Report guide
Haier Smart Home released its 2024 quarterly report. The company achieved revenue of 69 billion yuan in 24Q1, +6.01% year over year; net profit to mother of 4.8 billion yuan, +20.16% year over year; net profit after deduction of 4.6 billion yuan, +25.41% year over year. The company's 24Q1 net profit exceeded our expectations and maintained a “buy” rating.
Key points of investment
Domestic high-end development continues to advance, and growth was maintained despite pressure from overseas 1) During the 24Q1 period, the company's revenue in the Chinese market was +8% year-on-year. The company's high-end brand Casadi continues to lead the high-end market, and 24Q1 Casadi's revenue achieved double-digit growth. During the 24Q1 period, Casadi's market shares for refrigerators over 10,000 yuan, washing machines worth 10,000 yuan or more, and air conditioners over 15,000 yuan were 39.3%, 84.1%, and 25.3%, respectively. 2) In response to the challenge of declining demand in major home appliance markets in Europe and the US, Haier actively promoted a localized supply chain and leveraged the synergy of global R&D, procurement and logistics. Overseas revenue bucked the trend by +4% year-on-year in 24Q1.
Profitability increased dramatically, and operating cash flow matched profit growth 1) The company's gross margin reached 29.0% during the 24Q1 period, an increase of 0.3 pct over the previous year. The domestic market benefits from digital channel transformation and structural improvement, while overseas benefits from product structure optimization and capacity utilization. The company's sales, management and R&D expenses in 24Q1 were 13%, 3%, and 4%, respectively, -0.5 pct, -0.3 pct, and +0.1 pct, respectively. 2) In terms of cash flow, the company achieved operating cash flow of 1,725 billion yuan during the 24Q1 period, +27% year-on-year.
Implement stock ownership plans for A- and H-share employees, and the incentive goal shows the company's confidence 1) The company implements A-share and H-share employee stock ownership plans. The funding sources for the two plans come from incentive funds withdrawn by the company, respectively. 2) The assessment goals of the employee stock ownership plan were comprehensive assessment of net profit and return on net assets. The assessment targets were net profit deducted from non-return to mother in year 24 and 25 compared to the net profit growth rate of not less than 15% compared to the compound net profit of 23, and ROE of not less than 16.8% in 24 and 25, respectively.
Profit forecasting and valuation
We expect the company to achieve revenue of 2807/3004/321.1 billion yuan in 24-26, corresponding growth rates of 7%/7%; the company expects to achieve net profit of 191/219/24.4 billion yuan in 24-26, corresponding growth rates of 15%/14%/11%, corresponding EPS 2.03/2.32/2.58 yuan, respectively, and corresponding PE of 15x/13x/12x respectively. Maintain a “buy” rating.
Risk warning
Exchange rate fluctuations, raw material costs fluctuate, macroeconomic downturn.