Incident: On April 22, 2024, Hisense Video released its 2024 quarterly report. 2024Q1 realized revenue/net profit attributable to mother/net profit after deduction of net profit of $127.02/4.67/ -378 million yuan, respectively, compared with +10.61/-24.81/ -21.92% year-on-year, respectively. The net cash flow from the company's operating activities was $345 million (yoy -81.66%), mainly due to changes in sales pace and raw material reserve strategy.
2024Q1 revenue grew by double digits, and domestic sales are expected to outperform export sales. 2024Q1 achieved double-digit growth of 12.7 billion yuan (yoy +10.61%), of which the main business revenue increased by about 15%. In terms of domestic sales, according to data from Aowei Cloud Network, 2024Q1 China's color TV sales/sales/average price is +12.6/-5.3/ +18.9% year on year, respectively. The company's domestic sales revenue is expected to increase in double digits, mainly driven by the increase in average price. In terms of export sales, according to data from the General Administration of Customs, the export value and export volume of the 2024Q1 LCD TV are +10% and -1.7% year-on-year respectively. The company's export sales are also expected to increase by double digits. Looking forward to the future, we believe that as the official global partner of the 2024 European Cup, world-class event marketing is expected to further enhance the global brand power, drive the company's sales growth and increase global share, and at the same time enable overseas regional and channel expansion, and help long-term development.
2024Q1 gross margin was under pressure, and the cost ratio was optimized to 1 pct during the period. Gross profit margin: 2024Q1 was 15.76% (yoy-2.41pct). The decline was mainly affected by panel price increases and increased overseas competition. Cost side: The 2024Q1 sales/management/R&D/finance cost rates were 6.05/1.66/4.13/ 0.19%, respectively, -0.59/-0.22/-0.37/+0.14pct year-on-year, respectively, and continued optimization. Net profit margin to mother: 2024Q1 was 3.67%, -1.73pct year over year.
Investment suggestions: The company is a leader in the black TV industry, continuing to deepen vertical collaboration and horizontal layout of the color TV industry. The global share of color TV continues to increase and the product structure continues to be upgraded. The brand side lays out the three major brands Toshiba, Hisense, and Vidda domestically to achieve full coverage of different user groups, opens up the Japanese market overseas through TVS, and uses sports marketing methods to enhance the influence of the Hisense brand, while actively expanding overseas regions and channels. The 2024 employee stock ownership plan highlights and firm confidence, and is expected to increase revenue and profitability. We estimate that in 2024-2026, the company's net profit due to mother will be 23.87/2,75/32.35 billion yuan, the corresponding EPS will be 1.83/2.11/2.48 yuan, respectively, and the PE corresponding to the current stock price will be 14.75/12.77/10.88 times, respectively. Maintain a “Recommended” rating.
Risk warning: Increased market competition, risk of declining purchasing power due to pressure from the global economic situation, uncertainty in the international trade environment, exchange rate fluctuations, poor performance of new products, sharp rise in panel prices, etc.