I recently bought VEE and though I would share my analysis.
Intro:
VEEM (ASX:VEE) are a Perth based engineering firm specialising in marine propulsion and stabilisation systems for the global luxury motor yacht, fast ferry, commercial work boat, and defence industries. Although the Group is managed as a single business segment, it can be broken down into the following sales categories: Propulsion and Stabilisation, which comprises, of the manufacture of new propellers, shaft lines, gyrostabilisers and marine ride control fins, Defence, and Engineering (non-defence). VEE’s main area of competitive advantage is their continued in-house R&D, allowing them to release and specialise in new and efficient technologies, with their world class gyrostabiliser and propeller products receiving ever increasing demand both at home and internationally, testament to their R&D abilities. VEE’s main area of focus is the development, marketing, sales and support of their products and services. COVID initially benefited VEE but as supply chains, availability of materials and labour were impacted by COVID, reducing VEE’s ability to do business and market their products, it hurt their bottom line.
FY22 was their worst year for some time with profits falling from $2.4m in FY20, $4.9m in FY21 to $1.27m. FY23 has seen profits return to previous levels with net profit coming in at $4.1m, indicating that things are on the improve and the worst is behind them. This has been reflected in their share price as it has gone from circa high of $1.40, low of 40c, to its current 63c, in this time.
Things were heading in the right direction before COVID hit and impacted VEE’s ability to do business, and now after their FY23 numbers, it looks like things are on the improve again with revenue, profit, and margins increasing and getting back to their pre COVID levels, with this flowing through to EPS in FY23. Looking forward, operating profit and margins will be key as businesses get use to operating in a higher cost and inflationary environment post COVID, with businesses that keep a lid on costs and maintain or improve margins, set to do well. On the back of their FY23 numbers where VEE managed to increase revenue, operating profit, profit and margins they look to be managing this balancing…
