Incidents:
The company released its 2023 annual report, and achieved revenue of 261.4 billion yuan (YoY +7%) in 2023, and net profit attributable to mother/net profit of 16.6 billion yuan/15.8 billion yuan, +13% year-on-year. 23Q4 achieved revenue of 62.8 billion yuan (YoY +7%), and net profit attributable to mother/net profit of 3.4 billion yuan/3.1 billion yuan, +13% year-on-year, achieving quarterly improvement targets. The company's 2023 profit distribution plan is to pay 8.04 yuan (tax included) for every 10 shares. The cash dividend ratio is 45.0%, and the dividend ratio exceeds market expectations. The company formulated the “Shareholder Return Plan for the Next Three Years (2024-2026)”: the company's cash dividend ratio for 2024-2026 will increase steadily compared to 2023, and the cash dividend ratio for 2025 and 2026 will not be less than 50%.
Comment:
Revenue grew steadily, and the market share of strong categories increased. By region, on the domestic side, domestic revenue in 2023 was 124.6 billion yuan (YoY +7%). Business growth was mainly due to leveraging the advantages of multi-brand layout, increased value per user, and increased market share in strong categories. On the overseas side, the company grasped overseas markets through high-end brand creation strategies and expanded terminal contact coverage, with overseas revenue of 135.7 billion yuan (YoY +8%) in 2023. Among them, the North America/Europe/South Asia market revenue was 798/285/95 billion yuan, or +4%/+24%/+15% year-on-year in RMB. By category, the company's refrigeration business achieved global revenue of 81.9 billion yuan (YoY +5%), and the offline/online retail share in the Chinese market increased by 1.3 pcts/1.1 pcts to 45.2%/40.3%; the kitchen appliance business achieved global revenue of 41.7 billion yuan (YoY +7%), of which the offline/online retail share in the Chinese market increased by 0.5 pcts/0.8 pcts to 8.8%/4.3%; the washing business achieved global revenue of 61.5 billion yuan (YoY +6%), of which the offline retail share increased 1.5pcts reached 47.5%, and the online share remained flat; the high-end brand Casadi implemented a brand upgrade plan, and the business trend was steady, moderate and positive. Casadi's retail sales increased 14% in 2023.
The gross margin remains stable, and the cost ratio continues to be optimized. The company's gross profit margin for the whole year was 31.5%, up 0.2 pcts year-on-year from 2022. Among them, the domestic market business benefited from falling prices of bulk raw materials, digital transformation on the procurement and R&D side, digital production and marketing collaborative system construction, and product structure improvements, and achieved a year-on-year increase in gross margin; the positive impact of continuous optimization of product structures and increased capacity utilization in overseas markets was offset by factors increasing competition in major regional industries, and gross margin declined year on year. The annual sales expense ratio and management expense ratio were 15.7% and 4.4% respectively. Compared with 2022, 0.2 pcts and 0.1 pcts were optimized. The decline in the cost ratio was mainly due to the company's digital transformation and improvement in organizational operation efficiency. The company's net operating cash in 2023 was 25.3 billion yuan, and the operating quality was good. In the long run, the company will continue to promote and deepen digital transformation, break through development limitations and improve user experience and operational efficiency through innovation in business models, operating mechanisms, and organizational platforms.
Profit forecasting, valuation and rating: Haier is positioned as the world's leading brand of major appliances. Digital transformation reduces fees and increases efficiency, and operating efficiency continues to improve. It is expected that the domestic and foreign market share of the company's products will increase steadily, and that digital transformation will continue to reduce costs and increase efficiency. In view of overseas interest rate hikes and increased competition, the company's 2024-2025 net profit was lowered to RMB 190 billion and RMB 21.4 billion (down 1.8% and 2.0% from the previous forecast, respectively), and the net profit forecast for 2026 was 24 billion yuan. The PE corresponding to the current price was 13, 12, and 10 times, maintaining the “buy” rating.
Risk warning: Overseas sales are weak, and the price increase of raw materials exceeds expectations.