Incident Overview
Vesync Annual Report 2023:
2023A: Revenue of US$585 million, +19% YoY, net profit attributable to mother of US$77.48 million, and loss of US$16.28 million in the same period last year.
23H2: Revenue of $309 million, +16% year over year, net profit to mother of $44.86 million, and loss of $31.76 million in the same period last year.
Analytical judgment:
H1's revenue growth rate was 24%, and H2 is still growing at a steady +16% rate. The company's category and channel expansion logic continues to be implemented, and the original dominant categories of purifiers and humidifiers performed excellently. According to the announcement, the sales share of purifiers in the US in '23 was 28.6%, +5.6pct year on year, ranking first in the US for two consecutive years; humidifier sales share was 22.7%, growing from number one in Amazon in the US to number one in omni-channel share. In terms of channel development, non-Amazon channel revenue grew 61% in '23, accounting for an increase of 5.7pct to 22%. The company has already entered 11000/3200/1900 stores in North America/Europe/Asia Pacific respectively.
On the profit side, gross margin increased sharply by 18pct to 46.9% in '23, mainly due to an increase in product revenue and a decrease in freight costs. Operational efficiency improved, and the sales expense ratio decreased by 1pct to 17% in '23. Under the combined influence, the net profit margin was 13.2%. On a marginal basis, H2's gross profit margin was 48%, and the net profit margin was 15%, an increase of 3 pcts over the medium term.
Investment advice
Combined with the annual report, we adjusted the company's revenue forecast for 24-26 to US$70/8.26/US$943 million (the previous value was US$735/887 million in 24-25), +19.51%/+18.02%/+14.22%, respectively. In terms of gross margin, it is estimated to be 47.00%/47.10%/47.10% for 24-26, respectively. The corresponding net profit for 24-26 was US$0.88/1.06/US$120 million (the previous value was US$0.76/ US$0.86 billion in 24-25), +15.08%/+18.52%/+13.74% year-on-year, respectively. The corresponding EPS was $0.08/0.09/0.10 (the previous value was $0.07/0.07 for 24-25). Based on the closing price of HK$5.05 on March 26, '24 (0.64 USD converted at the current exchange rate of 0.13), the corresponding PE was 8.44/7.12/6.26 times, respectively, maintaining an increase rating.
Risk warning
Risk of macroeconomic fluctuations; risk of price increases for raw materials; increased risk of competition.