Incident: The company achieved operating income of 205.018 billion yuan for the full year of 2023, +7.82% year on year, net profit to mother of 29.017 billion yuan, +18.41% year on year; of these, 2023Q4 achieved operating income of 49.206 billion yuan, +17.7% year on year, and net profit to mother of 8.925 billion yuan, +43.9% year on year. The company achieved full year revenue of 36.596 billion yuan in Q1 2024, +2.53% year-on-year, net profit of 4.675 billion yuan, +13.77% year-on-year, net profit of 4.525 billion yuan after deducting non-return net profit of 4.525 billion yuan, +21.55% year-on-year. In '23, the company distributed a cash dividend of 23.80 yuan (tax included) to all shareholders for every 10 shares, with a dividend rate of 45.3%.
The 24Q1 deducted non-performance growth rate was beautiful, and dividends per share increased
Revenue side: Air conditioning/other business revenue in '23 was +12.13%/-17.89%, and the main business achieved good growth; among them, internal and export revenue from the main business was +15.22%/+7.02% YoY. By product, excluding air conditioners, 23A household appliances/industrial products/smart equipment/ green energy/other main revenue was -12.39%/+31.63%/+55.03%/+51.16%/+55.84%, respectively.
Profit side: The company's net profit to mother in '23 was 29 billion yuan, a record high; 24Q1 net profit to mother was 4.675 billion yuan, +13.77% year over year, net profit after deducting non-return to mother was 4.525 billion yuan, +21.55% year over year. The net profit growth rate after deducting non-return to mother was impressive.
Non-profit and loss: Judging from the company's non-recurring profit and loss in 24Q1, mainly transactional financial assets changed significantly year-on-year. 24Q1 was 5.39 million yuan, and 23Q1 was 256 million yuan. Transactional financial assets are the company's long-term equity investments in San'an, Wingtai, and Haili, so deducting non-performance is highly indicative compared to the previous year.
Dividends: The company paid 2.38 yuan (tax included) per share in '23, with a dividend rate of 45.3%. The dividend rate corresponding to the closing price of 2024/4/29 was 5.9%. The company is still attractive as a high dividend target.
Revenue performance reservoirs continue to rise
Contract liabilities: 24Q1 contract liabilities were $20.491 billion, -14.6% year-on-year and +50.8% month-on-month.
Other current liabilities: 24Q1 Other current liabilities were $62.194 billion, +3.7% YoY and +1.9% YoY.
The two major profit reservoirs continued to grow month-on-month.
Changes in operating cash flow
Cash flow: Net cash flow from operating activities in Q1 in '24 was -2,941 million yuan, or -119.52% YoY.
Judging from the cash situation received from the sale of goods and services, 23Q1 was 55.96 billion yuan, +60.2% over the same period, the amount of cash received was significantly higher than revenue; in 24Q1, it was 33.46 billion yuan, -40.2% over the same period last year, and the amount of cash received matched the revenue.
Accounts receivable: 24Q1 The company's accounts receivable were $17.568 billion, +1.2% year over year, of which receivables financing was $14.86 billion, or -30.2% year over year. We believe that a reduction in receivables financing may reduce working capital in accounts receivable, thereby reducing the amount of cash received in cash flow.
In 2023, the company's gross margin was 30.92%, +4.43pct year on year, and the net margin was 13.52%, +1.42pct; of these, 2023Q4 gross margin was 35.07%, +6.74pct year on year, and the net margin was 16.66%, +3.34pct year on year.
The company's gross margin for Q1 2024 was 29.9%, +2pct year on year, and the net margin was 12.68%, +1.74pct year on year.
The company's profit level has increased significantly, which we believe may be due to an increase in the product structure.
Investment advice: The company is a leading enterprise in the field of air conditioning. The Q1 air conditioning category continued to grow steadily, and the dividend per share increased. According to the company's annual report and quarterly report, we have lowered the fee rate appropriately. We expect the net profit to the mother for 24-26 to be 313/332/35.2 billion yuan, respectively (the value was 296/31.1 billion yuan before 24-25), and the corresponding PE was 7.6x/7.1x/6.8x, maintaining the “buy” rating.
Risk warning: macroeconomic growth is slowing; real estate recovery falls short of expectations; risk of fluctuations in raw material prices; risk of company operation.