Event: On August 7, 2024, TCL Smart Home released its 2024 mid-year report. 24H1 revenue/net profit attributable to mothers/net profit after deducting non-return to mother were 8.96/0.559/0.558 billion yuan, respectively, +24.7/+32.7/ +42.2% year over year; of these, 24Q2 was 4.76/0.334/0.334 billion yuan respectively, +24.9/+36.1/ +48.8% year over year, respectively. Revenue and profit performance all exceeded market expectations. By operating entity, the revenue of 24H1 Omar refrigerator and Hefei home appliances was 6.56 billion yuan (yoy +26.2%) and 2.45 billion yuan (yoy +23.7%), respectively, and net profit was 1.03 billion yuan (yoy +21.9%) and 32.67 million yuan (yoy +58.1%), respectively, going hand in hand.
Strong export sales of 2024H1 have driven a rapid increase in revenue, and the growth rate of cold and washing machine sales has exceeded the industry average.
1) By product, 24H1 cold and washing machine revenue was 7.61 billion yuan (yoy +21.7%) and 1.28 billion yuan (yoy +46.3%) respectively, with sales volume of +22.9% and +46.5%, respectively. From this, it can be seen that revenue growth was driven by sales growth. Average prices remained flat. On the one hand, sales growth was due to low overall base during the same period last year, the implementation of domestic trade-in subsidies, low overseas inventory, and active stocking by buyers in some countries and regions. Growth. The 24H1 growth rate was 14.7% and +11.8% respectively. Compared with the industry growth rate, the company's growth rate was +8.2/+34.7pct, respectively, which highlighted alpha attributes. Washing machines were particularly strong, mainly due to rapid growth in export sales. According to industry online data, the export volume of 24H1TCL washing machines was +97.1% compared to the same period.
2) By region, 24H1 domestic and overseas revenue was 2.31 billion yuan (yoy -1.77%) and 6.65 billion yuan (yoy +37.7%) respectively. Domestic sales are mainly declining or affected by weak domestic demand, and export sales are growing rapidly. In addition to the high increase in TCL washing machines, according to industry online data, the 24H1 Oma/TCL refrigerator export shipment growth rate was +24.2/ +74.4%, respectively, which also showed good results. In addition, overseas markets grew steadily in Europe, Latin America, the Middle East and Africa Written by
3) Looking ahead, due to the small scale base of TCL ice washing, the growth rate of Omar refrigerators may decline as the base number rises.
2024Q2's profitability increased significantly, and the expense ratio increased during the period.
1) Gross profit margin: 24H1/24Q2 was 23.0/ 25.3%, respectively, -0.2/+1.3pct year on year, of which 24H1 ice cool/washing machine/domestic/export gross margin was 24.9/10.9/19.1/ 24.3%, respectively, +0.2/-0.8/+2.1/-1.9pct, respectively. The 24Q2 gross margin increased mainly due to product structure upgrades. The share of revenue of high-end air cooling products with higher 24H1 gross margin increased 2.5 pct to 64.0%.
2) Expense ratio: 24H1 sales/management/R&D/finance cost rates were 3.6/3.5/3.2/ -1.2%, respectively, flat /+0.1/+0.4pct, respectively. 24Q2 was 3.5/4.1/3.4/ -1.4% respectively, and the year-on-year rate was +0.2/+0.7/+0.3/+1.6pct, respectively. 24Q2 all cost rates increased. The increase in the management expense ratio was mainly due to an increase in labor costs and storage expenses, an increase in financial expenses or a decrease in the positive contribution of exchange profit and loss.
3) Net interest rate: 24H1/24Q2 net interest rates were 6.24/ 7.01%, respectively, and +0.37/+0.58pct year-on-year respectively. Among them, Omar refrigerator and Hefei 24H1 net interest rates were 15.7/ 1.3%, respectively, and -0.57/+0.29pct, respectively.
Investment suggestions: The company's Hefei home appliances focus on TCL's own brand of high-end ice washing business and actively promote a global layout; Omar refrigerators maintain leading export sales, continue to optimize product structure, and continuously expand emerging markets; at the same time, focus on reducing costs and fees to improve operating efficiency, and are optimistic that revenue and profit will continue to grow.
Based on the company's 24Q2 performance exceeding expectations, we raised our profit forecast. The net profit for 2024-2026 is 0.936/1.047/1.168 billion yuan (originally 0.87/1.004/1.164 billion yuan), the corresponding EPS is 0.86/0.97/1.08 yuan, respectively, and the PE corresponding to the current stock price is 11.19/10.00/8.97 times, respectively. Maintain a “Recommended” rating.
Risk warning: raw material price fluctuations, exchange rate fluctuations, increased market competition, changes in trade policies in exporting countries and regions, unrecoverable accounts receivable, etc.