Key points of investment
Weimei released its quarterly report of '23, which highly praised the performance of Greater China and achieved a huge breakthrough in online business.
Vimee released its quarterly report of '23, which highly affirms the performance of the Greater China region. Vimee released the 23Q1 results. The revenue and net profit ratio for a single quarter was -5.19%/+6.92%. Among them, Vimee CEO Martin Waters highly affirmed the development of Vimee China. In April 2022, Vimee China signed a joint venture agreement involving all of the existing company's businesses in China. According to the agreement, Vimi/Virginie each held 51%/49% of Vimee China's shares. After nearly a year of development, the Chinese business turned a loss into a profit. In particular, the online sales sector achieved tremendous breakthrough growth. At the same time, Martin Waters emphasized that Virginia has established a high-quality rapid response supply chain for Vimee China and has developed effective products for the Chinese market. In the future, this model is expected to be gradually extended to other regions of Asia. Both sides remain optimistic about future collaborations, brand profits, and store growth.
Backed by the digital industry and driven by strong product power, online hits are frequent. We believe that the company's ability to repeatedly create hits online comes from:
① Data accumulation and technology patent barriers are deep, and attention is paid to the exclusive needs of Chinese consumers. We believe that the core competitiveness still comes from the company's deep accumulation of technology and R&D innovation over the years as a global underwear IDM manufacturer. In fields related to underwear manufacturing, the company currently has more than 100 international patents. In May 2022, the company collaborated with Tmall to establish the T-LAB digital industry research laboratory. Through cooperation with Tmall, the company better understood the demand for underwear among Chinese women and launched various pioneering products such as “jelly strip vests” and “anti-gravity bras”.
② Marketing resources are increasingly matched with product positioning. With the launch of luxury products with comfort as the core requirement, aesthetic diversification placed equal emphasis on comfort, and formed a better fit with the marketing resources accumulated by earlier brands (spokespersons include Yang Mi, Zhang Jingyi, and He Sui).
③ Seize the opportunities of the traffic era and spread brand content. As online traffic continues to show a decentralized trend, the company better conveys brand ideas to consumers through broadcast methods, guarantees its middle and high-end positioning and high discount rates while strengthening sticky interaction with consumers.
Profit forecasting and valuation
We expect the company's revenue for FY23/24/25 to change -2.9%/+11.6%/+11.2% to HK$81.0/90.4/10.0.6 billion, and net profit of the parent to change -33.9%/+63.6%/+22.2% year over year to HK$3.4/56/690 million. According to the market capitalization of 2023/06/07, the corresponding FY23-25 PE is 10X/6/5X, respectively. We believe that as a global leader in underwear IDM manufacturing, the company is still a scarce target in the market. Barriers are prominent in related fields, the growth path is clear, and it continues to maintain its “buy” rating.
Risk warning: core customer sales fall short of expectations; unexpected exchange rate fluctuations lead to increased financial expenses;