Key points of investment:
Investment advice: Raise profit forecasts. The company's 24H1 performance exceeded expectations, so the company's profit forecast for 2024-2026 was raised: the company is expected to return 0.914/1.007/1.099 billion yuan in 24-26, +16%/+10%/+9% year-on-year (previously 0.876, 0.989, 1.084 billion yuan). Maintain an “Overweight” rating.
The results exceeded expectations. The company 24H1 achieved revenue of 8.962 billion yuan, +25% year over year, net profit of 0.559 billion yuan, +33% year over year; of these, 24Q2 achieved revenue of 4.764 billion yuan, +25% year over year, and net profit of 0.334 billion yuan to mother, +36% year over year.
Omar refrigerator exports grew strongly, and TCL washing machines performed well. Omagh Refrigerators 24Q2 revenue +27% year over year. Among them, export revenue was +25-30% year-on-year. The company's business in the European market has achieved steady growth, and the Latin American and Middle Eastern African market business has increased significantly. TCL Hefei Ice Washing 24Q2 revenue was +25% year-on-year. According to industry online data, domestic sales and exports of 24Q2 TCL washing machines were +11%/+81%, respectively. We expect 24Q2 TCL washing machine business revenue to increase by more than 50% year on year.
Profits are resilient, and the structure continues to improve. In terms of absolute contribution to performance, 24H1's total revenue was +0.118 billion yuan year over year, of which Omar refrigerator subsidiary's performance contribution was +0.095 billion yuan year over year; TCL Hefei ice washing was +0.012 billion yuan year over year. Therefore, the performance side exceeded expectations, mainly due to the strong profitability of Omar's entities. In terms of profit margin, the company's 24Q2 gross profit margin was 25.3%, +1.2pcts year over year, net profit margin 13.5%, and +0.8pcts year over year. In response to the further year-on-year increase in the company's 24Q2 gross profit level on a high basis, we think it mainly comes from: 1) Further release of scale effects. Due to the surge in overseas orders in April and May, production lines were rotated multiple times, and capacity utilization was further improved; 2) The product structure was gradually optimized. The company's revenue share of high-end air cooling products in the first half of the year was +2.5 pcts year on year, compared with the gross margin of traditional products; 3) The average export price rebounded year on year. We expect 24Q2 mainly to increase the share of orders with a high European demand structure; the cost side is relatively manageable. Among them, Q2 management expenses increased significantly due to the increase in scale; among financial expenses, the positive contribution of exchange profit and loss in the second quarter decreased by about 50 million yuan year on year.
Risk warning: risk of large fluctuations in raw material prices, risk of export business facing major trade policy adjustments in exporting countries and regions, risk of exchange rate fluctuations