Event: Vantage Co., Ltd. announced its 2023 annual results forecast. The company expects to achieve net profit of 40~490 million yuan in 2023, YoY +179.5% ~ +242.4%. After conversion, Q4 is expected to achieve net profit of 0.4 to 130 million yuan in a single quarter, with a loss of 140 million yuan for the same period last year; net profit without deduction of 0.2 to 110 million yuan, and a loss of 170 million yuan for the same period last year. We believe that the company's management adjustments are gradually showing results, and we look forward to continued improvements in future performance.
The company's Q4 e-commerce channel performed well: According to Aowei Cloud Network data, Vantage range hoods/gas stoves Q4 online retail sales were +2% YoY/+19%, respectively. We judge: 1) the growth rate of the Vantage Q4 e-commerce channel is the fastest among all channels; 2) Vantage's offline retail channel Q4 also achieved relatively rapid growth; 3) the company's Q4 overseas channel revenue increased year-on-year due to base factors and the recovery of the overseas economy; 4) the company controlled operating risks, and the Q4 engineering channel situation continued the Q3 trend. We believe that at the corporate level, Vantage is actively implementing channel changes, reducing costs and increasing efficiency, and the effects of these reforms are expected to show.
Q4 profitability increased year-on-year: According to the company's performance forecast, the median value of the Q4 performance forecast was 90 million yuan, with a loss of 140 million yuan for the same period last year. Assuming a 10% revenue growth rate in Q4, the company's Q4 net margin was 5.0%. The company's profitability increased significantly year-on-year, mainly due to the company's large impairment losses in 2022/Q4.
Investment advice: Profitability is expected to increase further as new Vantage products are launched one after another. The company will continue to increase channel expansion and brand promotion efforts in the future, and we expect the company's operations to improve.
We expect the company's EPS from 2023 to 2024 to be 0.56/0.69 yuan, maintaining a buy-A investment rating, and a 6-month target price of 6.9 yuan, corresponding to a dynamic price-earnings ratio of 10 times in 2024.
Risk warning: The real estate market is declining, and the competitive landscape of the industry is deteriorating.