Recently, incidents related to the US election have been frequent, and the market is generally concerned about the risk of imposing additional tariffs, causing financial sentiment related to going overseas to continue to weaken. At the same time, there are also certain differences and doubts about Anke's growth certainty and long-term confidence. We quantify the split market in the form of topics and pay close attention to the potential impact of tariffs imposed by the US, and discuss in detail the company's possible countermeasures, as well as the sustainability and growth potential of its short to medium term business potential.

Business expansion: category focus+market development to gain momentum for growth. 1) Emerging markets have broad space: The consumer electronics industry accounts for 60% of sales in markets other than Europe and the US, but Anke accounts for only 30%. Currently, the company is strengthening the development of new markets such as Australia and Southeast Asia, and strengthening the layout of weak countries is expected to contribute significantly to subsequent growth. 2) Accelerated expansion of offline channels: Amazon's basic market is stable, and the long-term growth rate is maintained at around 20% to ensure the steady growth of online channels. The proportion of offline sales in Europe exceeds 80%, but Anker's offline share is only 30% and is mostly concentrated in the US and Japan. The accelerated expansion of the European market is expected to reach more consumers and may become an important driving force for future growth. 3) Rapid growth in core categories: Energy storage & security continued to grow rapidly after the company focused on categories, accounting for more than 25% of total revenue in '23, and shortfalls in business such as sweepers are also being made up.

We believe that the company's current inertial growth may be sufficient to support a 20% compound revenue growth rate in the next 2-3 years.

Tariffs are safe: brand premium+cost optimization are the operating cards to hedge against risk. 1) The risk of additional tariffs is manageable. Cross-border tariff collection is based on production costs rather than product sales prices. The higher the gross margin, the lower the tariff levy value for enterprises, and the profit impact is relatively manageable. According to our estimates, if US tariffs were to be imposed to 60%, Anker would only need to raise the US price by 15%, or can basically offset the additional costs. 2) High brand awareness is the core logic of US price increases. Anker has strong recognition of overseas brands, and overseas users regard the brand as the first factor in shopping and are willing to pay a premium for it. Furthermore, the 15% increase in the price of Anker products has relatively limited additional costs for users (less than $10 for mobile phone accessories), so a slight price increase will not significantly change consumers' decision-making preferences. 3) Supply chain cost reduction is another card for resisting tariff pressure. Anke's actual gross margin trend under the new accounting standards continues to rise, and the product cost side contributed even more in 2023. Mainly due to integrated gallium nitride technology to optimize the number and size of components, Anke is expected to significantly benefit from the cost reduction effects brought about by integrated gallium nitride solutions. The efficiency of the company's supply chain may be further improved.

Investment advice: The recent tariff sentiment is undisturbed, the company's operating fundamentals continue to prosper, and long-term value continues to stand out. We slightly adjusted the 24/25/26 EPS forecast to 3.82/4.67/5.59 yuan (previous value 3.83/4.66/5.57 yuan), corresponding PE was 13/11/9 times. Referring to the DCF valuation method, maintain a target price of 85 yuan, corresponding to 22 times PE in 24 years, and maintain a “strong” rating.

Risk warning: macroeconomic fluctuations, increased industry competition, category adjustments and market development fall short of expectations.