Event: On March 27, 2024, Haier Smart Home released its 2023 annual report. In 2023, the company achieved total revenue of 261,428 billion yuan (+7.33%), net profit attributable to mother of 16.597 billion yuan (+12.81%), and net profit not attributable to mother of 15.824 billion yuan (+13.33%). Looking at a single quarter, 2023Q4 achieved operating income of 62,770 billion yuan (+6.82%); net profit attributable to mother of 3.447 billion yuan (+13.20%), after deducting non-attributable net profit of 3.103 billion yuan (+13.19%). Based on 9.293 billion shares, the company plans to distribute a cash dividend of 8.04 yuan (tax included) to all shareholders for every 10 shares, totaling 7.471 billion yuan, with a dividend ratio of 45.02%. The cash dividend ratio is expected to increase steadily from 2024-2026.
Air conditioning revenue increased by double digits in 2023, and the European market contributed to growth. 1) By product: In 2023, the company's revenue for refrigerators/washing machines/air conditioners/kitchen and bathroom appliances/equipment parts and integrated channel services/water appliances was 816.41/612.72/456.60/415.89/151.20/15.011 billion yuan respectively. Air conditioning revenue achieved double-digit growth of +5.16/6.15/13.98/7.35/4.39/ 8.88%, respectively. 2) By region: The company's domestic and foreign revenue in 2023 was 124.6.14/135.678 billion yuan respectively, +7.12/ 7.60% year-on-year respectively. Looking at overseas market segments, the company's revenue in North America/Europe/South Asia/Southeast Asia was 797.51/285.44/95.21/5.780 billion yuan respectively, +4.1/23.9/14.9/ 11.6% year-on-year, respectively. The European market grew rapidly.
2023Q4's profitability has steadily increased, and results in cost reduction and efficiency have been shown. 1) Gross profit margin: In 2023Q4, the company's gross profit margin was 34.03% (+0.06pct), achieving a steady increase. 2) Net profit margin: 2023Q4 net profit margin 5.52% (+0.38pct). The increase was higher than the gross profit margin, which is a cost-side optimization. 3) Cost side:
The 2023Q4 sales/management/R&D/finance expense ratios were 18.82/5.28/3.47/ 0.99%, respectively, -0.07/-0.01/-0.01/+0.34pct, respectively. The sales/management expense ratio declined, or the results of cost reduction and efficiency were shown. The worsening financial expense ratio was affected by overseas interest rate hikes, and interest expenses increased.
Seize the growth opportunities of high-end market segments, and the Tri-Wingbird package has accelerated to seize users' mentality. 1) Sub-brands: The Casadi brand continues to upgrade, with retail sales increasing by 14% in 2023; using local market advantages to actively develop the top luxury electronics brand “Fisher & Packer” to seize the opportunities in the ultra-high-end home appliance market, it has opened 5 retail experience stores in the Top Home Building Materials International Hall and high-end shopping centers in 2023 to establish a high-end brand image. 2) Tri-Wingbird: Strengthen the complete scenario plan to seize user mentality. In 2023, the retail sales of Tri-Wingbird stores increased by 84% year-on-year, accounting for more than 60% of the complete package.
Investment advice: On the industry side, domestic trade-in policies catalyze the demand of the major appliance industry. Overseas export chains are recovering, and emerging markets are expected to take advantage of the “Belt and Road” Dongfeng to achieve rapid growth. On the corporate side, leading Baidian enjoys the dividends of domestic policies and export growth, and actively carries out a global layout to seize emerging market opportunities. Casadi+ Fischer & Packer is leading the growth of the high-end market. Digital reforms continue to deepen, and revenue performance is expected to continue to improve. We estimate that in 2024-2026, the company's net profit to mother will be 188.29/208.58/ 23.054 billion yuan respectively, corresponding EPS of 2.00/2.21/2.44 yuan, respectively. The current stock price corresponding to PE is 12.84/11.59/10.49 times, respectively. Maintain a “buy” rating.
Risk warning: macroeconomic uncertainty, increased industry competition leading to price wars, raw material price fluctuations, exchange rate fluctuations, overseas business operation risks, etc.