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VESYNC(2048.HK):品类持续拓展 渠道逐步优化

VESYNC (2048.HK): Continued expansion of categories and gradual optimization of channels

安信國際 ·  Apr 7, 2021 00:00

What happened: Vesync recently announced its annual results, with annual revenue of US $349 million, an increase of 1.03% over the same period last year; gross profit of 43.7%, an increase of 4.6 pct over the same period last year; and net profit of US $55 million, an increase of 7.6% over the same period last year, with a net profit margin of 15.7%, an increase of 12pct. Through the continuous deepening of cooperation with Amazon.Com Inc, the visibility of the company's products has been further enhanced. With the initial expansion of offline channels, it is expected to continue to optimize the channel structure and release performance through multiple channels in the future.

Summary of the report

Vesync is a Chinese small household appliance company and one of the participants in the American small household appliance online market, focusing on online marketing and sales of self-designed and developed small household appliances and smart household devices under its brand, including air purifier, air fryer, oven, juicer and so on. The products are sold through three core brands Levoit, Etekcity and Cosori, mainly sold to the United States, Canada, the United Kingdom, Germany, France, Spain and other countries. The company plans to continue to expand the category, and intelligent products, all kinds of smart home appliances access to a variety of customer life scenarios, so as to establish a perfect Internet of things, big data analysis in-depth understanding of customer needs.

The epidemic led to a substantial increase in demand for small household appliances, leading to performance growth. The company announced its annual revenue of US $349 million, an increase of 1.03 times compared with the same period last year, and its income grew rapidly. this is mainly because the home quarantine policy during the epidemic extended the time for consumers to shop online in the United States and around the world, leading to strong growth in sales of household products. In terms of brands, the company strategically chose to focus resources on Levoit and Cosori brands with high gross margins, increasing the revenue share of these two brands from 39.2% and 23.8% to 48.9% and 28.7%, respectively, while Etekcity's revenue share decreased from 36.9% to 22.4%. From a regional point of view, North America is still the main market of Vesync, with revenue of US $302 million, an increase of 1.03% over the same period last year, accounting for 86.6%, mainly driven by the increase in sales of products such as Levoit air purifier and Cosori air fryer in the United States; revenue in Europe increased by 85.3%, accounting for 11.7%, mainly due to the rapid increase in sales in new markets such as the UK, Italy and Germany. Revenue in Asia grew 3.5 times, accounting for 1.7% of revenue, mainly due to increased sales in the Japanese market. In the future, the company may consider entering the Chinese market, but due to the fierce competition in the Chinese market, the company is in the stage of looking for product positioning and understanding customer preferences.

The increase in selling prices led to an increase in gross profit margin in 2020 to 43.7%, an increase in 4.6pct compared with the same period last year, mainly due to the increase in the overall average selling price, the reduction in the proportion of Amazon.Com Inc's performance fees, and the air purifier, one of the main products, was included in the product exclusion list to enjoy additional tariff exemption. In addition, the company has a certain degree of flexibility in pricing and is relatively less sensitive to risk factors such as rising raw material prices.

Deepen cooperation with Amazon.Com Inc to enhance brand awareness with the gradual development of business, the company continues to deepen cooperation with Amazon.Com Inc, and the share of Vendor Central revenue has increased from 50.8% to 66.7%, indicating that Amazon.Com Inc's recognition of Vesync is increasing, and the stickiness of mutual cooperation has been improved. The company also plans to further increase the proportion of VendorCentral in the future. In addition, the cooperation mode of Vendor Central improves the flexibility of Vesync in decision-making and resource integration, and the cycle and quantity of goods can be adjusted in the storage and distribution of goods, so as to avoid unnecessary peak periods of shipping. At the same time, Vesync has more chips to discuss with Amazon.Com Inc a suitable terms of trade for its own development. Amazon.Com Inc's platform as an endorsement can also further enhance consumers' trust in products. In addition, the company is also gradually trying offline channels at the initial stage, because the threshold for entering offline stores is higher, and the company can be invited to enter a number of well-known retailers, reflecting the market's recognition of the brand. In the future, it may achieve simultaneous online and offline development and optimize the channel structure.

There may be some risks in the expansion of the Chinese market, considering the company's advantages in the supply chain in China, so the company's expectation for the expansion of the Chinese market is meaningful to a certain extent. However, the company's three major brands are less well-known in China. And the competition in the Chinese small household appliance market is particularly fierce. Amazon.Com Inc's position in China is far less than overseas, and the company may need more investment to develop the Chinese market. There are certain risks.

Risk tips: macroeconomic downturn, inventory backlog; new brand cultivation is not as expected; industry competition intensifies.

The translation is provided by third-party software.


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