Incidents:
Changhong Meiling released its 2023 annual report. In 2023, the company achieved operating income of 24.248 billion yuan (+19.95% year over year); net profit to mother of 741 million yuan (+203.04% year over year); Q4 company achieved operating income of 5.0 billion yuan (+4.96% year over year); and net profit to mother of 242 million yuan (+194.22% year over year).
Comment:
The refrigerator business is growing steadily, and the range is getting richer. In 2023, the company's refrigerator and freezer business achieved revenue of 9.088 billion yuan (+18.57% year over year), and gross margin was 19.05%, an increase of 1.86 pct over the previous year. The refrigerator business revolves around the “fresh, thin, narrow, and embedded” product upgrade idea, and has launched a variety of built-in and cross refrigerators incorporating AI technology. Relying on the “boutique+premium” product strategy, the user experience has been fully improved.
OEMs and e-commerce businesses in the air conditioning business are growing rapidly, and product quality is constantly improving. In 2023, the company's air conditioning business achieved revenue of 11.566 billion yuan (+18.24% year over year), and gross margin was 8.94%, a year-on-year decrease of 1.40pct. Air conditioning products entered the market through differentiated positioning. With the two product business cards “choose completely dust-free for the bedroom, choose a guest cabinet for the living room”, online focusing on explosive strategies, mainly promoting “panda lazy” cabinets and QW hangers; offline “completely dust-free” and “guest kitchen cabinets”, and the differentiated competitiveness of products has steadily increased. Taken together, e-commerce business, incremental business, and OEM business grew rapidly throughout the year.
Washing machines and small household appliances have launched a variety of explosives, and product strength continues to improve. In 2023, the company's washing machine business achieved revenue of 1,329 billion yuan (+76.37% year over year), and the small household appliances and kitchen and bathroom business achieved revenue of 1,849 billion yuan (+16.16% year over year). The washing machine is positioned as ultra-thin and large, and relies on high-quality motors to create a “clean” consumer mentality. It has achieved breakthroughs in domestic and foreign sales, and greatly increased revenue and profitability. The small household appliance business focuses on the three directions of tea, cleaning, and heating to create core products to improve competitiveness. The small box series tea bar machines have become a hit in the industry.
Profit forecast: Taking into account the competitiveness and innovation of the company's products, we expect the company's revenue to be 280.1/32.03/35.84 billion yuan in 2024-2026, up 15.5%/14.3%/11.9% year on year; net profit to mother will be 90/ 10.4/1.24 billion yuan, up 21.9%/14.7%/19.3% year on year. First coverage, giving a “buy” rating.
Risk warning: raw materials rise, exchange rate fluctuations increase, performance forecasts and valuations fall short of expectations