XGIMI TECHNOLOGY(688696):RESULTS DURING DOUBLE 11 SHOPPING FESTIVAL ENCOURAGING

类别:公司 机构:中国国际金融股份有限公司 研究员:Aaron Wei HE/Jun CHU/Jiale ZHOU 日期:2021-11-23

What's new

    We recently visited XGIMI Technology and spoke with its management team during the 2021 CICC investment Forum. During the Double Eleven shopping festival, the company recorded gross merchandise volume (GMV) of over Rmb800mn (up over 90% YoY), compared with that of its peers JMGO at over Rmb600mn and Formovie at more than Rmb200mn. We think XGIMI Technology maintains its leadership in the projector sector.

    Comments

    Reasonable product structure; high-end products improve the company’s brand image; popular products help monetization. Thanks to its diversified projector solutions for consumers, XGIMI Technology is enhancing its brand influence while turning its customer traffic into earnings, in our view. The company’s high-end RS Pro and H series flagship products show its technological strengths, in our view, and its cost-effective Z-series products are the most popular projectors among consumers. During the Double Eleven shopping festival, the sales volume of its NEW Z6X projectors exceeded 80,000 units, with GMV of over Rmb250mn. The upgrading period of the company’s flagship series products averages 1.5-2 years, as it focuses on product details. We think it has enjoyed increasing customer recognition thanks to its focus on product quality.

    Efforts in marketing and cooperation with popular stars paying off. XGIMI Technology has stepped up efforts in marketing since early 2021. In April, its RS series entered a cooperation with actress WANG Ziwen. In August, actor Jackson Yee became the company’s global brand ambassador. In September, the brand invited stars to participate in its promotion events. Given these efforts, we estimate XGIMI Technology’s sales on the Tmall platform grew over 70% YoY in 3Q21. We think the technical barriers in the projector segment are relatively low, and Texas Instruments still holds the greatest share of digital light processing (DLP) technologies. However, XGIMI Technology successfully enhanced its brand influence when the penetration rate of its products was low, as it stepped up efforts to improve product quality and optimize its marketing strategy through significant investment. We think the company has built competitive edges in terms of product quality and brand influence.

    Offline channel adjustment and supply-chain improvement to bolster growth. XGIMI Technology reduced the number of distributors and closed some stores that were reporting losses; therefore, its offline revenue grew slower than online revenue. The company plans to increase the number of franchised and proprietary stores moving forward. At end-3Q21, the number of offline stores reached around 150. In addition, XGIMI Technology has controlled product prices and secured its supply since 2Q21, realizing encouraging results. We do not think its sales will come under pressure despite the likelihood of a continued chip shortage through 4Q21.

    Valuation and recommendation

    We keep our 2021 and 2022 earnings forecasts unchanged. The stock is trading at 50.9x 2022e P/E. We maintain OUTPERFORM and our target price of Rmb688 (implying 59.8x 2022e P/E) offering 18% upside.

    Risks

    Volatile market demand and raw material cost; chip shortage.