Incident: In 2023, the company achieved operating income of 372.04 billion yuan, +8.2% year on year; net profit to mother was 33.72 billion yuan, +14.1% year on year; net profit without return to mother was 32.97 billion yuan, +15.3% year over year.
Among them, 23Q4 achieved operating income of 80.93 billion yuan, +10.0% year on year; net profit to mother of 6.0 billion yuan, +18.1% year on year; net profit after deducting non-return to mother of 6.13 billion yuan, +35.0% year on year. In terms of dividends, the company plans to distribute cash of 30 yuan (tax included) to all shareholders for every 10 shares, with a total cash dividend of 20.8 billion yuan, accounting for about 61.57% of net profit to mother in 2023.
Home appliance leaders are growing steadily, and the ToB business continues to grow at a high rate. The company achieved an 8% increase in revenue in 2012, which was further split: 1) To C business, consumer electronics revenue was 134.7 billion yuan, +8% year over year (of which H1/H2 +3%), gross profit margin was 33.0%, +2.8pcts year on year; HVAC revenue was 161.1 billion yuan, +7% year over year (of which H1/H2 was +10%/+3%), gross profit margin of 25.6%, +2.7 pcts year on year. 2) ToB business. The company's revenue for new energy and industrial technology/robotics and automation/ intelligent building technology was about 279/311/25.9 billion yuan respectively in '23, up 29%/12%/14% year-on-year.
The capacity of the reservoir has been significantly expanded, which is conducive to improving the stability of performance. By the end of '23, the company's other current liabilities/contract liabilities were about $713.41.8 billion, respectively, +23%/+49% over the same period in '22; in 2023, the US operating cash flow exceeded $57.9 billion, +67.1% over the same period last year. The company's reservoir expanded significantly year-on-year in '23, and the cash flow performance was excellent, which is conducive to improving the stability of subsequent performance.
Cost-efficiency advantages are prominent, and improvements in profitability continue to be realized. The company's main gross profit margin in 23Q4 was 28.8%, +2.2pcts year on year. Benefiting from the company's continuous integration of global resources, promoting technological innovation, and building an R&D scale advantage, gross margin continued to increase significantly year-on-year. On the cost side, the company's 23Q4 sales/management/R&D/finance expenses were 11.8%/5.1%/5.6%/-2.0%, respectively, +1.6/+0.3/+0.6/ -0.2pcts. In the end, the company achieved a net interest rate of 7.4% to mother in 23Q4, +0.5pct year-on-year.
Investment suggestions: Midea Group has a clear leading advantage in the white electronics business, and the development logic of each business line is clear: 1) The home appliance business, the COLMO+ Toshiba double high-end brand optimizes profits, maintains OEM advantages overseas and vigorously builds its own brand sales outlets; 2) The T0B business starts a second engine, and each business gradually breaks through and strengthens horizontal collaboration across product divisions, which is expected to be accompanied by scale expansion and gradual optimization of profitability. The company continues to refine its core competitiveness in the TOC+ToB field and strive for long-term development. The estimated net profit for 24-26 is 374/411/45 billion yuan, corresponding to PE12.0x/11.0x/10.0x, maintaining a “buy” rating.
Risk warning: the risk of rising raw material prices; the risk of fluctuations in the real estate market; the risk of increased market competition; the expansion of overseas brands and categories falling short of expectations.