Investment events
Vantage Co., Ltd. released its 2023 three-quarter report. 2023Q1-Q3 achieved revenue of 4.43 billion yuan, +4.0% year-on-year; net profit of 360 million yuan, +28.2% year-on-year; net profit of net income after deduction of 350 million yuan, +31.3% year-on-year. In Q3 alone, the company achieved revenue of 1.55 billion yuan, +6.6% year-on-year; net profit of 100 million yuan, +151.6%; net profit after deduction of net profit of 100 million yuan, +184.7% year-on-year.
Key points of investment
Revenue slightly exceeded expectations. New offline retail and online channels are expected to grow faster. Q3's revenue is +6.6% year-on-year, and revenue slightly exceeds market expectations. The company is accelerating product iteration and upgrading online. We expect the Q3 online channel to maintain rapid growth; offline channels may benefit mainly from the expansion of new retail business; traditional distribution is pressured by declining real estate and reduced store traffic; the company strictly controls engineering channel risks and focuses on improving capital efficiency. The engineering business may still be under pressure in Q3; as overseas customers remove inventory, overseas business is expected to gradually recover.
Significant increase in gross sales, excellent cost control
The company's 23Q3 gross sales difference was +6.6pct to 17.2% year on year. We think it may be mainly driven by product structure optimization, projects with low gross profit contribution, and a decline in the share of overseas channels. The company's 23Q3 corporate management/development/finance expense ratio was +0.4pct/-1.6pct/+0.3pct, respectively, to 4.9%/3.5%/-0.1%. The net interest rate for net income in Q3 alone was 6.4% (+3.7pct year-on-year), and the profit margin for reduced asset impairment losses and credit impairment losses (42.82 million) was 8.9%. Affected by the low base for the same period last year, the company's Q3 performance was significantly +184.7% year on year.
The actual controller proposed to buy back shares for equity incentives and employee stock ownership plans. The company announced on October 29 that the actual controller and chairman, Mr. Pan Yejiang, proposed to repurchase some of the company's shares with 120 million yuan and choose opportunities for equity incentive plans or employee stock ownership plans in the future, which is conducive to binding core talents and promoting the stable development of the company.
Profit forecasting and valuation
The company's product structure continues to be optimized and profitability continues to recover. We expect the company's net profit for 2023-2025 to be 501 million yuan, 572 million yuan, and 642 million yuan respectively, +250.38%, +14.09%, and +12.30%, respectively, corresponding to the current stock price PE of 10X/9X/8X, maintaining the “buy” rating.
Risk warning: real estate continues to decline; raw material prices have risen sharply, etc.