out to be "millions" out. But the posts of some people earlier suggested they were willing to buy on the prospect of sales which were an entire order of magnitude out.

[Codfish]

Hey guys stop bickering. I have wondered where Lizard gets his numbers from but since I'm not prepared to do the numbers myself I've no basis for criticism.

There is a very long way to go before we can talk about profitability, dividends etc with WDT. They have yet to build their millionth motor never mind 8-10m per year. They are still an intellectual property company really, and are yet to prove themselves able to manufacturer milions of motors each year consistently and efficiently.

WDT may well fulfill it's promise and resist the temptation to sell out to the big boys in to the bargain. I'd be very happy if they did. For now, though, it's looking good but there is still a long way to go.

[Nevl]

codfish you are right about the dividends but I mentioned it as it seems to be the first priority for any Kiwi company making a profit rather than reinvestment. Also Panasonic according to the news release to the NZ herald is going to manufacture the motors at the new Singapore plant. WDT is outsourcing virtually all its production so upscaling production is relativly simple. That was the whole point of the last 2 capitial raisings. Getting to a stage where WDT acts as an intelectual property company with a small production facility to do small runs of the engines. The sad thing is most of the sales are for the monsoon engine and not the more advanced engines but still the price still seems to be around the $35 per engine. This is good news as the new engines seem to be cheaper than the old style electric motors hopefully hastening the uptake. Ross Green also prdicted profits from the 2nd half of 2008. i suspect the payments from Panasonic will be a big part of this as well as the Total integration project for the American company. The 400000 order announced last week will not hurt either.

[bonito]

A write up / summary of recent WDT activities from the weekend for those who missed it.

Motor co gets a rev up
By JENNY RUTH - Sunday Star Times | Sunday, 21 October 2007

A string of new orders over the past few months, particularly from household names Panasonic and Samsung, has significantly boosted Wellington Drive Technologies' credibility.

The fact that such companies have allowed their names to be published is significant in itself and likely to generate further interest in the company's energy efficient motors used in all sorts of household appliances, from fridges to air conditioners.

In the past, the company has been unable to name its customers back in late August, it announced an order for 400,000 motors from "a major North American manufacturer of commercial refrigeration equipment".

To put that in context, at the end of June, the company had shipped a total of just 700,000 motors it was founded in 1986 but has been producing commercial products only in the past few years.

Illustrating how much production is now ramping up, so far, in the year ended June, Wellington already delivered more than half that total and expects to deliver its millionth motor some time in 2007.

That unnamed US customer will start receiving motors in January next year and Wellington says that customer expects it will need more than 400,000 a year in future as it plans to introduce the motors into other product lines.

While that order will hit the company's bottom line long before Panasonic's order, which is still at the development stage, it was the naming of Panasonic that really got the company's share price moving.

Wellington has been able to name some customers in the past, although they haven't been household names in New Zealand. These include US supermarket operator Kroger and Turkish appliances manufacturer Arcelik Europe's third-largest appliances manufacturer.

"As one credible party contracts with us, other credible parties see that as a tick," says Wellington chairman Shawn Beck. "It's getting to feel a bit more like a snowball rolling down the hill."

Being unable to name customers has been "a pain in the proverbial", but customers wanted to be careful about their marketing strategies and hadn't wanted to give their competitors advance warning of new products, he says.

But it is getting easier and customers are more willing to be named. "Given that it's fairly obvious that energy efficiency is coming, they're not quite so paranoid," Beck says.

As to that energy efficiency, Wellington says the energy savings from that 400,000 order is equivalent to reducing carbon emissions by at least 100,000 tonnes and will have about the same effect as taking 50,000 cars off the road.

The new orders are also making the company's forecast that it will become profitable by the second half of calendar 2008 look more achievable. It has been a profit-free zone all its existence so far, accumulating $34.2 million in losses to June 30.

Gaining credibility is always important for a start-up company and Wellington's was severely dented late last year when a $40m deal to sell 40% to US investors fell over when those investors couldn't stump up with the cash at the last moment.

Unlike many start-ups, Wellington doesn't lack institutional support: it counts Axa, ACC, ING and Walker Capital Management among its shareholders.

Some individuals have also been willing to put their money where their mouths are, including Goldman Sachs JB Were broker Grant Taylor, who owns nearly seven million shares.

Taylor says that despite the fiasco of the US deal, its failure turned out to be a galvanising event expecting to receive the money, Wellington had already started to spend it to speed up its commercialisation process. Rather than just raising enough money to keep going at a snail's pace, as Wellington had in the past, "what it caused the company to do was say, are we going to go for gold?" he says.

The answer was yes; the company placed $12m with six institutions the same day it announced the US deal's failure and raised a further $7.65m from a rights issue this year.

If it does move into profit next year, that could be the last time the company needs to hold its hand out for more money.

Although it's always possible that, having proved itself over the next year or so, Wellington Drive Technologies may decide to speed up development even further.

# Jenny Ruth is a freelance financial journalist and a columnist for the Independent Financial Review.

[Scuffer]

This the key with the prices of oil and coal going skywards and the whole carbon credit thing the most efficient motors are the motors which are going to be utilised where ever possible. Another key factor is that by being more efficient they are lighter which means less use of copper and steel, which are resources that are also heading up in price.
The average electric motor states its power factor on its name plate usually around 0.85 so any improvement on power lost is money saved, I don't know what the p.f. of the average WDT motor is but it will be difficult to get it up much more so if they have managed to do this then they will be very much sort after and now that major companies are showing interest and opening their wallets I fully expect the sp to go up dramatically soon.

[upside_umop]

This the key with the prices of oil and coal going skywards and the whole carbon credit thing the most efficient motors are the motors which are going to be utilised where ever possible. Another key factor is that by being more efficient they are lighter which means less use of copper and steel, which are resources that are also heading up in price.
The average electric motor states its power factor on its name plate usually around 0.85 so any improvement on power lost is money saved, I don't know what the p.f. of the average WDT motor is but it will be difficult to get it up much more so if they have managed to do this then they will be very much sort after and now that major companies are showing interest and opening their wallets I fully expect the sp to go up dramatically soon.

really depends which motors your looking at scuffer.
have a read of some wdt reports on motor efficency and which markets their targeting, or even google it. mainly in low power air conditioning, refridgerators etc..
the basic gist is, that wdt are targeting the efficent motor market less than 1 hp equivalent. you say the average motor is 0.85 and hard to improve on. i think wdt is competing in market where the motors are lower power ( <1kw ) and when 'average' or 'normal' motors are in this range, they become highly inefficient. wdts motors however are one of the most efficient making them very attractive.

here is a page with a little table which show efficiencies of motors improving with more power. you will then get where wdt a positioning themselves...

http://www.psnh.com/Business/SmallBusiness/Motor.asp

about the shareprice rising dramatically? its already got a reasonably large market cap for a company not yet turning a profit. no doubt they are also experiencing a very tough market with the nzd so high...
i guess its all about your required/expected rate of return...

[Scuffer]

Interesting I didn't know that thanks upside.

[SMan]

Does anyone have any pricing/cost info for wdt units? A saving of US$40M per year for 400,000 units equates to US$100 per unit per year. A 350W unit running 24/7 will consume roughly 3000kWh of electricity per year. So a $100 saving on only 3000kWh must represent a significant increase in efficiency and I can see the attraction of these units to the end retailer.

[ratkin]

Looking through their last report they seemed rather worried about the kiwi dollar being too high. Fact is it probably not going any lower for quite sometime .