Performance exceeded expectations, and equity incentives were promoted. The company achieved revenue of 68.978 billion yuan in a single quarter of 2024, up 6% year on year, and realized net profit of 4.773 billion yuan, up 20% year on year, and realized net profit withheld from mother of 4.640 billion yuan, up 25% year on year. Judging from operating profit, it achieved operating profit of 5.249 billion yuan in the first quarter, an increase of 27% year on year, and performance exceeded expectations. The company's net operating cash flow in the first quarter was 1,725 billion yuan, an increase of 27% over the previous year, and continued to maintain good operating quality. The company introduced A/H share equity incentives at the same time. The A share incentive amount is 712 million yuan, and the H share incentive amount is 0.69 million yuan. The assessment indicators are net profit after deducting non-return to mother and ROE each account for 50% weight. Net profit after deducting non-return to mother in 24/25 reached a compound growth rate of 15% compared to 23, and the ROE reached 16.8%, then 100% ownership.
The volume and quality of business in China increased, and overseas markets bucked the trend. By region, the company performed well in the domestic market in the first quarter, with revenue growth of 8.1%. Among them, the home space, kitchen appliances and smart building businesses all grew by more than 10%. According to industry online data, Haier's internal and external household air conditioning sales increased 23%/25%/24% year-on-year respectively from January to January 2024, significantly outperforming the industry's 17%/22%/19% growth; while domestic business revenue grew strongly, business quality continued to improve. The high-end brand Di Casa regained an upward trend, with revenue growth of 14% in the first quarter, driving the company's profit in the Chinese market in the first quarter The increase was more than 30%; the overseas market faced the challenge of falling demand in major European and American home appliance markets, and the company's overseas revenue bucked the trend and achieved a double-digit increase in operating profit.
Fee control has achieved remarkable results, and the net interest rate increase logic continues to be implemented. The company's gross sales margin reached 29.0% in the first quarter, an increase of 0.3 pct over the previous year. On the one hand, it benefited from domestic market procurement and R&D digital transformation, digital production and marketing collaboration system construction, and product structure improvement; on the other hand, overseas markets continued to optimize the product structure and capacity utilization rate continued to increase, and gross margin also increased at the same time. Thanks to the continuous promotion of digital transformation at home and abroad, the company improved efficiency in marketing resource allocation, logistics distribution and warehousing operations. In the first quarter, the sales rate decreased by 0.5 pct to 13.1% year on year; in the first quarter, the company continued to promote the application of domestic and overseas digital tools, optimize business processes, improve organizational efficiency, and the management rate decreased by 0.3 pct to 3.2%; the financial rate and R&D rate were basically stable, and the final net sales profit margin was 7.04%, an increase of 0.85 pct, a record high in nearly 7 years.
Raise profit forecasts and maintain a “buy” investment rating. We raised the company's 24-26 profit forecast to 191/219.25.2 billion (previous value was 188/212/24 billion), with year-on-year increases of 15%/15%/15%, respectively. Corresponding to the current PE valuation, it is 14 times/12 times/11 times, respectively, to maintain the “buy” rating.
Risk warning: risk of fluctuations in raw material prices; risk of exchange rate fluctuations.