Incidents:
Hisense Home Appliances released its 2023 annual report: In 2023, it achieved revenue of 85.06 billion yuan, and realized net profit of 2.84 billion yuan, +97.7% year on year, and realized net profit of 2.36 billion yuan, +160.1% year over year; of these, the company achieved revenue of 20.7 billion yuan in the fourth quarter, +21.1% year on year, and realized net profit of 410 million yuan, +12.7% year on year, realized net profit of 290 million yuan, +124.8% year on year. In addition, the company plans to pay a cash dividend of RMB 10.13 for every 10 shares, with a total amount of 1.39 billion yuan, and a dividend rate of 49.0%.
The growth of various businesses resonated, and the ASEAN region performed well
The company's revenue continued to grow steadily in 2023. By business, CCAC's main business was +9.3% YoY, excluding Hisense Hitachi's revenue, household air conditioning was about +15% YoY; refrigerators/washing machines/total main business were +18.7%/+53.6%/+22.9%, respectively; the automotive air compression & integrated thermal management business achieved annual revenue of 9.05 billion yuan. Refer to Sandian's announcement, and is expected to grow year-on-year. By region, the company's domestic/overseas main business was +15.0%/+12.3%, respectively. Among them, the ASEAN business was more than +20% year-on-year, and the performance was quite impressive.
JiaKeng's profit was repaired throughout the year, and the cost rate increased in the short term
The profit margins of the HVAC/Ice-washing division for the whole year were +2.7/+2.4pct to 12.7%/3.7%, respectively. The results of supply chain optimization & efficiency improvement are showing. Among them, Hisense Hitachi's net interest rate was +1.1 pct to 14.6% year over year. It is expected that the strengthening of the scale effect of the home air business and product structure upgrade will drive the increase in HVAC's profitability.
Q4 The company's gross margin was +0.6pct year on year, with a steady increase. Q4 sales/management/R&D/finance expense ratios were +1.6/+0.8/+0.3/+1.0pct, respectively, or mainly due to the company's year-end calculation of certain long-term incentives.
Profit quality is gradually improving, and steady growth can be expected
On the basis of the reduction in impairment in the same period last year and the increase in revenue from fair value changes in the current period, the company's Q4 deducted non-net interest rate +1.1 pct to 1.9% year on year, and the overall profit quality gradually improved. In the context of the 2024 Sports Festival, the company is expected to make full use of marketing resources to accelerate the pace of traditional home appliance brands going overseas. CCC is expected to continue to grow with its multi-brand and multi-category advantages. Overall, the company can be expected to gradually release high growth potential in the new energy business.
Profit Forecasts, Valuations, and Ratings
The company's revenue for 24-26 is expected to be 940, 103.3, and 113.4 billion yuan respectively, with year-on-year growth rates of +10%/+10%, respectively, and performance of 32.6, 37.5, and 4.30 billion yuan respectively. The year-on-year growth rates are +15%/+15%, EPS is 2.4, 2.7, 3.1 yuan, and +15%, respectively, and the CAGR for 23-26 is +15%.
In view of the continuous improvement of Hisense's home appliance business, it is expected to achieve another good performance in 2024, and medium- to long-term growth can be expected. We gave the company 15 times PE in 2024, a target price of 35.20 yuan, and maintained the company's “buy” rating.
Risk warning: 1) Domestic and foreign demand falls short of expectations; 2) Raw material prices and exchange rates fluctuate greatly.