Introduction to this report:

The company's 24Q1 performance was in line with expectations. The revenue side benefited from strong and steady growth in refrigerator exports. Profit margins remained stable during the phase of rising external costs, and began to show an upward trend in profits after the integration of TCL ice washing.

Key points of investment:

Maintaining profit forecasts and holding growth ratings: The company's 2024Q1 performance is in line with expectations, and the 24-26 profit forecast is maintained: the company is expected to return 8.76, 9.89, and 1,084 billion yuan in 24-26, +11%, +13%, and +10% year-on-year. Considering the rapid release of TCL ice washing integration efficiency, referring to the valuation level of comparable companies in the white electronics industry, 15 xPE was given in 24 years, and the target price was raised to 12.15 yuan to maintain the “gain” rating.

The performance was in line with expectations: The company achieved operating income of 4.198 billion yuan in 2024Q1, +24.6% year-on-year, and net profit to mother of 225 million yuan, +27.83% year-on-year.

Thanks to overseas inventory replenishment, refrigerator exports grew strongly. We expect 24Q1's revenue side growth to continue to benefit from high export business growth due to inventory replenishment through overseas channels. Looking at the main components of the split, Omar refrigerators themselves have a higher export ratio, while TCL Hefei ice washing mainly sells domestically. We expect Omar's own revenue to grow relatively faster, with revenue +25-30% year over year, and TCL ice washing revenue about +20% year over year.

Rising costs affect gross profit, and cost-side optimization contributes significantly. 2024Q1's gross profit margin was 20.28%, -1.88pct year on year; we expect the decline in gross margin mainly due to rising external costs and weakening average export prices for refrigerators. On the cost side, sales and management expense ratios have all been tightened to a certain extent, and financial expenses are contributing significantly. It is expected to be mainly due to the impact of exchange gains and losses due to the decline in the RMB exchange rate. In addition, looking at the split entities, we estimate that TCL ice washing contributed about 20 million yuan in performance in 24Q1, which is a significant increase in profit of about 06 billion yuan compared to 23Q1.

Risk warning: risk of large fluctuations in raw material prices, risk of export business facing major trade policy adjustments in exporting countries and regions, risk of exchange rate fluctuations