20230511-招银国际-JS环球生活-01691.HK-1Q23_results_beat_and_expect_gradual_recovery_8页_1mb

The company's 1Q23 results beat expectations due to strong sales growth in the EU (5.4% YoY gross sales, attributed to new products like the Hair Dryer) and market share gains, while US sales declined slightly below estimates but showed signs of improvement.

Key growth drivers include rapid expansion in Europe, expected sequential recovery in the US and China, and expansion in APAC with new product launches. Management prioritizes market share gains and topline growth.

Recommends maintaining a BUY rating with an elevated target price to HK$9.92, based on improved financial forecasts: net profit and revenue estimates lifted by 2-8% for FY23E-FY25E, driven by margin expansion (GP margin up by at least 1ppt) from cost reductions and better operational efficiency.

Valuation remains attractive at 7.7x FY23E P/E, below the five-year average of 14x, with a 43.8% upside potential from current price. Peer comparison shows comparable ROE and P/E ratios.

Risks include US end-demand volatility, potential inventory clearance needs, and pandemic-related pressures in China, but confidence in sustained growth in key regions underpins the buy recommendation.