Vesync’s 2022 Net Loss Mainly Attributable to Impact of Voluntary Recall; Shares Undervalued

We cut Vesync’s fair value estimate to HKD 6.10 from HKD 6.80 following its disappointing 2022 earnings. The 2022 net loss of USD 16.3 million (versus net profit of USD 41.6 million in 2021) was mainly attributable to the impact of the voluntary recall of its airfryers. We think the firm remains undervalued, but it will need to restore investors’ confidence after failing to meet expectations for two consecutive years, although this is partly due to external factors such as channels destocking and sharp rise in freight rates. We believe it will take time to prove Vesync’s capability and a strong recovery in the firm’s earnings should help to rerate the stock.