Investment events
Vantage Co., Ltd. released its 2023 annual report and 2024 quarterly report, with revenue of $6.23 billion (+7.1% year over year), net profit to mother of 450 million yuan (+212.5% year over year), and net profit after deduction of 410 million yuan (+362.8% year over year). 24Q1's revenue was 1.38 billion yuan (+15.6% YoY), net profit to mother was 120 million yuan (YoY +34.6%), and net profit after deducting net income of 120 million yuan (YoY +50.7%).
Key points of investment
Online and offline channels drive growth, with steady performance in core categories. Q1 channel payments were active in revenue +7.1% year over year, of which by category: 1) smoke machines +21.6% year over year, accounting for +4.9pct to 41.2% year over year; 2) stoves +6.0% year over year, accounting for -0.3 pct to 23.4% year over year; 3) water heaters were -5.6% year over year, accounting for -2.5 pct to 18.4% of revenue year over year.
By channel: 1) offline +10.9% YoY, accounting for +1.6pct to 45.5% of revenue; 2) Online +23.4% YoY, accounting for +4.7% to 35.13% YoY of revenue; 3) Engineering channel YoY -19.9%, accounting for -2.7pct to 8.1% of revenue; 4) Overseas YoY -20.3%, accounting for -3.5pct to 10.1% YoY in revenue.
24Q1 revenue was +15.6% year-on-year, and contract debt at the end of Q1 was 390 million yuan, +78% compared to the beginning of the period, and channel payments were active.
Gross margin continues to rise, and other earnings increase profits
1) 23 Full year: The company's net profit to mother was +212.5% YoY to 450 million yuan, with a net profit margin of 7.2% (+4.7pct YoY).
2) 24Q1: Net profit to mother +34.6% year-on-year, net profit to mother 9.0% (+1.3pct year over year). 24Q1 gross margin was +2.2 pct to 41.9% year on year. We expect to mainly benefit from the optimization of the company's product structure and the continuous restoration of high-margin offline and online channels. Sales Expense Rate/Management Expense Rate/R&D Expense Rate/Financial Expense Ratio were +1.9pct/-1.0pct/-0.5pct/-0.4pct to 24.1%/4.7%/-0.3%, respectively. Other revenue was +98.3% year-on-year to RMB 28.5 million, mainly due to preferential tax policies related to advanced manufacturing.
The dividend rate remains at a high level
The company plans to distribute a cash dividend of 249 million yuan, with a dividend rate of 56%.
Profit forecasting and valuation
The company's product structure continues to be optimized, and the core channel continues to improve. We expect the company's 24-26 performance to reach 6.0/6.8/760 million yuan (+34%/+13%/+11%, respectively), corresponding to the current stock price PE of 12X/10X/9X, respectively, maintaining a “buy” rating.
Risk warning: Real estate continues to decline; raw material prices have risen sharply, etc.