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With the first rollover completed it's neck and neck with China inching ahead of the European Union.  This situation is kind of replicated if we look at individual firms–The European Union's Rackk City Bikes just taking first place, very closely followed by China's Sigma. Any way, more on that later.

What I find interesting is that when we look just a revenue, Rackk City Bikes are third behind  Sigma and PeakPerformanceBros (Nice work!)

European UnionPeakPerformanceBros$22,065,676
European UnionRackk City Bikes$21,918,513
ChinaWheelin N Dealin$19,926,825
European UnionPsiclePath$19,636,737
European UnionJack It Up$18,819,599
ChinaRHO Inc.$17,935,661
European UnionPedal$15,792,873
ChinaWheelie Cool Bikes$15,050,040
European UnionMunchy Bikes$12,790,229

The difference between China and the European Union, starts to look more distinct when we turn our attention to profit. Despite having higher revenue, China has lower profit ... the question has to be, "What are they spending all their money on?"

Looking at profit (and also margin) at the the level of the firm, Rackk City Bikes bubbles to the top with a healthy 10% margin, whereas PeakPerformanceBros slide to fourth position. Again, I wonder where the money went.

European UnionRackk City Bikes$2,285,455$21,918,51310.4%
European UnionJack It Up$1,393,711$18,819,5997.4%
European UnionPeakPerformanceBros$1,315,959$22,065,6766.0%
European UnionMunchy Bikes$1,035,221$12,790,2298.1%
European UnionPedal$1,021,756$15,792,8736.5%
ChinaWheelin N Dealin$930,984$19,926,8254.7%
European UnionPsiclePath$711,991$19,636,7373.6%
ChinaWheelie Cool Bikes$561,999$15,050,0403.7%
ChinaRHO Inc.$129,893$17,935,6610.7%

As I look at the profit, I notice that Chinese firms have 4 of the bottom five places; even though some of those firms have pretty respectable sales revenue.

Is MunchyBikes the quite sleeper here? Their sales don't look so hot, but their margin is very respectable (by margin, they rank third). If they sort out their sales they'll be chasing (and possibly overtaking Sigma).  If anyone in the EU dig's into the figures, I bet they find that Munchy Bikes is pretty efficient at most of what it does.

One thing that most folk are spending money on is advertising. No surprises there, and it's interesting to see that both the EU and China have doubled their spending on advertising (compared to their level of sales). I've said to a few teams, it's interesting to think what is the "right" amount to spend on advertising (as opposed to how much can be spent). 

Taking a bit of a deep dive into the numbers, our analysts rate every firm in the EU (in regards to advertising) as LOW (as they do with Sigma and Sugma in China). The other Chinese firms, I'd rate as MEDIUM for advertising. (As an exercise, for those with time on their hands ... how do you interpret what the analysts say ... is LOW good/bad/indifferent/or just a thing; likewise, is MEDIUM good/bad/indifferent/or just a thing?).

When it comes to every firms' Corporate Brand Rating, I say it was definitely LOW. I know most Marketing Director's feel the have a lot on their plate, and it may be hard to find time to dig into that (and maybe you have bigger fish to fry). 

I'm dwelling on advertising a bit, as it is often the first thing that goes a bit out of control for most firms. Hence, my slight obsession with what is the right number for advertising.

As an aside, I won't say anything about 'lost sales' that tends to be pretty obvious to most folk/teams.

::cough:: At this point I accidentally published the page before I finished .... oops

Anyhow, carrying on. I have never seen a graph like this one for the average retailer margin. The decimal points are a total surprise to me. Overall, the industries are so close to one another, that decimals are needed to distinguish between them.  I wonder if that's generally true of the firms (I won't peak).

COGs (dollars) per SCU. Pretty much everyone is going up. It's getting more expensive to make bikes. That follows as people start to spend on things like setup time reduction, maintenance, and quality (huh? ... what about that great book 'Quality is Free', was it wrong),  Hopefully, the slew of new bikes that are likely to be released next year will have materially (pun intended) lower prime costs that will make a dent in these numbers.

Yeah, quality is on its way up. How high will it go?

FYI our analysts say that Wheelie Cool Bikes (China) has the lowest quality ... I wonder if that fits with their strategy. If so, no worries.

One number which is pretty challenging is that for the average cycle time. Here the difference is small but significant. It suggests that China a more efficient producer ... which is odd considering the COGs graph we looked at earlier. Well actually, it signals they are trying to be more efficient (and the COGs might be accounted for by their slightly higher quality). The number for cycle time looks solid at the moment, but the challenge will come in the years to come as firms start to spread into new markets and are producing an ever wider variety of bikes. Keeping the cycle time low is relatively straightforward with one bike, but it gets increasingly difficult with each additional type of bike being produced. Ops Directors will earn their money with this. 

So here we are at the end of my take on what is happening. There is a lot I'm not sure of at the moment; which firms know what they are doing, which firms are lucky–it'll be a mystery to me for a few years/rollovers yet.  

And so, to the big board. As an exercise, try and look at the numbers and decide which of these firms you would BUY, HOLD, or SELL if you were an investor.

2019European UnionRackk City Bikes$15.56$2,285,455$21,918,51324,1042,000,000$1.14$15.56$31,110,806$31,110,805$1,783,249$5,624,879
2019European UnionJack It Up$14.48$1,393,711$18,819,59923,1672,000,000$0.70$14.48$28,952,284$28,952,284$894,336$6,418,972
2019ChinaWheelin N Dealin$14.00$930,984$19,926,82529,3232,000,000$0.47$14.00$27,994,998$27,994,998$422,377$4,933,766
2019ChinaRHO Inc.$13.17$129,893$17,935,66125,1132,000,000$0.06$13.17$26,334,524$26,334,524-$383,977$3,031,215
2019European UnionPedal$13.09$1,021,756$15,792,87322,5962,000,000$0.51$13.09$26,174,086$26,174,086$515,451$4,534,093
2019European UnionMunchy Bikes$12.94$1,035,221$12,790,22923,2242,000,000$0.52$12.94$25,887,586$25,887,586$529,185$2,554,244
2019ChinaWheelie Cool Bikes$12.67$561,999$15,050,04023,3732,000,000$0.28$12.67$25,332,198$25,332,197$51,145$4,794,656
2019European UnionPeakPerformanceBros$10.21$1,315,959$22,065,67629,1292,000,000$0.66$10.21$20,422,838$20,422,838$678,094$10,176,020
2019European UnionPsiclePath$9.60$711,991$19,636,73731,4082,000,000$0.36$9.60$19,196,072$19,196,072$76,526$7,933,866

For me, I'm really curious about PeakPerformanceBros and their $10m in cash; that gives them a type of flexibility that other firms don't have right now. The tension there, is that other firms have probably already invested in "their future".  That is a real tension, and either approach can be successful (once again, it's down to how well people excecute on things.

So the top three firms are Rackk City Bikes, Sigma, and Jack It up. But honestly, none of the leaders are that far ahead of the rest of the firms.  For example, most of the firms have revenues north of $15m. At this stage, a single year/rollover could see any of them topping the table. For Munchy Bikes, it will probably take them two years/rollovers to get into contention. 

Overall, China and the EU seem pretty evenly balanced; the markets in each world are developing at pretty at the same pace. It really makes it hard to make predictions.

Reading the news, globally commuter bikes seem to displaced by electric bikes; it's happening everywhere—just look about town—and none our firms in the EU or China have access to the technology to play in that market. Matt Ensor, one of the best transportation engineers I know (even though he calls himself a sociologist) is very bullish about the future of electric bikes and their impact on the design of cities. I wonder how many of you have an e-bike, or an e-scooter (or do you rent them by the hour).

Finally, our analysts say HOLD Rackk City Bikes, Sigma, and PeakPerformance Bros. Did that match your thoughts?

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