Event: recently, the company released its semi-annual report for 2022, with a total operating income of 95.807 billion yuan, an increase of 4.13% over the same period last year, and a net profit of 11.466 billion yuan, an increase of 21.25% over the same period last year.

Comments:

The company's traditional main business is disturbed by the epidemic, and the overall performance of the profit side is more eye-catching. From a quarterly point of view, in 2022, Q1 and Q2 achieved revenue of 35.535 billion yuan and 60.272 billion yuan respectively, an increase of 6.02% and 3.04% respectively over the same period last year; and net profit of 4.003 billion yuan and 7.463 billion yuan respectively, up 16.28% and 24.10% respectively over the same period last year. Focusing on customer demand, the company accelerates the reform of new retail channels, actively broadens overseas markets, accelerates the transformation of numerical intelligence, insists on independent innovation, and steadily expands diversified new businesses while maintaining the steady development of home appliance business. Under the background of the decline of the overall home appliance market and the greater pressure on the global economy, the company's Q2 achieved revenue growth against the trend in 2022, although the growth rate slowed down, but the scale broke through the 60 billion yuan mark.

The company's green energy business has significantly expanded. In terms of products, in the first half of 2022, the company's business income from air conditioners, household appliances, industrial products, intelligent equipment and green energy was 68.746 billion yuan, 2.177 billion yuan, 2.888 billion yuan, 200 million yuan and 1.926 billion yuan respectively, up 5.18%,-1.51%, 57.79%, 2.40% and 131.57%, respectively. Among them, the green energy business has obviously expanded its volume, and its income has doubled. ① new energy vehicle business: the company has launched road cars, buses, tourist vehicles, micro-card logistics vehicles and so on. ② lithium battery business: the scale of power battery orders at home and abroad is increasing rapidly. Layout 3-5C fast charging power battery products, and developed special power batteries such as heavy trucks, mine cards, tractors, port machinery, oil field equipment, etc., and newly developed lithium titanate square shell batteries with the largest mass production capacity (above 155Ah) in the industry. ③ energy storage business: Gree titanium battery energy storage system has been sold to more than 30 countries and regions around the world, covering new energy consumption, grid frequency modulation, communication base stations, rail transit and other application scenarios.

Company profitability repair. In the first half of 2022, the company's sales gross profit margin was 24.50%, up 0.76% from the same period last year and 0.95% from the previous quarter; in the second quarter alone, the company's sales gross profit margin was 24.99%, up 1.65% and 1.33% respectively from the same period last year. The optimization of the company's gross profit margin is mainly due to the substantial optimization of the gross profit margin of the main export business. In the first half of 2022, the company's net sales interest rate was 11.37%, up 0.95% from the same period last year; in the second quarter alone, the company's net sales interest rate was 12.08%, up 1.64% and 1.92% respectively from the same period last year. In the first half of 2022, the company's profitability was repaired, mainly due to a reduction in installation and maintenance fees and publicity fees, and the sales expense rate was optimized by 2.45 percentage points compared with the same period last year.

Investment suggestion: the company takes scientific and technological innovation as the drive, product quality as the guarantee, comprehensively deepening reform, accelerating the transformation of digital intelligence, based on the home appliance industry, steadily expanding diversified new business, and sustained high-quality development. It is estimated that the EPS of the company in 2022 / 2023 is 4.53 yuan / 5.08 yuan respectively, corresponding to 7 times / 6 times of PE, maintaining the recommended rating.

Risk tips: epidemic risk; macroeconomic fluctuation risk; raw material price fluctuation risk; global asset allocation and overseas market expansion risk; exchange rate change risk.