Introduction to this report:
The company's 2023A&24Q1 performance is in line with expectations. The home air business benefits from the high prosperity and steady growth of the industry, stable dividends, and still has allocation value in line with undervaluation.
Key points of investment:
The investment proposal raised the profit forecast and maintained the “gain” rating. The company's 2023 performance is close to the forecast limit, so it was raised 24-25, and the company's profit forecast for 26 years was added. We expect the company's EPS to be 5.52/5.86/6.21 yuan in 24-26 (5.41/5.83 yuan in 24-25). Considering the current upward trend in the valuation center of Baidian faucets and the company's own historical valuation level, we will give 10xPE in 24, and raise the target price to 55.2 yuan.
The results for 23 and 24Q1 were in line with expectations. The company achieved operating income of 205.018 billion yuan in 2023, +7.82% year on year, net profit to mother of 29.017 billion yuan, +18.41% year on year; of these, 23Q4 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. 24Q1 achieved operating income of 36.596 billion yuan, +2.53% year-on-year, and net profit to mother of 4.675 billion yuan, +13.77% year-on-year.
Domestic sales of the home are growing steadily. In 2023, air conditioning/household appliances/industrial products/smart equipment/green energy were +12%/+32%/+55%/+51%, respectively. The air conditioning business is still the company's absolute core business. The diversification process of C-end home appliances is still slow, and B-end high-end manufacturing has performed relatively well. The 24Q1 company's contract debt reached 20.49 billion yuan, compared with +6.9 billion yuan at the end of 23, showing that dealers still have good intentions to pick up goods and ensure steady revenue growth in the later stages.
The gross sales margin improved significantly. The gross sales gap for 2023 and 24Q1 was 22.57% and 22.14% respectively, +2.02pcts and +2.03pcts year-on-year. We believe that the results of the company's channel reform have been reflected: although investment in channel expenses has been increased, more channel profits have been recovered through the online batch model.
Risk warning: raw material prices fluctuate, cost pressure remains unabated, and declining real estate completion drag down post-cycle demand