年 報 VESYNC CO., LTD 2024 ANNUAL REPORT 年報 目 錄 | 2 | 公司資料 | | --- | --- | | 4 | 五年財務概要 | | 5 | 主席報告 | | 8 | 管理層討論及分析 | | 24 | 董事及高級管理層履歷 | | 30 | 董事會報告 | | 57 | 環境、社會及管治報告 | | 102 | 企業管治報告 | | 115 | 獨立核數師報告 | | 121 | 綜合損益及其他全面收益表 | | 123 | 綜合財務狀況表 | | 125 | 綜合權益變動表 | | 126 | 綜合現金流量表 | | 128 | 財務報表附註 | | 217 | 釋義 | 1 Vesync Co., Ltd 二零二四年年報 公司資料 董事會 執行董事 楊琳女士 （主席兼行政總裁） 楊海先生 陳兆軍先生 （財務總監） 非執行董事 楊毓正先生 獨立非執行董事 方和先生 顧炯先生 檀文先生 審核委員會 顧炯先生 （主席） 方和先生 檀文先生 薪酬委員會 方和先生 （主席） 顧炯先生 檀文先生 楊琳女士 楊海先生 提名委員會 楊琳女士 （主席） 顧炯先生 方和先生 檀 ...

Financial Performance - Revenue for the year ended December 31, 2024, was $652,640 thousand, representing an 11.5% increase from $585,484 thousand in 2023[3] - Gross profit increased to $306,578 thousand, up 11.7% from $274,372 thousand in the previous year, with a gross margin of 47.0%[3] - Profit before tax rose by 27.5% to $111,485 thousand, compared to $87,472 thousand in 2023[3] - Net profit attributable to shareholders was $93,048 thousand, a 20.1% increase from $77,481 thousand in 2023[3] - Basic earnings per share increased by 24.9% to 8.64 cents, up from 6.92 cents in the previous year[3] - The company reported a total comprehensive income of $87,098 thousand for the year, compared to $77,133 thousand in 2023[7] - Total revenue for the year ended December 31, 2024, was approximately $652.64 million, an increase of 11.43% from $585.48 million in 2023[22] - The group reported a net loss from the sale of derivative instruments amounting to $1,260,000 in 2024, down from a loss of $6,511,000 in 2023, showing an improvement of about 80.7%[25] - The company's profit attributable to owners for the year ended December 31, 2024, was approximately $93.0 million, an increase of about $15.5 million or 20.1% compared to $77.5 million for the year ended December 31, 2023[94] Assets and Liabilities - Total assets less current liabilities amounted to $380,232 thousand, compared to $336,886 thousand in 2023[10] - Non-current assets increased to $99,532 thousand from $59,247 thousand in the previous year[9] - Cash and cash equivalents rose significantly to $177,360 thousand, up from $104,308 thousand in 2023[9] - The total amount of bank loans due within one year is $20.759 million, a decrease from $29.584 million in the previous year[50] - The total bank and other borrowings as of December 31, 2024, were approximately $20.8 million, a decrease from $29.8 million in 2023[95] - The company's debt-to-equity ratio as of December 31, 2024, was approximately 8.8%, down from 11.7% on December 31, 2023[108] Revenue Breakdown - Revenue from North America was $480.49 million in 2024, up from $429.94 million in 2023, representing a growth of 11.73%[18] - Revenue from the European market is approximately $131.1 million, with a growth of about $5.4 million or approximately 4.3% compared to 2023[61] - Revenue from the Amazon channel for 2024 is $486.4 million, a growth of approximately 6.5% from $456.6 million in 2023, driven by increased sales of air purifiers, humidifiers, vacuum cleaners, and other products[69] - Revenue from non-Amazon channels increased significantly by approximately 29.0% in 2024, reaching $166.2 million, primarily due to increased sales in retail stores and the expansion into TikTok retail channels[70] - Revenue from the Levoit brand increased by approximately $96.5 million in 2024, reaching $423.7 million, primarily due to higher sales of air purifiers, humidifiers, vacuum cleaners, and tower fans[74] Expenses and Costs - Research and development costs increased to $39,943,000 in 2024 from $34,161,000 in 2023, reflecting a rise of about 16.5%[25] - Total financing costs rose significantly to $3,428,000 in 2024, compared to $1,532,000 in 2023, marking an increase of approximately 124%[28] - The total tax expense for the year was $18,437,000, up from $10,042,000 in 2023, indicating a year-over-year increase of about 83.5%[35] - Total sales and distribution expenses increased by approximately 5.1% to about $104.2 million in 2024, driven by marketing and advertising expenses and platform commissions[81] - Administrative expenses rose by approximately 10.9% to about $92.1 million in 2024, primarily due to increases in research and development expenses and administrative personnel costs[83] - Financial costs increased from approximately $1.5 million in 2023 to about $3.4 million in 2024, largely due to the introduction of accounts receivable factoring interest[87] Operational Highlights - The company primarily engages in the R&D, production, and sales of smart small home appliances and smart home devices, mainly selling to markets in the US, Canada, and Europe[12] - The company has expanded its management team and strengthened its product development capabilities, leading to improved operational efficiency and brand promotion[56] - The company continues to enhance its capabilities in product strength, channel development, regional expansion, and operational efficiency, contributing to strong market performance in 2024[56] - The company has maintained a commitment to independent technology development and innovative design, which has positively impacted its performance[56] - The company aims to enhance its user-centric product portfolio and expand its offerings, focusing on smart home devices, with new products expected in 2025[110] Market Presence - Levoit air purifiers and humidifiers hold the top sales revenue and volume shares in the US market, with revenue shares of approximately 33.0% and 23.3%, respectively, an increase of about 4.4 percentage points compared to the same period in 2023[58] - Non-Amazon channel revenue growth is approximately 29.0% in 2024, with its share of total revenue increasing from about 22.0% in 2023 to approximately 25.5%, a rise of about 3.5 percentage points[59] - North American market revenue is approximately $480.5 million, an increase of about 11.8% compared to the same period in 2023, driven by a 45.2% growth in non-Amazon channels[61] - The company launched new products in 2024, including high-efficiency fans and smart feeders, to meet diverse consumer needs, enhancing brand share[62] - The Ve Sync app has approximately 9.4 million activated devices and 9.6 million users, representing increases of about 40.3% and 43.3%, respectively, compared to 2023[63] - The company has expanded its presence in the Asia-Pacific market, adding approximately 600 new stores, totaling over 2,500 mainstream retail outlets by the end of 2024[59] Corporate Governance - The company is committed to maintaining high standards of corporate governance, ensuring transparency and accountability to shareholders[123] - The audit committee, consisting of three independent non-executive directors, has reviewed and recommended the approval of the consolidated financial statements for the year ending December 31, 2024[125] - The financial data presented is extracted from the audited consolidated financial statements for the year ending December 31, 2024, as reviewed by Ernst & Young[126] - The company has complied with the standard code of conduct regarding securities trading during the reporting period[122] Shareholder Information - A privatization proposal was announced on December 27, 2024, offering shareholders a choice between cash at HK$5.60 per share or shares in the parent company[112] - During the reporting period, the company repurchased a total of 10,733,000 shares for a total consideration of HK$54,214,710[119] - The company did not recommend any final dividend for the year ending December 31, 2024[118] Legal and Regulatory Matters - The company is involved in various legal proceedings and regulatory inquiries as part of its normal business operations[53] - The company is involved in a voluntary recall of "Cosori" brand air fryers in the United States, Canada, and Mexico[131]

Financial Performance - Revenue for the first half of 2024 reached approximately $296.2 million, with a gross profit of $143.8 million, and net profit attributable to parent company owners of $44.9 million, representing year-over-year growth of 7.0%, 14.9%, and 37.5% respectively[7] - Group revenue for the first half of 2024 was approximately $296.2 million, a 7.0% increase compared to the same period in 2023[12] - Gross profit increased by 14.9% to approximately $143.8 million, with net profit attributable to shareholders rising by 37.5% to $44.9 million[12] - Net profit for the first half of 2024 increased to $44.857 million, up from $32.586 million in the same period of 2023, representing a growth of approximately 37.6%[85] - Total comprehensive income for the first half of 2024 reached $40.230 million, compared to $29.649 million in the first half of 2023, reflecting a 35.7% increase[85] - Basic earnings per share for the first half of 2024 rose to 4.13 cents, up from 2.89 cents in the same period of 2023, marking a 42.9% increase[85] - Total revenue for the six months ended June 30, 2024, was $296.194 million, compared to $276.932 million in the same period in 2023, representing a 7% increase[99][103] - The parent company's profit attributable to ordinary equity holders for calculating basic and diluted earnings per share was $44,857k[119] Market Share and Product Performance - Levoit air purifiers and humidifiers maintained their leading market share in the U.S., with sales shares of approximately 33% and 24%, respectively, and expanded rapidly in Germany, capturing 36.8% and 39.2% market share[8] - Levoit air purifiers and humidifiers achieved the top sales volume share in Germany, with 36.8% and 39.2% market share respectively, according to GfK data[8] - Cosori air fryers maintained the top sales share in Spain and achieved high rankings in other European Amazon channels[8] - The company's product portfolio, including Etekcity scales and Cosori kitchen appliances, consistently ranked first in sales share on Amazon U.S.[8] - Levoit air purifiers and humidifiers ranked first in sales volume in Germany, capturing 36.8% and 39.2% market share respectively[12] - Cosori air fryers maintained the top sales revenue share in Spain and achieved high rankings in Amazon air fryer categories across other European countries[12] - Levoit brand revenue increased by 47.1% to $192.7 million in H1 2024, driven by growth in air purifiers, vacuum cleaners, and tower fans[19] Regional Revenue Performance - North America market revenue reached approximately $224.9 million, a 13.0% increase compared to the same period in 2023, driven by rapid expansion in non-Amazon channels, which grew by 89.6%[10] - Europe market revenue was approximately $53.2 million, a decrease of $12.1 million or 18.6% compared to 2023, primarily due to reduced demand for air fryers in Turkey, partially offset by growth in Germany and Hungary[10] - Asia market revenue grew by 43.4% to approximately $18.1 million, driven by strong performance in Japan and the Middle East[10] - Revenue from North America increased by 13.0% to $224.9 million in H1 2024, driven by growth in non-Amazon channels and new TikTok retail channels[16] - Revenue from Europe decreased by 18.6% to $53.2 million in H1 2024, primarily due to reduced demand for air fryers in Turkey, partially offset by growth in Germany (39.1%) and Hungary (38.6%)[17] - Revenue from Asia increased by 43.4% to $18.1 million in H1 2024, driven by growth in Japan and the Middle East markets[18] - Revenue from North America increased to $224.931 million in 2024 from $199.017 million in 2023, a 13% growth, while Europe saw a decline to $53.159 million from $65.293 million, a 19% decrease[99] Non-Amazon Channel Growth - Non-Amazon channel revenue grew by approximately 46.5% year-over-year in the first half of 2024, increasing its share of total revenue from 20.7% to 28.4%, a rise of 7.7 percentage points[8] - Non-Amazon channel revenue grew by 46.5% compared to 2023, driven by increased sales in chain retail stores and expansion into TikTok retail channels[15] Product Launches and Innovations - The company successfully launched products like the Levoit Core Mini air purifier and Etekcity ESN00 nutrition scale on TikTok, driving significant sales[8] - The company expanded its product offerings in North America, adding new air purifiers and smart scales to major retailers like Target and Best Buy[8] - The company's VeSync app enhances user experience by providing centralized control of smart home devices and personalized content[7] - The company aims to further enhance its product portfolio, particularly in the consumer smart home devices sector, with new products such as next-gen smart air purifiers, central air conditioner filters, smart pet feeders, and smart scales to be launched in the second half of 2024[49] - The company is investing in technology to develop the VeSync app into a home IoT platform, aiming to create a connected lifestyle[49] Financial Position and Cash Flow - The company's cash and cash equivalents increased to $160.9 million as of June 30, 2024, up from $104.3 million as of December 31, 2023[37] - Total bank borrowings decreased to $12.7 million as of June 30, 2024, from $29.8 million as of December 31, 2023, with $10.4 million at fixed interest rates and $2.3 million at floating rates[38][39] - The company's asset-liability ratio decreased to 7.6% as of June 30, 2024, from 11.7% as of December 31, 2023[48] - The company's assets pledged as collateral decreased to $35.0 million as of June 30, 2024, from $82.4 million as of December 31, 2023[47] - Cash flow from operating activities increased significantly to $80.553 million, up from $36.069 million in the previous year[92] - The company's cash and cash equivalents at the end of the period stood at $160.906 million, compared to $113.990 million in the previous year[93] - Inventory decreased by $2.078 million, contributing to the positive cash flow from operations[92] - Trade receivables and bills receivable decreased by $31.959 million, improving cash flow[92] - Cash flow from financing activities was negative at $24.061 million, primarily due to share repurchases and loan repayments[93] - The company's investment activities resulted in a net cash inflow of $3.676 million, compared to a net outflow of $14.170 million in the previous year[93] Expenses and Costs - Sales and distribution expenses decreased by 3.5% to $46.1 million in H1 2024, driven by reduced marketing and advertising expenses and improved inventory turnover efficiency[24] - Administrative expenses decreased by 2.0% to $42.2 million in H1 2024, primarily due to reduced professional fees[26] - Financial costs increased to $1.2 million in H1 2024, mainly due to factoring fees and supplier discount interest returns[29] - The company's total employee costs increased to $40.8 million for the six months ended June 30, 2024, up from $37.0 million in the same period in 2023[43] - Cost of goods sold decreased slightly to $126.544 million in 2024 from $128.242 million in 2023[108] Tax and Other Income - The company's subsidiaries in China enjoy a preferential corporate income tax rate of 15% due to high-tech and western development qualifications[32] - The company's tax expense for the six months ended June 30, 2024, was $7.8 million, an increase of $6.8 million compared to the same period in 2023, primarily due to higher pre-tax profits[35] - Other income and gains decreased by 56.6% to $3.7 million in H1 2024, mainly due to reduced government grants, fair value gains, and foreign exchange gains[22] - Other income and gains totaled $3.722 million in 2024, down from $8.581 million in 2023, primarily due to lower government grants and exchange gains[107] - The company's effective tax rate in Hong Kong is 16.5%, with a reduced rate of 8.25% for the first HK$2 million of taxable profits for eligible entities[110] - In mainland China, the company benefits from a preferential corporate income tax rate of 15% for high-tech and western development enterprises, compared to the standard rate of 25%[111] - The group's tax expenses for the period totaled $7,817k, with significant contributions from the US ($3,837k), Singapore ($2,354k), and Mainland China ($1,096k)[115] Shareholder and Equity Information - The company's attributable profit to parent company owners increased by $12.3 million or 37.5% to $44.9 million for the six months ended June 30, 2024, compared to $32.6 million in the same period in 2023[36] - The company's total issued shares as of June 30, 2024, amounted to 1,146,616,800 shares[61] - Yang Lin holds 406,040,800 shares through a discretionary trust, representing a significant portion of the company's equity[59] - Yang Lin, Yang Hai, and Yang Yuzheng collectively hold 789,260,200 shares, accounting for 68.83% of the company's total equity[60] - Yang Lin has the right to exercise 1,150,000 share options under the share option plan[61] - Chen Zhaojun holds 5,240,000 shares, representing 0.457% of the company's equity[60] - Fang He, Gu Jiong, and Tan Wen each hold 200,000 shares, representing 0.017% of the company's equity[60] - Arceus Co., Ltd holds 8,067,200 shares, fully owned by Mr. Yang Hai, who also holds 1,150,000 share options[62] - Caerus Co., Ltd holds 364,719,200 shares, fully owned by Acevation Trust, with Mr. Yang Yuzheng as the settler[62] - North Point Trust Company LLC holds 406,040,800 shares, representing 35.41% of the company's equity[64] - Karis I LLC holds 243,624,800 shares, representing 21.25% of the company's equity[64] - Karis II LLC holds 162,416,000 shares, representing 14.16% of the company's equity[64] - Mr. Xu Bo and his spouse hold 789,260,200 shares, representing 68.83% of the company's equity[64] - HHLR Advisors, Ltd. holds 98,286,000 shares, representing 8.57% of the company's equity[64] - HHLR Fund, L.P. holds 94,860,000 shares, representing 8.27% of the company's equity[64] - The company has a total of 1,146,616,800 shares issued as of June 30, 2024[65] - The company's share option plan allows for the granting of up to 107,210,480 share options, with vesting over a 5-year period[69] - The total number of unexercised share options as of June 30, 2024, is 5,100,000, with each director holding options ranging from 200,000 to 2,000,000 shares[70] - The company adopted a post-IPO share incentive plan on July 20, 2021, and revised it on October 24, 2023, to only use existing shares for the plan[71] - A total of 8,669,800 share awards were granted under the post-IPO share incentive plan, with 6,687,100 shares remaining unexercised as of June 30, 2024[72] - No share awards were granted to the company's directors as of January 1, 2024, and June 30, 2024[73] - 27,500 share awards vested in 2024, and 1,222,000 share awards are scheduled to vest between 2024 and 2026[74] - 187,200 share awards are scheduled to vest between 2024 and 2025, with 73,000 share awards already expired in 2024[74] - 802,400 share awards are scheduled to vest between 2024 and 2025[74] - 1,080,000 share awards are scheduled to vest between 2024 and 2027[74] - 3,097,800 share awards are scheduled to vest between 2024 and 2027, with 73,600 share awards already expired in 2024[74] - 1,519,500 share awards expired in 2024[75] - 411,000 share awards will vest according to the following schedule: 82,200 in 2024, 123,300 in 2025, and 205,500 in 2026[75] - 232,000 share awards will vest according to the following schedule: 46,400 in 2024, 69,600 in 2025, and 116,000 in 2026[75] - 200,000 share awards will vest according to the following schedule: 40,000 in 2025, 60,000 in 2026, and 100,000 in 2027[75] - 83,000 share awards will vest according to the following schedule: 16,600 in 2025, 24,900 in 2026, and 41,500 in 2027[75] - 234,000 share awards will vest according to the following schedule: 78,000 in 2025, 78,000 in 2026, and 78,000 in 2027[75] - 269,000 share awards will vest according to the following schedule: 53,800 in 2025, 80,700 in 2026, and 134,500 in 2027[75] - The fair value of the granted awards is HKD 70,059,000[76] - The company repurchased a total of 8,883,000 shares during the reporting period at a total cost of HKD 45,526,600[78][79] - The company declared an interim dividend of HKD 0.0888 per share, equivalent to approximately USD 0.0114[81] - The company repurchased shares worth $5.820 million during the first half of 2024[88] - A dividend of $21.576 million was declared during the first half of 2024[88] - The company repurchased 12,659,000 shares in 2023 at a total cost of $61,390k, which were subsequently canceled in March 2024[126] - The company repurchased 8,883,000 shares on the Hong Kong Stock Exchange for a total consideration of HKD 45,527,000 during the six months ended June 30, 2024[127] - The trustee repurchased 8,611,000 shares under the post-IPO share incentive plan for a total consideration of HKD 43,182,000 during the six months ended June 30, 2024, compared to 1,157,000 shares for HKD 4,102,000 in the same period last year[127] Corporate Governance and Compliance - The company adheres to the Corporate Governance Code, with the exception of the separation of Chairman and CEO roles, which are both held by Yang Lin[56] - The company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers, and all directors and relevant employees have confirmed compliance during the reporting period[57] - No directors have interests in any businesses that directly or indirectly compete with the company's operations[58] Financial Instruments and Fair Value - The fair value change of equity investments recognized in other comprehensive income was a loss of $764,000 for the first half of 2024[88] - The exchange rate difference from the translation of foreign operations resulted in a loss of $3.583 million for the first half of 2024[88] - The fair value of financial instruments measured using significant unobservable inputs (Level 3) was USD 5,081,000 as of June 30, 2024[134] - The fair value of derivative financial instruments was USD 365,000 as of June 30, 2024, measured using significant observable inputs (Level 2)[134] - The fair value of trade receivables and bills receivable was USD 14,316,000 as of June 30, 2024, measured using significant observable inputs (Level 2)[134] - The fair value of financial liabilities measured using significant observable inputs (Level 2) was USD 647,000 as of June 30, 2024[137] - Derivative financial instruments are valued at $214 thousand, with no significant observable or unobservable inputs[138] - The fair value of liabilities measured at Level 3 showed changes during the period[139] - Equity investments designated at fair value through other comprehensive income decreased from $1,778 thousand to $1,726 thousand due to exchange adjustments[140] - Financial assets at fair value through profit or loss were purchased for $3,355 thousand during the period[140] - No transfers between Level 1 and Level 2 fair value measurements occurred during the period[140] - The company's financial instruments are categorized into different fair value levels, with no transfers in or out of Level 3[140] - The company's financial instruments are measured at fair value, with no significant changes in valuation techniques or inputs[140] Related Party Transactions - Outstanding balances with related parties

Investment Rating - The report maintains a "Recommend" rating for VESYNC (02148 HK) with a target price of HKD 6 2 [1] Core Views - VESYNC achieved revenue of USD 300 million in H1 2024, a YoY increase of 7 0%, and net profit attributable to shareholders of USD 45 million, a YoY increase of 37 5% [1] - Revenue growth accelerated in Q2 2024, with Q1/Q2 YoY growth rates of 1 0%/23 7% respectively, driven by strong demand on Amazon and inventory adjustments [1] - Non-Amazon channels grew significantly by 46 8% YoY, while Amazon channel revenue declined by 3 4% due to platform policy adjustments [1] - North America market revenue increased by 13 0% YoY, driven by market share gains in air purifiers and humidifiers, while Europe revenue declined by 18 6% due to reduced demand in regions like Turkey [1] - Gross margin improved by 3 3 ppts to 48 5%, and net margin increased by 3 4 ppts to 15 1%, driven by cost optimization and improved operational efficiency [1] - The company is expected to accelerate growth through diversified non-Amazon channels and new product categories, with TikTok and YouTube platforms contributing to a social media following of 1 5 million [1] Financial Forecasts - Revenue is projected to grow to USD 676 million in 2024, USD 786 million in 2025, and USD 898 million in 2026, with YoY growth rates of 15 5%, 16 2%, and 14 3% respectively [2] - Net profit attributable to shareholders is forecasted to reach USD 90 million in 2024, USD 107 million in 2025, and USD 121 million in 2026, with YoY growth rates of 16 5%, 18 1%, and 13 4% respectively [2] - EPS is expected to increase from USD 0 07 in 2023 to USD 0 08 in 2024, USD 0 09 in 2025, and USD 0 11 in 2026 [2] - PE ratios are projected at 7x for 2024, 6x for 2025, and 5x for 2026 [2] Market and Product Performance - VESYNC's air purifier and humidifier market shares in the US increased by 5 7 ppts and 1 1 ppts to 33 3% and 23 9% respectively [1] - The vacuum cleaner category achieved a 6 8% market share on Amazon US in June 2024, contributing to incremental revenue growth [1] Valuation and Target Price - The target price of HKD 6 2 is based on a DCF valuation, implying a 10x PE for 2024 [1]

Investment Rating - No specific investment rating provided for Vesync (2148 HK) [3] Core Viewpoints - Vesync achieved a 7% YoY revenue growth and a 37 5% YoY increase in net profit attributable to shareholders in H1 2024 [1] - Non Amazon channels showed strong growth with a 46 5% YoY increase in revenue driven by expansion in retail chains and TikTok retail channels [1][5] - The company's gross margin improved significantly to 48 5% up 3 3pp YoY due to higher product yields and lower unit costs [2][7] - Vesync plans to launch a new brand Pawsync targeting pet households and continue expanding its product portfolio and geographic coverage [2][8] Revenue Breakdown - Total revenue for H1 2024 was USD 296 million with Amazon channel revenue declining 3 37% to USD 212 million and non Amazon channel revenue growing 46 5% to USD 84 million [1][5] - North America remained the largest market contributing 75 9% of total revenue with a 13% YoY growth while Europe saw an 18 6% decline and Asia grew 43 4% [1][6] - By brand Levoit revenue grew 32 35% to USD 193 million Cosori revenue decreased 24 09% to USD 72 million and Etekcity revenue fell 16 02% to USD 30 million [1][6] Market Share and Product Performance - Levoit air purifiers and humidifiers ranked first in sales in the US market and achieved leading market shares in Germany with 36 8% and 39 2% respectively [2][6] - Cosori air fryers maintained the top sales position in Spain [2][6] Future Development Plans - Vesync will focus on upgrading its product portfolio expanding non Amazon channels deepening market penetration in Europe and investing in technology to develop the VeSync app into a home IoT platform [2][8][9] - The company aims to enhance brand awareness and consumer recognition through multi dimensional brand operations [8][9]

Investment Rating - The investment rating for the company is "Buy-A" with a target price of HKD 5.27 over the next six months [1][6]. Core Insights - The company, VESYNC, reported a strong revenue growth of 7.0% year-over-year (YoY) in H1 2024, achieving a revenue of USD 300 million and a net profit of USD 40 million, which is a 37.5% YoY increase [6][8]. - The company is expanding its product range and actively developing offline sales channels while entering European and Asian markets, which is expected to drive rapid revenue growth [6][8]. - VESYNC maintains a leading position in the small appliance market on Amazon in the U.S. and has established a long-term partnership with Amazon [6][8]. Financial Summary - Revenue projections for the company are as follows: USD 490.4 million in 2022, USD 585.5 million in 2023, USD 630.9 million in 2024, USD 689.6 million in 2025, and USD 752.0 million in 2026 [4][9]. - Net profit is expected to recover from a loss of USD 16.3 million in 2022 to USD 96.9 million in 2024, reaching USD 116.8 million by 2026 [4][9]. - Earnings per share (EPS) are projected to increase from -0.01 in 2022 to 0.10 in 2026 [4][9]. - The price-to-earnings (P/E) ratio is forecasted to improve from -37.1 in 2022 to 5.2 in 2026, indicating a significant recovery in profitability [5][9]. - The net profit margin is expected to rise from -3.3% in 2022 to 15.5% in 2026, reflecting improved operational efficiency [5][9]. Market Performance - The company's stock price as of September 4, 2024, is HKD 4.11, with a 12-month price range of HKD 2.81 to HKD 5.75 [1][6]. - The relative returns over different periods are as follows: 5.0% over 1 month, -9.0% over 3 months, and 30.7% over 12 months [2][6].

Investment Rating - The report maintains an "Outperform" rating for VESYNC (02148 HK) [1][4] Core Views - VESYNC achieved steady revenue growth and improved profitability in H1 2024, with revenue increasing by 7 0% YoY to $300 million and net profit attributable to shareholders rising by 37 5% YoY to $45 million [1] - The company's gross margin improved by 3 3 percentage points YoY to 48 5%, driven by higher contribution from the high-margin Levoit brand and lower raw material costs [1] - Non-Amazon channels experienced rapid growth, with revenue increasing by 46 5% YoY to $84 million, while Amazon channel revenue declined by 3 4% YoY to $212 million [1] - The Levoit brand maintained its leading position in the US market, with its air purifiers and humidifiers capturing 33% and 24% market share respectively in H1 2024 [1] Regional Performance - North America revenue grew by 13 0% YoY to $225 million, while Asia revenue surged by 43 4% YoY to $18 million [1] - Europe revenue declined by 18 6% YoY to $53 million, primarily due to reduced demand for air fryers in the Turkish market [1] Brand Performance - Levoit brand revenue increased by 32 4% YoY to $193 million, driven by strong performance in the US market and successful expansion into new markets like Germany [1] - Cosori brand revenue declined by 24 1% YoY to $72 million, while Etekcity brand revenue decreased by 16 0% YoY to $30 million [1] Financial Metrics - The company's net profit margin improved by 3 4 percentage points YoY to 15 1% in H1 2024 [1] - Sales and management expense ratios decreased by 1 7 and 1 3 percentage points YoY to 15 6% and 14 2% respectively [1] Profit Forecast - The report raises the profit forecast for 2024-2026, with expected net profit attributable to shareholders of $92 million, $108 million, and $123 million, representing YoY growth of 19%, 17%, and 14% respectively [1] - The diluted EPS for 2024-2026 is forecasted to be $0 08, $0 09, and $0 11, with corresponding P/E ratios of 7x, 6x, and 5x [1] Valuation - VESYNC's current market capitalization is HK$4 873 billion, with a closing price of HK$4 25 [4] - The company's 52-week high and low prices are HK$5 71 and HK$2 62 respectively, with an average daily trading volume of HK$2 16 million over the past three months [4]

Investment Rating - The report maintains a "Buy" rating for Vesync with a target price of HK$6.20 [6][9]. Core Insights - Vesync's revenue for the first half of the year was US$290 million, a year-on-year increase of 7.0%, slightly below the previous double-digit growth expectation. The non-Amazon sales channels showed strong performance, with a 46.5% year-on-year increase, accounting for 28.4% of total revenue. However, Amazon channel revenue decreased by 3.4% due to inventory destocking [2]. - The company's net profit reached approximately US$45 million, a 37.7% increase year-on-year, marking a record high for the first half of the year. The interim dividend was set at HK$0.0888 per share, with a payout ratio of 30% [2]. - North American business remained stable with a revenue of US$230 million, a 13.0% year-on-year increase, driven by more products on supermarket shelves and new TikTok retail channels. Conversely, European sales dropped by 18.6% due to weakened demand in Turkey and earthquake impacts [3]. - The main brand, Levoit, accounted for 65.1% of revenue, with air purifiers and humidifiers capturing 33.3% and 23.9% market shares in the U.S. respectively. The company plans to expand its product categories, including hair care, massage, and pet-related products [4]. - The forecast for FY24E and FY25E net profit is expected to increase by 20.5% and 15.9% respectively, with revenue projections adjusted to US$640 million for FY24E and US$740 million for FY25E [4]. Financial Summary - Revenue for FY22 was US$490 million, with a growth rate of 8.0%. For FY23, actual revenue was US$585 million, with a growth rate of 19.4%. The forecast for FY24 is US$643 million, with a growth rate of 9.8% [5]. - Net profit for FY22 was a loss of US$16 million, while FY23 showed a profit of US$77 million. The forecast for FY24 is US$93 million, reflecting a growth rate of 20.5% [5]. - The diluted earnings per share (EPS) for FY24 is projected at US$0.086, with a price-to-earnings (P/E) ratio of 6.6 times [5].

Financial Performance - Revenue for the six months ended June 30, 2024, was $296,194 thousand, representing a 7.0% increase from $276,932 thousand in the same period of 2023[2] - Gross profit increased to $143,790 thousand, up 14.9% from $125,118 thousand year-over-year, with a gross margin of 48.5% compared to 45.2% in 2023[2] - Profit before tax rose significantly by 56.7% to $52,674 thousand, compared to $33,620 thousand in the prior year[4] - Net profit attributable to equity holders of the parent was $44,857 thousand, a 37.5% increase from $32,619 thousand in the previous year[2] - Basic earnings per share increased to 4.13 cents, up 42.9% from 2.89 cents in the same period last year[6] - The company reported other income and gains of $3,722 thousand for the period, contributing to overall financial performance[4] - The group’s income tax expense for the six months ended June 30, 2024, totaled $7,817,000, compared to $1,034,000 for the same period in 2023, reflecting a significant increase[28] - The group recorded a tax expense of approximately $7.8 million for the six months ended June 30, 2024, an increase of about $6.8 million compared to the same period in 2023, primarily due to an increase in profit before tax[65] Assets and Liabilities - Total non-current assets as of June 30, 2024, amounted to $93,674 thousand, compared to $59,247 thousand as of December 31, 2023[7] - Current assets decreased to $479,753 thousand from $505,887 thousand at the end of 2023, with inventory at $76,529 thousand[8] - Current liabilities totaled $224,752 thousand, slightly down from $228,248 thousand at the end of 2023[8] - The company's total equity increased to $335,946 thousand from $327,516 thousand at the end of the previous year[8] - Trade receivables as of June 30, 2024, amounted to $65,154,000, a decrease from $192,082,000 as of December 31, 2023[32] - Trade payables as of June 30, 2024, totaled $102,539,000, compared to $113,112,000 as of December 31, 2023[35] - The group had approximately $35.0 million in pledged assets as of June 30, 2024, down from $82.4 million as of December 31, 2023[74] Revenue Breakdown - North America generated $224,931,000 in revenue, up from $199,017,000, reflecting a growth of 13.0%[14] - Revenue from North America increased by approximately 13.0% to $224.9 million in H1 2024 compared to $199.0 million in H1 2023, driven by growth in non-Amazon channels[46] - Revenue from Europe decreased by approximately 18.6% to $53.2 million in H1 2024, primarily due to reduced demand for air fryers in Turkey, despite growth in Germany and Hungary of approximately 39.1% and 38.6% respectively[46] - Revenue from Asia increased by approximately 43.4% to $18.1 million in H1 2024, mainly driven by growth in Japan and the Middle East[47] - Revenue from non-Amazon channels increased significantly by approximately 46.5% year-over-year, primarily due to a substantial rise in sales through chain retailers and the expansion into TikTok retail channels[45] Market Performance - Levoit air purifiers and humidifiers maintained the top sales share in the U.S. market, with sales shares of approximately 33% and 24%, respectively, marking an increase of about 6 percentage points compared to the same period in 2023[39] - Levoit vacuum cleaners achieved the top seller ranking in both the U.S. and German Amazon channels in the first half of 2024, continuing the success of its air purifiers and humidifiers[39] - Cosori air fryers maintained the top sales share in the Spanish market, demonstrating strong performance in Europe[39] - Levoit brand revenue increased by approximately 47.1% to $192.7 million in H1 2024, supported by higher sales of air purifiers, vacuum cleaners, and tower fans[48] Product Development and Innovation - The company is committed to long-term investments in product development and innovation, despite short-term pressures on operating profit margins[37] - The introduction of the Pawsync brand aims to create a smart health ecosystem for pets, enhancing user experience through technology[37] - The company launched new products in 2024, including high-efficiency fans and versatile air fryers, to meet diverse consumer needs and enhance brand share[41] - New product launches in the second half of 2024 will include advanced smart air purifiers, central air conditioning filters, smart pet feeders, and smart body scales[77] Corporate Governance and Compliance - The audit committee, consisting of three independent non-executive directors, has reviewed the unaudited interim financial information for the six months ended June 30, 2024[85] - The company has adopted the corporate governance code and has confirmed compliance with all applicable provisions during the reporting period[84] - Vesync Co., Ltd. is focused on expanding its market presence and enhancing its product offerings in the Internet of Things sector[90] Shareholder Returns - The group declared a final dividend of HKD 0.1569 per share, totaling approximately HKD 179,171,000 (equivalent to $22,923,000) for the year ended December 31, 2023[29] - The interim dividend declared is HKD 0.0888 per share, compared to HKD 0.0539 in 2023, with payment scheduled for October 22, 2024[78] - A total of 8,883,000 shares were repurchased during the reporting period at a total cost of HKD 45,526,600[80] Operational Efficiency - Total sales and distribution expenses decreased by approximately 3.5% to $46.1 million in H1 2024 from $47.8 million in H1 2023, attributed to improved marketing efficiency and inventory turnover[54] - Administrative expenses decreased by approximately 2.0% to $42.2 million in H1 2024 from $43.0 million in H1 2023, mainly due to a reduction in professional fees[56] - Financial costs for H1 2024 totaled approximately $1.2 million, an increase from $925,000 in H1 2023, driven by higher factoring fees and supplier discount interest[59] Future Outlook - The company aims to enhance its user-centric product portfolio and expand its offerings in the second half of 2024, focusing on smart home devices and increasing market presence in Europe[76] - The company is increasing its retail presence outside of Amazon, particularly through TikTok and mainstream supermarkets[77] - The company has committed to investing in technology to develop the Ve Sync app into a comprehensive home IoT platform[76]

Investment Rating - The investment rating for Vesync (02148.HK) is "Outperform the Market" [4][5]. Core Views - Vesync's sales performance showed significant improvement in Q2 2024, with total sales increasing by 24% year-on-year, driven by a 16.7% growth in Amazon channels and a 55.0% growth in non-Amazon channels [1]. - The company is expected to maintain stable profit margins despite rising costs in shipping and raw materials, as it has effectively managed promotional activities [1]. - The introduction of new products continues to provide growth momentum, particularly in the air purifier and vacuum cleaner segments, with several products ranking highly on Amazon's best-seller lists [1]. Summary by Sections Sales Performance - Q2 2024 total sales increased by 24% year-on-year, with Amazon channel sales up 16.7% and non-Amazon channel sales up 55.0% [1]. - Q1 2024 sales growth was impacted by high base effects and temporary adjustments in Amazon's policies, resulting in only a 1.0% increase [1]. Profitability - Despite cost pressures from shipping and raw materials, the overall profit margin is expected to remain stable due to effective promotional management in Q1 [1]. - Q1 net profit margin improved year-on-year as the company adjusted its promotional strategies [1]. Product Expansion - The growth in Q2 was primarily driven by increased sales of air purifiers, vacuum cleaners, nutritional scales, and tower fans in the US and European markets [1]. - New product categories have shown significant success, with top-ranking items in their respective categories on Amazon [1]. Financial Forecast - The company maintains its profit forecast, expecting net profits of $0.91 million, $1.07 million, and $1.23 million for 2024, 2025, and 2026 respectively, representing year-on-year growth rates of 18%, 17%, and 15% [1][2]. - The diluted EPS is projected to be $0.08, $0.09, and $0.11 for the same years, with corresponding P/E ratios of 7, 6, and 5 [1][2].