Vesync: Preliminary Net Profit in Line With Expectation; Shares Undervalued

Vesync expects 2023 earnings to be around USD 60 million-USD 85 million, versus net loss of USD 16 million in 2022. The net profit guidance is in line with our 2023 estimate of USD 74 million, and the firm attributed the strong recovery to increased sales at both Amazon and non-Amazon channels, lower international freight rates, cost savings initiatives, and enhanced operational efficiency. We believe the absence of provision for the voluntary recall of its air fryers in 2022 also contributed to the robust results. We maintain our earnings forecasts and fair value estimate of HKD 7.40. While Vesync remains undervalued, we think share price performance may be capped in the near term by concerns about rising international freight rates and higher U.S. tariffs. That said, in our view, the firm’s ongoing share buybacks should help to support share prices.