Description of the event
The company disclosed its quarterly report: In 2024 Q1, the company achieved revenue of 68.978 billion yuan, a year-on-year increase of 6.01%, achieved net profit attributable to mother of 4.773 billion yuan, an increase of 20.16% over the previous year, and achieved net profit of 4.64 billion yuan without return to mother, an increase of 25.41% over the previous year. At the same time, the company introduced employee stock ownership plans for A shares and H shares.
Incident comments
It has blossomed a lot at home and abroad, and the scale of revenue has grown steadily. 2024 Q1's revenue increased 6.01% year on year, and its domestic market in China increased 8.1% year on year. Specifically, companies in advantageous industries such as refrigeration, cleaning, and aquaculture continued to enhance their competitiveness and consolidate their leading edge through product leadership, scenario solution innovation, etc., and the refrigeration and cleaning industry maintained steady growth, and the aquaculture industry achieved double-digit growth; 2) Potential industries such as household air conditioning, kitchen appliances, and smart buildings benefited from the company's insight into user needs, layout of industrial chain integration capabilities, and development of professional channels. It is worth noting that the Casadi brand has further stabilized its influence in the high-end home appliance sector in China by expanding the user segment, deepening the layout of packaged products, and speeding up the construction of shopping malls. Revenue increased by more than 14% year on year, retail sales of Triwing Bird increased by more than 30% year on year, and the proportion of front-end products reached 38%, an increase of 8 pcts over the previous year. Overseas markets grew 4% year-on-year. Among them, mature markets in North America and Europe are expected to grow faster. At the same time, during the reporting period, the company's Combo heat pump washer-dryer in North America won the “CES Innovation Award Household Appliance Category Winner” for its outstanding performance and innovative design, and launched a new RealMax gas heater product and a new commercial HVAC system to further improve the product lineup and implement a dual brand strategy centered on Haier and New Candy in Europe through product innovation and Candy brand renewal to achieve a steady increase in market share.
Digital transformation has clearly boosted profitability, and the quality of the company's operations has improved. In 2024, the company's gross margin increased by 0.25pct to 28.95% compared to the same period last year, mainly due to deepening digital reforms in domestic market procurement and R&D, and improvements in product structure, as well as increased capacity utilization and product structure optimization in overseas markets. In terms of cost rates, the company's sales expenses ratio was optimized by 0.49 pct year over year, mainly due to digital transformation leading to efficiency improvements in marketing resource allocation, logistics distribution, warehousing operations, etc., and the management cost ratio was optimized by 0.34 pct year over year, mainly due to the use of digital tools optimizing business processes and improving organizational efficiency. The R&D cost rate increased 0.06 pct year over year, mainly because the company strengthened core technology and capacity development in the smart home field during the reporting period to support advanced layout and product innovation capabilities in various business sectors. Combined, it made Q1 2024 The company's operating profit (gross profit - taxes and additional - sales & management & R&D expenses plus asset and credit impairment losses) increased sharply by 27.1% year-on-year. Its domestic market grew by more than 30%, and overseas markets also achieved double-digit growth. On this basis, the company's financial expense ratio decreased by 0.02 pct year on year, and ultimately increased the company's net profit margin to mother by 0.82 pct year over year in 2024 Q1. In addition, the net cash flow from the company's operating activities increased 27.31% year-on-year to $1,725 billion in 2024 Q1. The growth rate was clearly superior to the performance growth rate, and the quality and efficiency of operations improved markedly.
Investment advice: As a global leader in major appliances, the company has operating advantages in all categories. Driven by smart home solutions, it can meet the multi-level needs of consumers and help the company achieve more sustainable scale growth. At the same time, the company strengthens its digital layout to improve operational efficiency. We expect the company's net profit to be 191.47, 220.46 and 25.06 billion yuan respectively in 2024-2026, corresponding to PE of 14.92, 12.95 and 11.42 times, maintaining a “buy” rating.
Risk warning
1. Risk of declining market demand due to a slowdown in macroeconomic growth; 2. Risk of overseas business operations.