Core views:
The company discloses its 2023 annual report. In 2023, we achieved revenue of 261.43 billion yuan (YoY +7.4%), net profit attributable to mother of 16.60 billion yuan (YoY +12.8%), net profit margin of 15.82 billion yuan (YoY +13.3%), gross profit margin of 31.5% (YoY+0.2pct), and net profit margin 6.3% (YoY+0.3pct). 23Q4 achieved revenue of 62.77 billion yuan (YoY +6.8%), net profit of 3.45 billion yuan (YoY +13.2%), net profit of 3.10 billion yuan (YoY +13.2%), gross profit margin of 34.0% (YoY+0.1pct), and net profit margin of 5.5% (YoY+0.3pct).
Each business growth led the industry. In 2023, the air conditioning business achieved revenue of 45.66 billion yuan, +14.0% year on year; refrigerators: 81.64 billion yuan, +5.2% year on year; kitchen appliances: 41.59 billion yuan, +7.4% year on year; water appliances: 15.01 billion yuan, +8.9% year on year; and washing machines: 61.27 billion yuan, +6.2% year on year.
Domestic share increased, and overseas growth was steady. (1) In 2023, domestic companies achieved revenue of 124.614 billion yuan, +7.1% year-on-year, and retail sales of offline Tri-wing stores were +84% year-on-year, accounting for more than 60% of complete sets. (2) In 2023, overseas companies achieved revenue of 135.678 billion yuan, +7.6% year-on-year. Among them, revenue in North America, Europe, South Asia, Southeast Asia, and Japan was +4.1%, +23.9%, +14.9%, +11.6%, and +2.6%, respectively.
The company announced the 2023 profit distribution plan. It is proposed to distribute a cash dividend of 8.04 yuan for every 10 shares to all shareholders, with a total dividend amount of 7.47 billion yuan, corresponding to a dividend ratio of 45%. The company's dividend ratios in the past 2020-2022 were 38%, 33%, and 36% respectively, and the dividend ratio increased markedly in 2023. As of 2024/03/27, the company's dividend rate was 3.33%. Furthermore, a shareholder return plan was introduced for the next three years, and the dividend ratio for 2025 and 2026 is expected to be no less than 50%.
Profit forecasting and investment advice. The company's net profit for 2024-25 is estimated at 18.703 billion yuan and 21.061 billion yuan. Considering comparable company valuations, the company is given 15 x PE in 24, a reasonable value of 29.72 yuan/share, maintaining a “buy” rating. For Hong Kong stocks, the AH premium factor is taken into account, corresponding to a reasonable value of HK$28.80 per share, maintaining a “buy” rating.
Risk warning: raw material cost pressure; industry competition intensifies; efficiency improvements fall short of expectations.