Incident: VESYNC publishes 2024 semi-annual report. In 2024H1, the company achieved revenue of 0.3 billion US dollars, YoY +7.0%; realized net profit to mother of 0.04 billion US dollars, YoY +37.5%.

We believe that as the company continues to expand product categories, actively lay out offline sales channels, and continue to explore European and Asian markets, revenue is expected to grow rapidly.

H1 Revenue Growth Steady: 2024H1's revenue continues to grow well. By region, the company's revenue in the North American market in the first half of the year was +13% YoY. The company's North American market is growing steadily, mainly because: 1) The company continues to increase the number of products entered offline retailers, and sales at retailer stores are growing rapidly. 2) The company developed TikTok retail channels and launched Levoit Core Mini air purifiers and other products on TikTok. According to the company announcement, 2024H1 maintains the top sales share of Levoit brand air purifiers and air humidifiers in the US market. H1's revenue YoY in the Asian market was +43%. In the first half of the year, the company's products entered about 200 mainstream supermarket stores in the Asia-Pacific region, speeding up the pace of market development in Asia. H1's European market revenue YoY -19% was mainly affected by the decline in air fryer revenue in the Turkish market. Channel customers in the Turkish market stocked a lot in 2023, and demand in the Turkish air fryer market fell short of expectations in 2024.

H1 company's profitability increased: 2024H1 company gross margin +3 pct year on year, net profit margin +3 pct year on year. The main reasons for the year-on-year increase in H1's gross margin include: 1) the company's product structure has improved; 2) the cost of some of the company's products has decreased.

Investment advice: VESYNC is a leader in the US Amazon small home appliance market. It has a complete brand matrix, and has established a long-term cooperative relationship with Amazon, and relies on the advantages of the domestic industrial chain of high efficiency and low cost. The company is actively connecting offline retail channels and the European and Asia-Pacific markets. Looking forward to the future, we are optimistic that the company will continue to enrich product categories and expand channels.

We expect the company's EPS for 2024 to 2026 to be 0.08/0.09/0.10, respectively, with a price-earnings ratio of 8 times 2024, corresponding to a 6-month target price of HK$5.27 (using the USD/HKD exchange rate of 7.80 on September 2, 2024). Maintain a Buy-A investment rating.

Risk warning: Prices of raw materials have risen sharply, and shipping costs have risen sharply.