Key points of investment
A cross-border enterprise with high-quality small household appliances, with a rich variety of products. The company's products are mainly sold to overseas regions such as Europe and America through Amazon. It has three core brands, namely Levoit, which is engaged in household environmental appliances, Cosori, which is engaged in kitchen appliances and dining utensils, and Etekcity, which is engaged in health testing equipment, outdoor entertainment products, and personal care products. Additionally, the company launched the VeSync app in 2015 to help users centrally control smart home devices. Thanks to a comprehensive product portfolio and smart connectivity attributes, the company can meet the diverse needs of consumers.
The global market space is sufficient, and intelligent upgrades enable growth. Compared with ice washing for major appliances, there is still room for improvement in the penetration rate of small household appliances in many regions of the world. According to Statista data, the global small household appliance market is expected to CAGR of 4.7% in 22-28. In the long run, the trend of intelligent upgrading of household appliances has been determined. Currently, the penetration rate of smart small household appliances in major European and American countries is only 10-15%, and the market space is broad.
Expand in multiple directions to open up the growth ceiling. Relying on a joint dual-core R&D team between China and the US, the company's products meet localization needs and have strong market competitiveness, leading in multiple categories, and brand awareness and reputation continue to increase. On this basis, the company continues to upgrade and iterate existing products and launch more new categories. Brand power and product power promote and catalyze each other, helping to form new growth points. At the same time, the company has a forward-looking layout of smart home devices, and its VeSync application has now successfully built various intelligent application scenarios and accumulated a large user base. As its product portfolio continues to be enriched, the program is expected to continue to iterate, accelerate the formation of a home internet platform, enhance customer stickiness, and drive rapid revenue growth. In addition to this, the company is also actively expanding channels and regions, using refined and systematic marketing methods to seize consumers' minds and gradually open up new incremental space.
Investment advice: The company has strong product strength, leading market share in North America, and strong brand advantages. Relying on strong product strength and brand strength, rapid expansion of the company's channels and regions, and continuous introduction of new categories and contributions, revenue is expected to maintain rapid growth. Net profit attributable to the parent company in 2023-2025 is expected to be US$0.69/0.84 billion, respectively, up 522%/23% year-on-year. This is the first coverage, and an increase in holdings is given a rating of -A.
Risk warning: Tariffs are imposed on products, overseas demand falls short of expectations, new product performance falls short of expectations, raw material prices fluctuate unwell, RMB exchange rate fluctuates unwell, sea freight prices fluctuate unwell, market competition intensifies, channel concentration is high, etc.