Report guide

Hisense Home Appliances released its 2023 annual report. The company achieved total revenue of 85.6 billion yuan in 2023, +15.5% year-on-year; realized net profit of 2.8 billion yuan, or +97.7% year-on-year. The company achieved total revenue of 20.7 billion yuan in 23Q4, +21.1% year-on-year; realized net profit to mother of 410 million yuan, +12.7% year-on-year. The company's 23Q4 performance was in line with expectations and maintained a “buy” rating. The company plans to distribute a dividend of 1.013 yuan per share, with a dividend payment ratio of 49%.

Key points of investment

Domestic and foreign sales showed strong performance, and domestic share increased significantly

1) The company achieved domestic revenue of 49 billion yuan in 2023, +15.04% year-on-year. Thanks to the company's channel construction and product upgrades, Hisense's white power market share increased. In 2023, Hisense's air conditioner domestic sales and shipment market share was 5.0%, up 0.8 pct from the previous year. 2) The company achieved export revenue of 27.9 billion yuan in 2023, +12.28% over the same period last year. Strong export performance was due to lower inventories of overseas retailers and the company's active expansion of overseas markets.

Hisense Hitachi's revenue continued to grow, and the number of Sandian orders increased sharply 1) Hisense Hitachi achieved operating revenue of 22.22 billion yuan in 2023, an increase of 10.09% over the previous year. Hisense Hitachi's market share continues to rise. According to industry online data, Hisense Hitachi achieved a sales share of 12% in 2023, an increase of 0.22pct over the previous year. 2) Sandian deepened its global customer development strategy. In 2023, the automotive air conditioning compressor and integrated thermal management sector achieved revenue of 9.05 billion yuan, and the total number of orders signed increased by 43% over the same period last year.

Operating cash flow increased dramatically, and dividend ratio increased

In terms of return on investment, the company plans to distribute a total dividend of 1,391 billion yuan, with a dividend payment rate of 49%. The company achieved a net operating cash inflow of 10.6 billion yuan in 2023, a year-on-year increase of 163%. The high increase in operating cash flow reflects the company's high operating quality throughout the year.

Profit forecasting and valuation

The company's revenue for 24-26 is estimated to be 940/1022/107.3 billion yuan, respectively, with corresponding growth rates of 10% /9% /5 percent, net profit to mother of 33/38/4.4 billion yuan, corresponding growth rates of 16% /16% /13%, corresponding EPS of 2.38/2.77/3.14 yuan respectively, and corresponding PE of 14x/12x/10x, respectively. Maintain a “buy” rating.

Risk warning

Raw material prices rose more than expected; demand fell short of expectations; market competition intensified