According to Zhitong Finance APP, Huachuang Securities issued a research report stating that it maintains a 'recommended' rating for VESYNC (02148), showing stable and positive operation, and the second growth curve is gradually materializing. Considering the intense short-term industry competition, the net income forecast for 24/25/26 is adjusted to 0.09/0.107/0.121 billion US dollars (previously 0.093/0.11/0.126 billion US dollars). According to the DCF valuation method, the target price is adjusted to HKD 6.2. The company released the mid-term performance announcement for 2024, achieving a revenue of 0.3 billion US dollars, a year-on-year increase of +7.0%; achieving a net income of 0.045 billion US dollars, a year-on-year increase of +37.5%.

Huachuang Securities' main views are as follows:

Revenue performance is stable, with Q2 revenue accelerating.

In 24H1, the company achieved revenue of 0.3 billion US dollars, a year-on-year increase of +7.0%. According to the company's previous announcement, 24Q1/Q2 revenues increased by +1.0%/+23.7% year-on-year, with first-quarter revenue relatively flat mainly due to partial product inventory shortages. However, 24Q1 product sales on the Amazon platform increased by +12.7% year-on-year, indicating strong consumer demand. After adjusting the sales pace, 24Q2 revenue growth accelerated. By channel, 24H1 Amazon/non-Amazon revenues changed by -3.4%/+46.8% year-on-year. The bank determined that the Amazon channel is related to short-term platform policy adjustments, while the non-Amazon channel's high growth is mainly due to the company's continued expansion into offline supermarkets and platforms like TikTok. Looking at different markets, North America/Europe/Asia Pacific revenues were 0.22/0.05/0.02 billion US dollars, year-on-year changes of +13.0%/-18.6%/+43.4%. The company's market share of air purifiers/humidifiers in the USA increased by +5.7/+1.1 percentage points to 33.3%/23.9%, driving steady growth in the North American market. European market revenue was slightly under pressure, attributed to reduced demand in regions like Turkey.

Performance meets expectations, and profitability continues to improve.

In 24H1, the company achieved a net income of 0.045 billion US dollars, a year-on-year increase of +37.5%. The performance is at the upper-middle level as previously anticipated, meeting market expectations. The bank believes that on one hand, it benefits from optimization of product costs and an increase in the proportion of high-profit businesses, driving the company's gross margin to increase by +3.3 percentage points to 48.5% year-on-year. On the other hand, the company actively improves operational efficiency and saves expenses, reducing the sales/management expense ratio by -1.7/-1.3 percentage points to 15.6%/14.2% year-on-year. Overall, the company achieved a net margin of 15.1% in 24H1, an increase of +3.4 percentage points, demonstrating continued improvement in profitability.

The company's financial statements are solid, and future operations are expected to accelerate.

Despite disruptions in the first quarter due to factors such as product inventory and changes in amazon policies, the company still maintained a good performance in the first half of the year. The bank believes that future operations are expected to accelerate recovery. First, the company's growth in non-amazon channels is rapid. In addition to various local supermarket channels, the company continues to promote and invest in platforms such as Tiktok and Youtube, attracting 1.5 million users on mainstream social media. Second, core categories such as purifiers and humidifiers continue to increase their market share, while the company's emerging categories are growing rapidly. The market share of 24M6 company's vacuum cleaners on Amazon has reached 6.8%, gradually contributing to the increase in financial reports. The bank believes that in the relatively mature small appliance industry, channel brand value will contribute more marginal increment. With the company's expansion into diverse channels beyond amazon, as well as the contribution of new product categories to the second growth curve, it is expected to accelerate growth in the future.

Risk Warning: Changes in Amazon platform policies, changes in tariff policies and marine transportation prices, rising raw material prices, channel expansion, new product research and development falling short of expectations.