Core views:

The company disclosed its 2024 quarterly report. 24Q1 achieved revenue of 4.20 billion yuan (YoY +24.6%), net profit to mother of 230 million yuan (YoY +27.8%), gross profit margin of 20.3% (YoY 1.9pct), 5.4% (YoY+0.1pct), and sales/management/R&D/finance expense ratios of 3.6%/2.9%/3.0%/-0.8%, respectively, -0.2pct/-1.0pct. (The above year-on-year change data are all calculated based on adjusted data from the TCL Hefei consolidated table)

Overseas demand improved, and the revenue side continued to rise. (1) Export sales: According to industry online data, the export sales volume of the 2024M1-2 refrigerator industry was +38%; according to data from the General Administration of Customs, the export value of China's refrigerator industry was +33% in RMB in 24Q1. The company's overall revenue growth rate is slower than that of the industry. It is expected to be mainly influenced by consolidation. Refer to the 23Q4 Omar Electric Appliance revenue +24% year over year, and +42% YoY after excluding TCL Hefei. (2) Domestic sales: According to online industry data, sales volume in the 24M1-2 refrigerator industry is +6% compared to the same period, and overall demand is stable. The company has increased domestic customer expansion efforts in recent years, along with the release of orders from downstream customers + the company's domestic sales relatively small base, and the performance is expected to outperform the industry. (3) Profit: 24Q1 gross margin declined slightly year-on-year, mainly due to downstream customer price adjustments. According to data from the General Administration of Customs, the average export price of 24Q1 refrigerators was -4.2% year-on-year.

The company changed its name to TCL Smart Home, highlighting the long-term strategic development layout. Recently, the company announced that it changed its name to Guangdong TCL Smart Home Appliance Co., Ltd. (TCL Smart Home for short). In the future, it will take AI smart home appliances as the development direction, firmly promote a global strategy, and strive to become the world's leading smart home appliance enterprise. At the same time, the company is expanding its business scope and is expected to lay out more categories of household appliances in the future.

Profit forecast and investment advice: The company is the largest refrigerator OEM in China, and the refrigerator export volume ranks first in the industry all year round. In the short term, the boom in refrigerator exports supports performance growth; in the long run, TCL's cold washing business is expected to form good synergy after injection. The company is expected to achieve net profit of 8.8, 9.8 billion yuan and 1.09 billion yuan in 24-26, +11% year-on-year, +11%, respectively. A 24-year PE 13x is given, corresponding to a reasonable value of 10.51 yuan/share, and a “gain” rating.

Risk warning: Overseas demand weakens, exchange rates fluctuate greatly, and raw material costs rise.