By Brian Lantier, CFA

NASDAQ:VIOT

READ THE FULL VIOT RESEARCH REPORT

Viomi Technology’s (NASDAQ:VIOT) shares have slightly underperformed the market since our initiation in December (down 15% vs -3% for the Russel 2000) which seems to largely be due to some factors beyond the company’s control, like the concerns about the health of the Chinese consumer and the possible impact of President Trump’s tariffs on all Chinese goods.

Viomi attended the Consumer Electronics Show (CES) in Las Vegas to formally introduce its line of under-the-sink reverse osmosis water filtration systems to the US market. While the US market poses some unique challenges, we do think that the US market can be a key growth driver over the next three years.

Viomi’s Vortex V6 600G and V8 800G models are now available for sale on Amazon as part of the company’s plan to access the US market. We discuss Viomi’s competitive positioning on the site and in the broader US market in our full research report.

While the issue of tariffs on Chinese goods is very fluid at this point, we believe that concerns about the impact on Viomi are overblown. The overwhelming majority of the company’s sales in 2025 will still be in China (not subject to tariffs) and in the US the majority of the company’s competitors would also be manufactured in China and subject to equivalent tariffs.

The domestic Chinese water filtration market is forecast to grow from a $4.0 billion market in 2023 to a $5.6 billion market in 2026, which is nearly a 12% CAGR as a result of growing disposable income and safety concerns around water quality in China which will drive greater adoption of water solutions. While there is some debate about the health of the Chinese economy and consumer spending trends, we believe that demand for core durable goods like water purification remains fairly strong. 

The company recently reaffirmed its revenue from continuing operations outlook of RMB 1.7-1.9 billion ($238 million - $266 million) and operating income will be RMB 110-130 million ($15 and $18 million).

We believe that Viomi’s ADSs could be worth $3.75 based on our discounted cash flow analysis, our analysis of other home appliance companies and recent transactions in the market. Investors do not have a full picture of the company’s financial condition since divesting its IoT business but this picture should become clearer after the company reports full-year results in late March.

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