Incident Overview

The company released the 24Q2 performance forecast. In 24Q2, the company's revenue/net profit to mother and net profit after deduction of non-net profit was 5.81/0.47-0.04-0.05 billion yuan, an increase of 33.2%/212.27%-279.09%/348.55%-460.18% year-on-year, with the main government subsidy of 6.696 million yuan (up 19.7% year on year).

24Q2 continued the year-on-year improvement trend of 23Q3-24Q1, that is, the 23Q3/23Q4/24Q1/24Q2 deducted non-net interest rate was 6.8%/7.9%/7.0%/7%-8.6%. For the best Q2 performance in history, the deducted non-net interest rate continued to reach record highs. Our analysis mainly benefited from high growth in automotive interiors and consumer electronics, as well as the high proportion of downstream inventory reserves in the sports shoe sector.

On 2024/4/16, the company announced that Amway Vietnam has officially become a supplier of Lezhibao in the United States.

On 2024/5/21, the company announced that Amway Co., Ltd. and Amway Vietnam have simultaneously become qualified suppliers of German adidas, mainly supplying footwear materials such as polyurethane synthetic leather, TPU, water-based breathable leather, and microfiber polyurethane synthetic leather for its footwear products.

On 2024/6/24, the company announced that the company has become an advanced customs AEO certified enterprise. After passing the advanced customs AEO certification, the enterprise's import and export business can enjoy preferential treatment provided by the global customs: enjoy lower inspection rates at home, prioritize customs clearance procedures for imported and exported goods, apply for exemption guarantees, etc.; enjoy customs clearance facilitation measures provided by economies, countries and regions that have already carried out AEO mutual recognition with China; and enjoy support for innovative customs business.

Analytical judgment:

The price increased by 8%. Our analysis comes from an improvement in the customer structure. 1) The 24Q2 company has sufficient orders and strong production and sales, continuing the good trend since 2023Q3-24Q1. The volume and price of the main products rose sharply. The sales volume of 24H1's main products increased 19.7% year on year, revenue increased 29.1% year on year, and unit price increased 7.85% year on year. Our analysis was mainly due to the optimization of the company's customer structure and product structure, and the proportion of high-margin, high-value-added products such as sports, electronic products, and automotive interiors increased. 2) According to the company's customs investment activity record table on July 5, among the company's designated automotive interior product projects in the second half of the year, there were many BYD models, and production and sales were generally stable; in terms of sports shoes, first, the company is actively contacting Adi for sample development; second, Amway Vietnam is actively promoting Nike laboratory certification and is expected to form a substantial order in September or the fourth quarter; third, the headquarters of Amway Co., Ltd. is actively promoting cooperation with Nike Shoe Department. There are many new projects and products being developed in the company. Opportunities are increasing, and the situation is improving, in line with planned expectations. “Growth” trend.

Investment advice

We analyzed that by category, (1) sports shoe materials are expected to experience rapid growth in 24 years. Amway Vietnam has entered the NIKE global supply system, and Vietnam is expected to reverse losses this year; (2) automotive interiors are expected to double, benefiting from major customer strategies and new customer expansion; (3) market concerns about the impact of the production cycle on the sofa business, but we analyzed that overseas real estate is stabilizing, and many of the company's customers still have room to increase their share. (4) Consumer electronics is expected to stabilize at the bottom, while electronics will maintain steady growth.

Maintain the 24-26 revenue forecast of 2.46/2.933/3.438 billion yuan; maintain the 24-26 net profit forecast of 0.201/0.264/0.334 billion yuan, corresponding to 24-26 EPS of 0.93/1.22/1.54 yuan, respectively. The closing price of 14.88 yuan on July 12, 2024 corresponds to PE 16/12/10X. We are optimistic about the profit elasticity brought about by the company's customers and product improvements, and maintain a “buy” rating.

Risk warning

Customer expansion falls short of expectations; risk of delivery delays due to tight capacity; risk of price war; capacity expansion falling short of expectations; systemic risk.