Incident: 24Q1 achieved operating income of 12.702 billion yuan, +10.61% year over year; main business revenue of 11.859 billion yuan, +14.91% year on year; realized net profit of 467 million yuan, -24.81% year on year; realized net profit of 378 million yuan after deduction, -21.92% year on year.
Comment:
Q1 The main revenue is steady. According to data from Aowei Cloud Network, in Q1, the sales scale of China's color TV market fell 5.3% year on year, sales increased 12.6% year on year, and the average price of color TV rose 18.9% year on year to 3,616 yuan. According to data from the General Administration of Customs, China's LCD TV Q1 export volume was -1.7% year-on-year, and the export value was +10.0% year-on-year. We believe that as a leading domestic high-end TV company, the growth rate of domestic and foreign sales revenue in Q1 may be superior to that of the industry.
Panel prices rose, and Q1 performance was under pressure in the short term.
The Q1 company achieved a gross profit margin of 15.76%, -2.41pct year on year; we believe that the main reasons for the decline in Q1 gross margin were: 1) the light on the company's gross profit level; 2) the increase in panel prices brought a certain pressure on display business costs. The price of 43/55/65-inch LCD TV panels in Q1 was +14%, +39%, and +38%, respectively. We believe that with the launch of subsequent new products, the company can gradually ease the cost pressure by adjusting terminal retail prices and optimizing the product structure.
From a cost perspective, the company strengthened the control of the cost rate. The Q1 sales, management, R&D, and finance cost ratios were -0.59/-0.22/ -0.37/+0.14pct, respectively. Benefiting from cost control, the decline in Q1's net profit margin to mother was narrower than the decline in gross margin, -1.73 pct to 3.67% year over year.
Inventory levels have increased, and net cash flow from operating activities has decreased.
1) The company's monetary capital and transactional financial assets at the end of the 24Q1 period totaled 14.629 billion yuan, -1.20%; the total amount of accounts receivable and notes at the end of the period was 9.079 billion yuan, -6.16% at the beginning of the period; the total inventory at the end of the 24Q1 period was 5.993 billion yuan, +2.77% at the beginning of the period, which we believe may be due to a major promotion in the domestic market in Q2; total contract liabilities at the end of the 24Q1 period were 416 million yuan, +5.42% compared to the beginning of the period.
2) The net cash flow from 24Q1's operating activities was $345 million, -81.66% year-on-year, mainly due to changes in sales pace and raw material reserve strategy.
Profit forecast and investment rating: We expect the company to achieve operating income of 611.26/670.62/72.157 billion yuan in 24-26, +14.0%/+9.7%/+7.6%, respectively, and net profit to mother of 22.94/27.26/3.126 billion yuan, +9.5%/+18.8%/+14.7%, respectively, corresponding to PE15.34/12.92/11.26x.
Risk factors: large fluctuations in raw material costs, consumer demand recovery falling short of expectations, overseas market expansion falling short of expectations, etc.