The company announced 23-year results:
1) In 2023, Haier's revenue was 261.4 billion yuan (+7.3%), the 23Q4 revenue was 62.8 billion yuan (+6.8%), and the mother's income was 3.4 billion yuan (+13.2%). Revenue and profit slightly exceeded expectations. The gross margin led to an increase in net interest rate, and the governance improvement & structural upgrade logic continued to be implemented.
2) The dividend rate for 23 was raised from 36% to 45%, and the 25-26 dividend ratio continued to be increased to ≥ 50%, corresponding to dividend rates of 3.2%, 3.6%, ≥ 4.5%, and ≥ 5% for 23-25 years. The company will write off 0.57% of its share capital, which is a high investment value.
23-year revenue split:
1) Subregion: Domestic sales revenue +7%, of which we expect Casadi's retail side to grow by 14%, and the AC growth rate is expected to increase by 17% when the restoration is in progress. Export sales revenue +7.6%, including RMB +4% in North America and +24% in Europe. Europe and the US together account for 80% of Haier's export sales.
2) By category: Looking at domestic and foreign sales combined, refrigerator revenue +5.2%, kitchen appliance revenue +6.9%, air conditioning revenue +13%, washing machine revenue +6.2%, water and household appliances revenue +8.5%.
23-year profit split:
1) The gross profit margin is 31.5% (+0.2pct), the cost ratio is 24.2% (+0.1pct), and the net profit margin is 6.3% (+0.3pct). The main reason is that raw material price reduction & product structure optimization increase gross profit margin. Digitalization drives a reduction in sales and management rates, and an increase in overall net profit margin.
2) Sub-business: The profitability of all businesses has improved, especially air conditioning. The refrigerator division's net profit margin was 6.1% (+0.7pct), kitchen appliances 7.1% (+0.1pct), air conditioning 4% (+1.4pct), washing machines 9.1% (+0.2%).
23Q4 revenue split:
We expect the domestic sales revenue growth rate to be medium to high. Among them, the air conditioning revenue growth rate is double digits, Casadi's revenue growth rate is high single digits to double digits, and the export sales revenue growth rate is median. Among them, North America is small in single digits, and the rest of the region is in double digits. Q4 is similar to the pace for the whole year.
Investment advice:
Against the backdrop of an upward air conditioning base and rising prices for raw materials and shipping, we believe it is necessary to cherish Haier, which has a continuous improvement in business quality. The company still has many profit improvement points in 24 years, including ① a high increase in domestic sales of air conditioning and kitchen appliances, ② restoration after Casadi removed inventory, ③ profit growth after the launch of European Newcandy, ④ rate optimization dividends brought about by digital reforms to reduce costs and increase efficiency.
Furthermore, the increase in real estate demand after the US entered a cycle of interest rate cuts in the second half of '24 is likely to drive Haier to continue to exceed expectations. In summary, we believe that the company's slope is rising, and repurchases+dividends will significantly increase the investment value. We expect the return in 24/25/26 to be $187, 211, and 23.8 billion yuan (the previous value in 24/25 was $193, 21.7 billion), corresponding to PE of 12, 11, and 9 times, maintaining a “buy” rating.
Risk warning: Risk of raw material price fluctuations, export sales falling short of expectations, risk of high-end brand growth slowing down, air conditioning growth falling short of expectations, risk of untimely research data updates.