Vesync: Lackluster Sales Update but Recovery Expected; Shares Undervalued

We keep Vesync’s fair value estimate at HKD 8.10 per share despite the disappointing overall gross sales data for first-quarter 2024. We think the firm remains undervalued, but the concerns about weaker consumer confidence will cap its near-term share price performance. We expect Vesync to deliver net profit CAGR of 17% over the next three years, underpinned by geographical expansion, offline channel penetration, and new product launches. We also believe the estimated 2024 dividend yield of more than 5% and ongoing share buybacks will support Vesync’s share price.