The performance was in line with expectations, and there was a high increase in net profit after deduction. The company achieved revenue of 106.102 billion yuan in a single quarter of 2024, up 10% year on year; achieved net profit of 90.0 billion yuan, up 12% year on year; realized net profit of 9.237 billion yuan, up 20% year on year. The company's business performance in the first quarter was in line with expectations. The reason the growth rate of net profit after deducted non-net profit was higher than the net profit due to the company's non-recurrent loss of 237 million in the first quarter, mainly due to changes in fair value, a significant increase of 280 million over the same period last year.

Overseas business is developing rapidly, and domestic white power is still booming. By business, the company's revenue from ToC's smart home business increased 11% in the first quarter, and ToB's commercial-grade industrial solution business increased 9%; during the reporting period, the company vigorously expanded new channels and own-brand business in overseas markets. Overseas e-commerce retail sales increased by about 60% year on year, and OBM's own-brand business sales in Brazil, Egypt, Malaysia and the Middle East increased 50% year on year; according to industry online data, from January to January 2024, the total sales volume of domestic air conditioners increased 9%/18%/13% year on year, respectively. 22%/19%. The domestic market benefited from a recovery in terminal demand combined with channels to replenish inventory, and the white power boom represented by air conditioning exceeded expectations.

Continue to maintain high quality management, and steady, moderate and positive profitability. The company's net operating cash flow for the first quarter was 13.929 billion yuan, up 50% year on year, and continued to maintain high quality operation; contract debt for the first quarter was 37.56 billion, up 32% year on year, reflecting that downstream customers were still highly motivated to pay. Other current liabilities were 78.44 billion yuan, up 22% year on year. The absolute value volume reached a record high, the company's historical surplus was abundant, and future performance was steady and worry-free. Key accounts in the cash flow statement and balance sheet present the company's solid financial statements. The company achieved a gross sales margin of 27.3% in the first quarter, a sharp increase of 3.3 pcts over the previous year, mainly due to the results brought about by product structure upgrades, reduction in raw material costs, and internal cost reduction and efficiency. During the reporting period, the company increased its overseas brand marketing investment by 3 billion yuan and continued to increase overseas independent brand building, which led to an increase in sales rates of 1.2 pcts to 9.98%, a financial rate increase of 1.2 pcts to 0.5% due to exchange rate fluctuations, and overall management and R&D rates remained stable.

Maintain a “buy” investment rating. We maintain the company's 2024-26 profit forecast of 378/415/45.6 billion, with a year-on-year increase of 12.1%/9.8%/9.9%, respectively. The current PE valuation is 13/12/11 times. The company's ToB business opens up a new growth path. The long-term growth logic is clear, management execution is strong, and the interests of management and shareholders are highly consistent after implementing the shareholding plan, and steady growth can be expected, maintaining a “buy” rating.

Risk warning: risk of fluctuations in raw material prices; risk of exchange rate fluctuations.