Back in the ‘old days’ (September 1962) we thought of the future as one where we flew around in saucers, had robots as servants, and lived in towers far above the ground, although the average Joe still had to commute to work and take the dog for a walk when he got home.  We (at least some) do live in towers far above the street, but the robot servants are still a bit further out, and the flying saucers, well, they might be a bit closer than you think., as a Swedish company (Jetson Aero (pvt)) has developed a battery operated ultralight plane designed to give commuters the ability to fly to work.  Whether this ushers in skies full of commuters heading to and from work or is just another mid-life crisis item for men in their 40’s remains to be seen, but Jetson’s ultra-light seems to have filled the dream of those wishing to avoid the stress and struggle of driving to and from work.
The company developed a proof of concept system in 2018 and has been developing what the company calls a ‘consumer friendly’ version of the Jetson ONE, with the intention of ‘making everyone a pilot,” a somewhat scary thought considering the lack of driving acumen seen on the roads today, but a noble idea from the standpoint of easing roadway congestion and reducing the use of fossil fuels.  In that same vein, the company’s primary focus (other than selling aircraft) is safety and the aircraft features a triple redundant flight computer, has a ballistic parachute (a ballistic parachute is one that is made to open rapidly like an ejection seat), can fly with the loss of one (of eight) engines, has hands free hover and emergency functions, and has LIDAR based terrain tracking and obstacle avoidance features.

​As the aircraft is designed for vertical take-off, it does not require a runway and weighs 190 lbs., is made of aluminum and carbon fiber and can fold up to just under 3 feet wide when not in use, so it fits in less space than a car, and while it can only carry one person (210 lbs. maximum weight), you can charge it in 2 hours using a regular 110v outlet (1 hour on 220v).  While not official safety features, the maximum speed is limited by software to 63 mph (see FAA rules below), a maximum of 1,500 feet in altitude (also scary), with a flight time of 20 minutes, which means you need to be less than 20 miles from work.
Of course there are a few questions one might ask before delving further into the purchase of the Jetson One, particularly cost and how difficult is it to get a license to fly one?  Both questions are actually easy to answer.  The cost to reserve a Jetson ONE is $22,000, with another $70,000 due on delivery, but don’t count on getting one this year as the company has sold out all chassis for 2022 and is now only taking orders for delivery in 2023, although actual 2022 deliveries will begin toward the end of 3Q or early 4Q.  Current orders would start at #187, so there might be a bit of a wait.
The second question is a bit harder to answer, but for folks in the US the FAA says under Title 14 – Part 103 (Ultralight Vehicles) of the Code of Federal Regulations, you do not need to be a pilot to fly an ultra-light aircraft as long as it meets the following qualifications:
(a) Is used or intended to be used for manned operation in the air by a single occupant; (yes)
(b) Is used or intended to be used for recreation or sport purposes only; (no dogs, cats or other passengers)
(c) Does not have any U.S. or foreign airworthiness certificate; and
(d) If unpowered, weighs less than 155 pounds; or
(e) If powered:
(1) Weighs less than 254 pounds empty weight (yes) , excluding floats and safety devices which are intended for deployment in a potentially catastrophic situation;
(2) Has a fuel capacity not exceeding 5 U.S. gallons (no fuel other than batteries);
(3) Is not capable of more than 55 knots[1] (yes) calibrated airspeed at full power in level flight; and
(4) Has a power-off stall speed which does not exceed 24 knots calibrated airspeed (yes).
 
Since the Jetson ONE meets all of these requirements, it does not require the pilot to be licensed or carry a certificate of airworthiness, nor does it require the pilot to have any ‘aeronautical knowledge, age, experience or medical certificate’ to operate such a vehicle, although flight is limited to the hours between sunrise and sunset and flights over ‘congested areas’ is forbidden.  We note that these rules are for the US only, with other countries defining ultra-lights differently, requiring permits, insurance and medical exams, including Canada, where an ultra-light pilot permit is required, so no flying over the border…
 
The company has received one outside investment from a former Google (GOOG) veteran and angel investor who is now an advisor to the company and is looking toward raising additional capital to fund the expansion Jetson needs to fill the over 186 Jetson ONE’s it sold since its release in October last year (12 to be delivered this year) and the 174 it has already sold for 2023.  The launch video below has had over 14m views.  The GIFs below are of the co-founder’s flight from his home in Tuscany to his office 3 miles away, and the 2nd of a typical landing. Please note we have no connection to the company, any involved personnel, funding sources, or have ever flown in an ultralight.  We just thought it an interesting and unusual application of battery technology…
 
https://www.jetsonaero.com/static/jetson_one_background_desktop-ddb6a861fa42c1cc72e6f48d754cc9d7.mp4
 
https://img.etnews.com/news/article/2022/07/05/cms_temp_article_05163347350806.gif
 
https://img.etnews.com/news/article/2022/07/05/cms_temp_article_05163759593137.gif
Figure 1 - Aerial View of Seattle at 1,500 feet - Source: 123RF
Figure 2- The Jetsons (1962) - Source: Hanna-Barbera Productions
Figure 3 Central Park Tower - World's Tallest Residential Building - Source: Extel Development


[1] 55 knots = 63 mph

​As we have noted, Samsung Electronics announced its QD/OLED TV line in March and began taking pre-orders in north America and a number of European countries, with regular sales beginning in April in the US and May for Europe.  Samsung is now expanding sales of the QD/OLED TVs to Singapore, Australia, and New Zealand, with the UAE, Brazil and other Central and South American countries in 3Q, and the rest of Europe by the end of the year.  The QD/OLED sets remain excluded from the Korean market, Samsung’s home territory.  We expect that supplies are still limited, despite the improvement in Samsung Display’s (pvt) QD/OLED yield rate and that Samsung’s heavy marketing of its QD/Mini-LED TV line as its premium TV offering would conflict with the idea of an OLED based TV, which Samsung has not offered and has denigrated in the past.
In our 4/18/22 note we estimated Samsung Display’s unyielded and yielded production for 2022, which we believe will fall to less than the general consensus of just over 1m units.  As this is a small percentage of the ~40m to 50m units Samsung typically sells each year, the marketing conflict remains a difficult one until a decision is made as to whether Samsung Display will expand QD/OLED capacity, which we expect is being decided currently.  While we could take the expansion of sales coverage as a sign that such a decision has been made, we hesitate to make such an assumption as the glass half-empty view would be that current sales have not been high enough to account for the potential production this year.  We ascribe to neither view at this point as shipments for the QD/OLED models have only been in place for a relatively short time, giving limited data to Samsung, especially during a period when TV set demand has been under pressure.  Given the potential investment involved in expanding SDC’s QD/OLED capacity, we expect the decision might be postponed until the end of 3Q or possibly to the end of the year.

El Salvador is unusual in that it was the first and only one of two countries where Bitcoin has been adopted as legal currency. The country’s President, Nayib Bukele, was the driving force behind the bitcoin adoption, which came into effect on 9/7/21 and the country began purchasing bitcoin immediately and soon released plans to build a ‘bitcoin city’ at the base of the Conchagua Volcano, in order to use the local geothermal energy to power bitcoin mining.  President Bukele indicated today that the country had just bought 80 bitcoin @ $19,000 each (~$1.52m US) and thanked the world for selling it at a low price.  While this might sound like a shrewd purchase, taking advantage of the large decline in bitcoin price, it was one of a number of bitcoin transactions that El Salvador has made, leading to some substantial losses.
As the price of bitcoin fell last month, President Bukele stated that “There are people who are concerned about the price of Bitcoin.  Bitcoin investments are safe. As soon as the bear market ends, the value will increase. Perseverance is the key,” and El Salvador’s finance minister added “…there was no loss because we did not sell any bitcoin,” likely not the most reassuring statement coming from the person who is in charge of the country’s treasury.  While he also noted that Bitcoin accounts for only 0.5% of the country’s assets, that is likely of little consequence to a typical wage earner in El Salvador, who makes $384/week, or even the average worker, who makes $830/week.  So far the Bitcoin currency game has not been a profitable one for the people of El Salvador.

Financial transparency is not quite the watchword of Chinese companies, at least in the consumer electronics space, and even more so in the display space.  There is considerable pressure on Chinese display companies to grow and increase market share given the construction and infrastructure grants and operating subsidies given to Chinese display producers.  Along with these subsidies and the share ownership of local or state-owned organizations, Chinese panel producers also have a cultural desire to show that they have the production and business savvy to compete and/or dominate in the global markets, and sometimes the optimism necessary to maintain an enthusiastic view of what is a highly competitive and cyclical business, becomes more important than the details and that can be reflected in company financials by a lack of explanations for items that might not paint the more perfect picture Chinese display companies would like to project.
The Shenzhen Stock Exchange does question certain aspects of the financials for companies listed on the exchange when there is little detail to explain particularly unusual or aberrant financial data through a letter sent to the company by the exchange asking for the detail that might help investors to better understand the data, and one such letter was sent to OLED producer Visionox (002387.CH) by the exchange in reference to the 2021 annual report.  The letters are not accusations, but a request for a better explanation of specific financial entries, and after the company’s response the data is either accepted as explained or suggestions are made on how to better report the data.
In the Visionox letter there were a number of points that the exchange needed clarified, the first of which was the gross margin, which was -2.93% for the 2021 year.  In itself a single year with negative gross margins for an OLED producer would not be unusual, but the letter indicted that a negative gross margin had been the case for the last four consecutive years, a bit more troubling for a company that has been operating OLED fabs since 2015 and has a ~5% share of the small panel OLED market. 
 
The company’s response was as follows[1]: “The company's net profit after non-deduction and the gross profit margin of OLED products have been negative for several consecutive years, mainly due to the company's 5.5th generation AMOLED production line projects [that] have been completed successively since 2019, and the 6th generation AMOLED panel production line project, 6th generation AMOLED module production line project in 2021. Before the production line reaches the predetermined usable [state, the company is still in a] ramp-up period of yield rate and utilization rate. In 2021, the company's OLED product gross profit margin [will increase][increased] year-on-year by 6.60 percentage points, gross profit margin was negative mainly because the company continued to import in response to customer needs.  New products, and the production of new products needs to go through a certain climbing period to reach a higher level of good quality [which affects yield] rate and utilization rate, so the initial product cost is relatively high.” 
 
Another issue brought up by the exchange was the high proportion of inventory reserves taken by the company, which were 21.43% of book for the year. The company cited long cycles, ‘heavy’ capital and technology costs, and the fact that the company’s main production line (Gen 6) did not open until June 2021 and had a low utilization rate which raised the fixed cost allocated to products produced on that line, causing negative gross margins leading to impairment of inventory.  That said, Visionox also gave a comparison of the year-end depreciation reserve levels for other comparable companies ((BOE – 200725.CH), Tianma (002387.CH), and TCL (000050.CH)) to point out that while the rate was high, it was not out of line with comparable companies, although from our perspective it gave little help to their cause (see table below).

[1] We paraphrased and added missing text due to translation errors and inaccuracies

The letter questioned a number of other entries, particularly the movement of assets allocated to projects under construction, but we also noticed a question about the company’s top five customers which gave some insight into how the company negotiated contracts with its major customers, although the questions from the exchange were related to AR entries.  While the company’s largest customer grew 18.8% y/y in 2021 and accounted for 20.08% of total sales, Customer A’s share of receivables in 2021 was 56.6%, far in excess of that of Customer B (12.8% receivable share), who generated only 5.6% less sales during 2021.  The company explained this discrepancy as a function of credit policies, which for that customer (A) were for payment within 90 days after the end of the month in which shipped, while Customer B’s credit policy was for payment within 50 days, also noting that Customer A was the leading smartphone brand, which we assume allows Visionox to give them some slack on payments.

​While there were other less relevant questions in the letter, the exchange signed off on all of Visionox’s responses, offering only a few points on ways the company could make future reports more transparent.  We expect the reason for the letter was due to requests for clarification from investors, either directly to the exchange or through the Q&A forum that allows investors to pose questions directly to company managements.  As we have noted in the past, some companies actively answer questions, while others give only pat answers that seem to rankle investors who have likely lost money on the stock or are just trying to understand what amounts to somewhat foggy financials for certain companies.  Again we note that most Chinese panel producers are beholden to funding sources and less to the smaller public shareholders, especially during periods when growth or profitability is under pressure, so there seems to be a distinctly optimistic picture of financials presented, whether through emphasis or de-emphasis.  This makes examining the detail even more important than might be the case with other foreign companies, though while we single out Chinese companies and display producers more specifically, we do see similar biases coming from companies in other countries, particularly those with a need to prove their worth in the global markets, making it necessary for governing bodies and local exchanges to ask questions when details are not specified.