The company announced its 23-year results and dividend distribution plan:
23 Full year: Revenue of $24.2 billion (+20%), back to mother of $740 million (+203%). Previously, there were quick performance reports and profits in the forecast.
23Q4: Revenue of 5.1 billion (+5%), return to mother of 240 million (+192%), dividend rate of 41.7% for 23 years, corresponding to current market value is 3.2%.
23-year revenue split: export sales growth accelerates
1) Air conditioning: Revenue of 11.6 billion yuan (+18%), of which domestic sales (Sichuan Changhong Air Conditioning Subsidiary) earned 8 billion yuan (+16%). The increase was mainly reflected in the air conditioning market driven by the heat summer in the first half of the year; export sales (Zhongshan Changhong Electric Appliance Subsidiary) revenue of 3.8 billion yuan (+22%), and Meiling actively grabbed orders overseas to accelerate the growth of air conditioning sales.
2) Refrigerators: Revenue of 9.1 billion yuan (+19%). We expect domestic and foreign sales to be 2:1. Among them, export sales benefit from active order grabbing, internal channel collaboration, and significant inventory replenishment in the second half of the year, and are expected to increase by high double digits; domestic sales are mainly due to price increases brought about by structural upgrades.
3) Small kitchen: With revenue of 1.8 billion dollars (+15%), the company has made significant breakthroughs in segments such as tea bar machines.
4) Washing machines: Revenue of 1.3 billion dollars (+76%), and a high increase in export sales under a low base.
Segment profit split in '23: Air conditioning and export sales contributed significantly
Of the company's net profit of 740 million yuan, according to the division of subsidiaries, we expect domestic air conditioning sales to contribute 230 million (net interest rate 2.9%, +0.9 pct); export air conditioning sales will contribute 160 million (net interest rate 4.3%, +1pct); and Kitchen Xiao will contribute 60 million (net profit rate of 3.5%, +0.6 pct). The remaining business (mainly ice washing) was split according to the parent subsidiary business, contributing 290 million (net interest rate 2.7%, +3.1 pct). The overall net interest rate for air conditioning and export sales is high.
What do you think of 24 years?
① We expect the company's overall net export margin to be greater than domestic sales. Demand for M1-2 export inventory repair will still be intense in '24, and the beta advantage of export sales will still be strong. ② The upgrade beta of domestic refrigerators is remarkable. Meiling refrigerators have a high quality/price ratio, which continues to drive an increase in profit margins. ③ Nationwide expansion of independent air conditioning brands is ongoing. ④ The company lost 40 million US dollars in value in '23. It is expected that there will be no major impairment in '24, and the performance went light!
Investment advice:
The company maintained net cash of 7.6 billion yuan in 23, and had net interest of 162 million yuan. We have sufficient cash on hand. We conservatively estimate 24/25/26 profit of 914/10.9/1.25 billion yuan (the value before 24/25 was 88/1.02 billion yuan), corresponding to PE of 10/8/7X, maintaining a purchase rating.
Risk warning: Real estate completion risk, risk of air conditioning growth falling short of expectations, risk of raw material price fluctuations, export sales falling short of expectations, risk of exchange rate fluctuations, risk of untimely research information updates.