Viomi: Valuation Below Cash Position And Results Likely To Recover

Summary

• The company’s results were affected significantly by China’s zero COVID policy, with Q3 2022 net revenues declining by 35.1% year on year.
• This policy was abandoned in December 2022, and I expect annualized sales to slowly reclaim the $800 million level and net income to return to about $40 million per year.
• The downside risk seems limited as Viomi has over $160 million in cash, short term deposits, and short term investments as of September and the enterprise value is negative.

hallojulie

Introduction

I like to write about companies that lack coverage on SA and today I'm taking a look at Viomi Technology (NASDAQ:VIOT). It’s a relatively small Internet of things (IoT) company whose results have been under pressure due to COVID-19 lockdowns

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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