Vatti(002035) 国泰君安·2024-10-09 12:12Investment Rating and Target Price - The report initiates coverage on the company with an "Overweight" rating and a target price of 9.50 RMB, compared to the current price of 7.24 RMB [2] - The target price is derived from a combination of absolute and relative valuation methods, considering the uncertainty of real estate policies on actual sales [7] Core Investment Thesis - The company's strategy of product integration and bundling is expected to drive higher average selling prices (ASP), while channel integration is anticipated to enhance market share [2] - The relaxation of real estate policies, such as the removal of purchase restrictions in Guangzhou and the reduction of existing mortgage rates, is expected to stabilize the real estate market, benefiting the home appliance sector, particularly post-cycle companies [7] - The company's new product lines, including integrated cooking centers and water heaters, are expected to contribute to revenue growth, with integrated cooking centers generating approximately 36 million RMB in sales in 2023 [7][29] Financial Performance and Forecast - The company's revenue is expected to grow by 4%, 7%, and 7% year-over-year (YoY) from 2024 to 2026, with net profit attributable to the parent company increasing by 6.2%, 7.5%, and 8.9% respectively [7] - The company's revenue in 2023 was 6.233 billion RMB, a 7.1% increase YoY, with net profit attributable to the parent company reaching 447 million RMB, a 212.5% increase YoY [10] - The company's gross profit margin improved to 42.2% in 2023, up from 39.5% in 2022, driven by product mix optimization and cost control [10] Product and Market Strategy - The company is focusing on integrated and bundled product strategies, with integrated cooking centers and water heaters expected to drive revenue growth [7][29] - The company's integrated cooking center, launched in 2023, has already achieved significant sales, and further growth is expected as the company increases marketing efforts and introduces new products [29] - The company is also benefiting from the trend of replacing electric water heaters with gas water heaters, leveraging its long-standing expertise in the gas appliance market [34] Channel and Operational Efficiency - The company is undergoing channel reform, with a focus on flattening the distribution structure to improve operational efficiency [7] - The company has established "Sales Operation Center," "Channel Operation Center," and "Retail Management Center" to enhance management precision and encourage direct sales by agents [7] - The company's online and offline channels accounted for 45% and 35% of total revenue in 2023, respectively, with engineering and overseas channels contributing 8% and 10% [44] Brand and Marketing Strategy - The company operates three major brands: Vatti (high-end), BCD (mid-range), and Vatti Home (high-end custom home solutions) [16] - The company has a strong marketing capability, having sponsored major sports events such as the Olympics and the FIFA World Cup, which enhances brand visibility and credibility [52] - The company is also focusing on brand rejuvenation, with endorsements from young celebrities and innovative marketing campaigns to attract younger consumers [53]