The company announced 2024Q1 results and employee stock ownership plans:
24Q1: Revenue of $68.98 billion (+6.0%), net profit attributable to mother of $4.77 billion (+20.2%), net profit of $4.64 billion (+25.4%).
The 24Q1 profit exceeded market expectations, and the core comes from domestic sales profit.
In addition, the company announced the 2024 A+H share employee stock ownership plan. The total capital of A-share participants was not more than 2,400 (including 13 directors and supervisors); the total capital of the H-share participants was not more than 30 (including 11 senior directors and supervisors), with a total capital of 68.5 million.
Internal and external split: 24Q1 internal/export sales +8%/4% YoY, operating profit +30%/+10% YoY? Domestic sales: We expect revenue to be +8.1% year over year, continue the growth rate in Q4, and operating profit increase by 30% +.
Among them, Casadi's revenue was +14%, up from Q4; ice washing maintained steady growth in the number of units, the air conditioning/kitchen heating/water industry achieved double-digit growth, and all businesses continued the Q4 growth rate.
Export sales: We expect revenue to be +4% year over year, continue the growth rate in Q4, and operating profit increase by 10% +.
We expect the US and European markets to dominate, accounting for 60%/20% respectively. Demand in North America is expected to remain under pressure, while Europe, Australia and New Zealand are improving.
Profit analysis: We estimate domestic/export operating profit margins of +1.8/0.3 pct, respectively? Overall: 24Q1 gross margin +0.3 pct year on year, net profit margin +0.8 pct year on year, total overall cost ratio -0.8 pct year on year (sales/management/ R&D/finance cost ratios -0.5/-0.3/+0.1/0 pct, respectively), with significant cost reduction and efficiency.
We estimate the operating profit margin for domestic and foreign sales as follows:
Domestic sales: We expect the operating margin of domestic sales to be +1.8 pct, and the profit exceeds expectations. Looking at the breakdown of contributions, Q1 gross margin of +0.3 pct, sales rate of -0.9 pct, and management rate of -0.4 pct, achieved remarkable results in structural improvement and digital cost reduction;
Export sales: We expect an export operating margin of +0.3 pct. Compared with the overall trend of a slight decline in operating profit margins in 23, there has been a correction. Looking at the breakdown of contributions, gross margin of +0.3 pct is the main source, due to a correction in European profits, and improvements in Australia and New Zealand; however, the slight decline in North America still needs to be improved.
Investment advice:
Our point of view:
The company announced a new phase of A+H employee shareholding. The assessment target is that the 24/25 net profit deducted from the mother will not be less than 15%, and the ROE will not be less than 16.8% compared to 2023. The assessment weight for the two indicators is 1:1. The highlights of the year 24 are Casati and export sales recovery. Q1 Casadi has already begun to be realized, and domestic sales profit performance has exceeded expectations. In the future, the pace is expected to be followed by Europe and then the US.
Profit forecast: Considering that domestic sales profit exceeded expectations, we raised our net profit forecast to parent. The company's revenue for 2024-2026 is estimated to be 2814/3001/319.2 billion yuan (unchanged), 7.6%/6.4% year-on-year, and net profit attributable to mother was 191/220/24.8 billion yuan (previous value: 188/213.24 billion), +15%/+13% YoY; current PE14/12/11 X maintains a “buy” rating.
Risk warning
Industry sentiment fluctuates, competition intensifies, raw materials fluctuate greatly, and exchange rates fluctuate greatly.