Haier Smart Home released its 2023 annual report. The company's 2023 revenue and performance met our expectations and maintained a “buy” rating. The company achieved revenue of 261.4 billion yuan in 2023, +7.33% year-on-year; net profit to mother was 16.6 billion yuan, +12.81% year-on-year. Looking at a single quarter, the company achieved revenue of 62.8 billion yuan in 23Q4, +6.80% year-on-year; net profit to mother was 3.447 billion yuan, +13.18% year-on-year. The company plans to distribute a dividend of 0.8 yuan per share, with a dividend payment ratio of 45.02%.
Key points of investment
Overseas revenue continues to grow, and high-end brands have achieved remarkable results
1) Haier's overseas business revenue in 2023 was 135.7 billion yuan, +7.59% year-on-year. Among them, revenue from America was 79.8 billion yuan and European revenue was 28.5 billion yuan, up 4.2% and 23.9%, respectively. With the integration of global platforms, the development of digitalization and automation, and optimization of product innovation efficiency, Haier's overseas business revenue has grown rapidly. 2) Haier's overseas business revenue continues to grow, mainly due to the rapid development of its high-end brands. Casadi's share continued to grow in 2023. The high-end market share of refrigerators/washing machines/air conditioners was 50%/84%/28% respectively, continuing to lead the high-end market.
Domestic business continued to be optimized. Foreign financial expenses and commodity prices affected the company's net interest rate for the 23Q4 single quarter was 5.52%, up 0.38 pct from the previous year. 1) The company's 23Q4 sales/management/R&D/finance expenses ratio was 18.32%/5.28%/3.47%/0.99%, respectively, compared with -0.07/-0.01/-0.01/+0.34pct in the same period last year. In Q4, sales expenses, management expenses, and R&D expenses declined in a single quarter, and the company vigorously integrated platform resources to reduce the cost of the entire supply chain; in Q4, financial interest expenses increased in a single quarter, which was mainly affected by overseas interest rate hikes and reduced investment returns. 2) 2023 gross profit margin of 31.51%, +0.18pct year-on-year. Among them, the domestic market benefited from product structure improvements, procurement and R&D integration optimization, etc., and gross margin increased year-on-year; overseas markets were affected by high inflation, and gross margin declined year-on-year.
The dividend ratio has increased significantly, greatly boosting investor confidence
In terms of return on investment, Haier plans to distribute a dividend of 0.8 yuan per share, with a dividend payment rate of 45.02%, +9.01pct compared to the previous year. The company promises that the dividend ratio will reach 50% from 2024 to 2025. The company's increase in the dividend rate reflects confidence in long-term operations, which will help increase return on investment and strengthen investor confidence.
Profit forecasting and valuation
The company's revenue for 24-26 is estimated to be 2,807/3004/321.1 billion yuan, respectively, with corresponding growth rates of 7%/7%/7%, net profit to mother of 188/213/23.8 billion yuan, corresponding growth rates of 13%/13%/12%, corresponding EPS 1.99/2.25/2.52 yuan respectively, and corresponding PE 13x/12x/10x, respectively. Maintaining a “buy” rating
Risk warning
Exchange rate fluctuations; macroeconomic downturn; increased market competition.