1Q23 was a slight beat, mostly due to rocketed sales growth in the EU. Even with no FY23E guidance provided, we do think rapid growth in the EU will stay, sales growth in the US shall improve, together with the tailwinds in margins （e.g. cheaper input costs and freight rate, better discounts）。 We still have a BUY rating with TP of HK$ 9.92, based on 11x FY23E P/E, vs 5 years average of 14x.
　　SharkNinja resumed positive sales growth in 1Q23, slightly better than　expected. SharkNinja recorded a 5.4% YoY increase in gross sales in 1Q23, slightly better than our estimates of “slight drop”。 While sales decline of 8% in North America was inline with our estimates, we attributed the positive surprises to: 1） remarkable sales growth of 70% in Europe （87% in constant FX） and 2） successful ramp-up of new products like the Hair dryer, where its market shares had gone up to 17%, from just 2% one year ago. Despite industry headwinds in the US, we are still encouraged by the reasonable market shares gain by SharkNinja, which is a strong indication of its highly competitive products and branding. For 1Q23, SharkNinja’s market shares in the US for Cleaning/ Food preparation/ Cooking appliances +0.9ppt/ +0.4ppt/ +0.1ppt, and its market shares in the UK for Vacuum cleaners/ Electrical cooking pots/ Food preparation appliances -1.2ppt/ +4.2ppt/ +5.4ppt YoY.
　　We do expect sequential improvement in the US and China, rapid growth to stay in the EU and expansion in APAC to continue. We believe the　sales growth （so as the profit） in FY23E could be backloaded （3%/ 9% sales growth in 1H23E/ 2H23E） because: 1） end demand is still healthy in the US, sell-through sales growth was at +ve MSD while sell-in sales dropped by 8% at the same time in 1Q23, 2） de-stocking in the US may still be great in 1H23E, but should be eased in 2H23E, 3） speedy growth in the EU is likely to continue （meaningful market shares gains in food preparation and cooking appliances）， 4） many new products and categories will be launched in 2H23E （on top of the Ninja 2in1 double layer oven, Ninja black cordless blender, ice cream maker, cutlery, Shark robot matrix）， 5） Joyoung’s sales was still under pressure in Jan-Feb due to pandemic and weakened overseas demands, but turnaround is rather likely in 2H23E, and 6） expansion in APAC will remain fast （Japan market already broken even, announced a new retail partner in South Korea and acquired the distribution partner in Australia and New Zealand）。
　　Maintain BUY and raised TP to HK$ 9.92. We lift FY23E/ 24E/ 25E net profit　forecasts by 2%/ 2%/ 2% to factor in: 1） greater drags on Joyoung during pandemic, 2） faster EU sales growth and 3） better GP margin expansion ahead. Our new TP is based on 11x FY23E P/E （unchanged）。 Its valuation is not demanding at 8x FY23E P/E, compared to 5 years average of 14x.