Vesync Earnings: Strong Recovery Underpinned by Lower Freight Rate and Cost-Cutting Measures

Vesync’s first-half 2023 net profit of USD 32.6 million more than doubled year on year and is in line with the profit alert issued in late July 2023. This is largely due to stronger sales, lower international freight rates, cost savings initiatives, and enhanced operational efficiency. After incorporating the latest results into our model, we increase our 2023-25 earnings forecasts by 42%-58% and raise our fair value estimate to HKD 7.40 from HKD 6.10. We believe Vesync is significantly undervalued currently, but concerns about slowing global economic growth and Vesync’s short track record may weigh on investor confidence.