Event: On April 30, 2024, the company released its 2023 annual report and 2024 quarterly report. The company's 23A/23Q4/24Q1 revenue was 205,018 billion/ 49.206 billion/ 36.596 billion yuan respectively, up 7.82%/17.70%/2.53% year-on-year.
By product, in 2023, air conditioning/household appliances/industrial products/smart equipment/green energy/other main/other business revenues were 151,217 billion/ 10.03 billion/ 670 billion/ 7.106 billion/ 1,568 billion/ 29.414 billion yuan, a year-on-year change of +12.13%/-12.39%/+31.63%/+55.03%/+51.16%/+55.84%/-17.89%. 23H2 air conditioning/household appliances/industrial products/intelligent equipment/green energy/other main business/other business revenues were 81,219 billion/ 4.515 billion/ 422 billion/ 4.191 billion/ 666 million/11.904 billion yuan respectively, a year-on-year change of +22.85%/-23.69%/-4.16%/+82.11%/+51.05%/+11.28%/-29.75%. The company's air conditioning business accounts for a high share of overall revenue, and 2023H2 is growing rapidly. In the household air conditioning sector, according to industry online reports, the company's domestic sales of household air conditioners in 2023 were 29.79 million units, an increase of 4.05% over the previous year. In the HVAC sector, according to Aiken.com's “2023 China Central Air Conditioning Market Report”, in 2023, Gree Central Air Conditioning achieved an excellent record of No. 1 market share for 12 consecutive years since 2012.
By region, domestic/export sales revenue in 2023 was 149.662 billion yuan/24.904 billion yuan, up 15.22%/7.02% year-on-year. 2023H2 domestic/export sales revenue was 80.754 billion/ 12.084 billion yuan, up 20.02%/26.73% year-on-year. Domestic and foreign sales grew rapidly in the second half of '23.
The company's gross margins for 23A/23Q4/24Q1 were 30.57%/34.76%/29.45% respectively, up 4.53/6.96/2.03 pct year-on-year. On the one hand, the company's product structure has been upgraded; on the other hand, the company has strengthened the digital construction of the procurement supply chain to improve cost competitiveness. Focusing on the five major goals of “centralized procurement,” “efficient supply chain collaboration,” “digital supplier management,” “smart settlement,” and “automated pricing,” the company further optimizes procurement costs and strengthens supply chain control.
The company's 23A/23Q4/24Q1 sales expense rates were 8.36%/7.81%/7.32%, respectively, up 2.43/0.78/0.02pct; management expenses rates were 3.19%/3.59%/4.74%, up 0.42/0.52/0.66pct; R&D expense rates were 3.30%/3.13%/4.07%, respectively, with a year-on-year change of 0.00/0.52/-0.23pct; financial expense ratios were -1.72%/-1.63%/-2.52, respectively %, a year-on-year decrease of 0.56/0.07/0.97 pct. The increase in sales expenses was mainly affected by the increase in product installation and maintenance costs, and the decline in financial expenses was mainly affected by the increase in interest income.
The company's net profit for 23A/23Q4/24Q1 was 29.017 billion/ 8.925 billion/ 4.675 billion yuan respectively, up 18.41%/43.90%/13.77% year-on-year. The company's net profit of 23A/23Q4/24Q1 after deduction was 27.565 billion/ 8.351billion/ 4.525 billion yuan respectively, up 14.92%/54.09%/21.55% year-on-year. The company's performance growth is mainly driven by revenue growth and gross margin increase.
The company's 2023 dividend was 13.142 billion yuan, with a dividend rate of 45.3%.
Investment advice: As a leader in the white power industry, based on the main air conditioning business, we are actively expanding our product line. At the same time, the diversified business layout is progressing steadily. The industrial products and green energy sectors are expected to bring new growth increases, and profitability may continue to improve. We estimate that in 2024-2026, the company's net profit to mother will be 316/344/375 billion yuan, corresponding EPS will be 5.61/6.11/6.66 yuan, respectively, and the current stock price corresponding to PE will be 7.52/6.91/6.33 times, respectively. Give it a “Recommended” rating.
Risk warning: risk of macroeconomic fluctuations, risk of fluctuations in raw material prices, risk of increased market competition, overseas political risk, risk of exchange rate fluctuations, risk of diversified development falling short of expectations, etc.