supor(SZ:002032)2025-05-06 02:28Investment Rating - The report maintains an Overweight (OW) rating for Zhejiang Supor with a price target (PT) of Rmb61, revised down from Rmb63 [2][20][21]. Core Insights - Supor's 1Q25 sales and earnings increased by 7.6% and 5.8% year-over-year, respectively, aligning with market expectations. The company is expected to outperform peers due to lower US sales exposure, a diversified production base, and fixed profit margins for OEM orders from Groupe SEB [2][10][20]. - The small appliance industry in China is anticipated to face uncertainties in both domestic and overseas demand in 2025. However, Supor's sales and earnings growth is forecasted to be 3.9% and 5.8% year-over-year, respectively, for 2025 [2][10][20][16]. Summary by Sections Financial Performance - Supor's 1Q25 results showed domestic sales growth of approximately 3% year-over-year, driven by an extended trade-in policy for small appliances. Export sales increased by 16% year-over-year due to front-loaded orders ahead of US tariff increases [7]. - The gross profit margin improved by 0.1 percentage points year-over-year to 23.9%, while the operating profit margin increased by 0.4 percentage points to 9.9% [7][9]. 2025 Outlook - Supor aims for positive growth in both revenue and earnings in 2025, targeting a stable net margin despite weak domestic consumption demand. The company anticipates a slowdown in export sales growth starting from 2Q25, maintaining a full-year growth target of around 5% [7][10]. - The impact of US tariffs is expected to be limited, as most products exported to the US are now produced in Vietnam, which benefits from a 90-day waiver period for tariff hikes [7][10]. Valuation - The report employs a DCF model to derive a price target of Rmb61, implying an 18x forward P/E ratio, with an assumed WACC of 8.0% and a terminal growth rate of 1.0% [11][21][22]. - Supor's strong cash-generating capability and low capital expenditure requirements (<1% of sales) support a high dividend payout ratio, estimated to be over 90% for 2025-26, translating to a 5% dividend yield [10][20].