**Episode Overview:**

In this episode of _QAV America_, Cam and Tony dissect the fundamentals of **Zepp Health (ZEPP)**, a Chinese smartwatch manufacturer with aspirations well beyond step counters. They unpack the company’s evolution from low-margin Xiaomi contractor to an ambitious, vertically-integrated brand aiming to take on Apple — at a fraction of the cost. Cam walks through the business model, leadership, geopolitical hedging via a Netherlands HQ, and a potential future in AI-powered wearables. Despite being unprofitable, Zepp boasts positive operating cash flow, aggressive R&D spend, and a book value nearly five times its share price. Tony and Cam debate its merits as a deep value tech stock in a crowded, commodified market — with a few detours into Marx Brothers references and Cameron’s post-Kung Fu abs.

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### **🔢 Timestamps & Topics**

– **[00:00:00 ] Trump’s Tariffs & Market Volatility**

Trump’s threats to Japan/South Korea spark global market reactions.

– **[00:02:00 ] What is QAV America?**

Quick refresher on the QAV system and the process behind selecting U.S. stocks.

– **[00:03:20 ] Zepp Health (ZEPP) Introduction**

Zepp’s background, link to Zeppo Marx, and business model basics.

– **[00:06:00 ] What They Make**

Smartwatches, fitness bands, health-focused earbuds under brands like Amazfit and Zepp.

– **[00:08:00 ] Price Point Strategy & Competitive Landscape**

Sub-$200 devices aiming to mimic Apple Watch functionality.

– **[00:12:00 ] Founder Story & Business Transition**

From a hacked pedometer to $10M investment from Xiaomi.

– **[00:14:00 ] Post-COVID Strategy Shift**

Moved final assembly to Vietnam, dropped Xiaomi contracts, chasing margin.

– **[00:17:00 ] Netherlands HQ – Why?**

Tax, regulatory and geopolitical benefits of being a “Dutch” company.

– **[00:19:00 ] Historical Sidebar: Friars Hung for Transubstantiation**

Cameron’s tangent on Gorinchem’s bloody Reformation history.

– **[00:21:00 ] Crowded Marketplace – Smartwatch Wars**

45M units shipped in Q1 2025, Zepp fighting for space in cheap smartwatch jungle.

– **[00:25:00 ] Margins, Hardware & Amazon Dominance**

Race-to-the-bottom manufacturing, vertical integration, low build costs.

– **[00:29:00 ] Financials Breakdown**

– **[00:33:00 ] AI Push – The Bull Case**

Expanding AI team to 120 people. Vision for on-device LLMs powering wearables.

– **[00:36:00 ] The Future of Personal Devices**

Onboard AIs, wearables, and the shifting market from fitness to full-assistant functionality.

– **[00:38:00 ] Final Verdict**

[00:00:00 ]

Cameron: Welcome back to QAV America, Tony, episode 13, timestamp. Tuesday, the 8th of July in Australia, about 2:30 PM in the afternoon. It’s a Tuesday. Uh, we’ve just done an Australian show where we talked about President Trump’s uh. Nobel Peace Prize nomination and congratulations to him on that. And uh, sure that’ll go great.

And, um, more tariffs that he announced yesterday that he’s gonna hit Japan and South Korea with, if they don’t. Give him a call and pledge allegiance and, uh, the US markets fell, the Australian market fell and then woke up and went, what are we doing? And recovered. So

Tony Kynaston: A, uh. Was that the

Cameron: Kramer,

Tony Kynaston: by the American? Uh, the Australian [00:01:00 ] market.

Cameron: yeah.

Tony Kynaston: it follows Wall Street up or down and it didn’t, it started to and it turned around today. But we do have

Cameron: Started,

Tony Kynaston: reserve bank meeting going on now, which may drop interest rates.

Cameron: I think they had a cup of coffee, all of our traders, and realized that Trump will tar it. And so they went, what are we? Why are we doing this? Let’s just assume he’s gonna tar it and get back to business. Oh, I dunno what they did.

Tony Kynaston: knows. Anyway, freedom Day number two. Coming up on Monday,

Cameron: Yes, just volatility all over the place, still in the US markets. Um, we, we are fortunate that because we have a system that ignores noise, most of what’s going on, we just go, yeah, yeah, whatever. And we focus on the fundamentals.

Tony Kynaston: And, and make a bit of fun of it too, usually.

Cameron: Yes, you do. You

Tony Kynaston: Hmm.

Cameron: will just stick to our knitting. And so today I’m going to, for people that are [00:02:00 ] listening for the first time, um, QAV is a value based investing system that Tony has developed over the last 30 years, continues to develop and refine, uh, we call it QAV.

It’s quality at value. So we’re looking for. Stocks in quality companies, basically companies that seem to be well run and are making money, uh, when we can get them at a discount to their intrinsic valuation. And we have a number of metrics that we look at. And so what I do in these US shows is I generate a buy list using our checklist that we have that scores companies based on whole range of fundamental metrics.

I’ll pick one somewhat at random from that’s on the buy list. That’s getting a positive score. It comes up as a buy and then we’ll break it down and look at it. Tony and I are boast based in Australia, based in Australia. Dunno a lot about the companies that are on the US markets. New York Stock Exchange or the nasdaq, [00:03:00 ] and a lot of them are very different.

Sorts of businesses to what we’re used to trading with in Australia. So we pull ’em apart and have a think about ’em and try and figure out, well, why is this showing up in our buy list and what do we think of it as an investment? If you know we do run a US portfolio, it’s doing very well. We actually don’t have any cash left to invest.

So we’re not buying the company that I’m talking about today at this stage. But I will ask Tony the question at the end of this, if we had cash to buy, what do you think about this one? And these aren’t necessarily recommendations. We’re not financial advisors. See a financial advisor before you make any investing decisions.

We’re just talking about companies that look interesting, uh, based on our analysis. And today’s company is one called Zep Health. I immediately liked it because I thought of Zeppo Marx.

Tony Kynaston: did too.

Cameron: Uh, yeah. My favorite of all the Marx brothers. Most underrated of all the Marx Brothers. Hey, he just, [00:04:00 ] he, he. He, he was, he was the good looking one.

The good looking Marx brother.

Tony Kynaston: didn’t

Cameron: That’s what I think of.

Tony Kynaston: though,

Cameron: No, no. He was too good looking. Too good looking. That was his problem. Yeah. Yeah. Um, he was a DEI hire DEI. Diversity

Tony Kynaston: The Nepo. Marks

Cameron: the Nepo. zPo. The Nepo. Yeah.

Tony Kynaston: The Nepo,

Cameron: Um, ZEPP is the name of the company Z. That’s their ticket code as well.

Tony Kynaston: ZEPP. This is the US

Cameron: Z, sorry. ZEPP. Yeah. My American wife would, uh, have corrected me on that as well. Uh, but growing up watching Sesame Street, I should have known that. Anyway, uh, now I will, I. Just highlight the fact that if you’re looking at this in stock, EDIA, ’cause uh, that’s what our checklist is designed for.

This is one of those stocks that we’ve been talking about lately [00:05:00 ] that does not report in USD. It reports in Remi, BRMB. Uh, for reasons that I’ll explain soon, so you’re gonna have to do a little bit of jiggling with the numbers. My other thing to let you know is that I did after our show last week when we decided to remove the Altman Zed score from our checklist.

I did do that this morning, the score. Thank you, Tony.

Although in Pulp Fiction, Bruce Willis says, Z’s dead baby.

Tony Kynaston: Z’s dead.

Cameron: Z’s dead.

Tony Kynaston: Could never work that out.

Cameron: Well, ’cause she’s French, I guess. Who is Zed? She sees the keys. Who is Zed Z’s Dead baby. Z’s dead and Z’s dead. Baby doesn’t, doesn’t work. So Tarantino? No. Near the alliteration there. Is that alliteration? No. What’s that? It’s just rhyming.

Tony Kynaston: just rhyme. Yeah.

Cameron: Anywho, yeah. Uh, so this is this, uh, company. I had to, I had to redo the [00