The company released 24H1 results:

24H1: Revenue of 14.9 billion (+17%); net profit attributable to mother 0.415 billion (+16%); net profit without return to mother of 0.43 billion (+13%);

24Q2: Revenue 9 billion (+15%); net profit attributable to mother 0.26 billion (+10%); net profit without return to mother 0.25 billion (-11%). Net profit to mother exceeded expectations.

Revenue side: Domestic refrigerator growth is slowing, and the rest of the business continues the Q1 high growth trend ① 24Q1/Q2 revenue growth base is similar. The slight slowdown in Q2 growth is mainly due to poor domestic sales and slightly higher inventory. Domestic demand for air conditioners continues to grow, driven by Xiaomi OEM, and export sales of air conditioners and refrigerators have maintained a high growth trend under the beta of Meiling International's active order grabbing orders and high industry growth.

② Our expected Q2 split is: overall +15%, air conditioning +20% + (inside and outside +20% +, outside faster than inside), refrigerator +10% (inside slightly down, outside + over 50%) (inside + single digit increase), washing machine +20% +.

Profit side: Costs affect profit, but revenue expansion & depreciation/fair value optimization & fee reduction drive profit recovery ① Copper and shipping price increases affect costs. 24Q2 gross margin was 10% (-1.8 pct year over year, -3.5 pct month over month), and the company's Q2 return increased 0.023 billion year over year. The decline in gross margin is expected to contribute 0.16 billion to profit.

② The tax rate has been raised to 11% over the past 24 years (23H1 tax is 0). Taxes are expected to reduce profits by 0.042 billion, but government subsidies have also added 0.031 billion in revenue.

③ Changes in fair value and reduced credit impairment contributed 0.073 billion in profit growth.

④ The continuous optimization of sales and management rates contributed 0.043 billion in profit growth, and the company's efficiency improvement brought significant positive feedback.

Investment advice: It is expected that H2 revenue will continue to increase, and profit margins will be greatly affected by the environment, but the company continues to push for cost reduction and efficiency to hedge against pressure.

In summary, we believe that Q2's revenue (driven by businesses such as export/Xiaomi foundry) maintained the previous high growth trend, and gross margin fluctuated due to the impact of shipping costs/raw materials. However, the company continued to reduce costs and improve efficiency, and the reduction of rates was effective in resisting general environmental changes, driving the return home to maintain positive growth.

The revenue for 24/25/26 is estimated to be 27.7/30.6/33.5 billion (+14%/+11%/+9%), and the mother is 0.81/0.93/1.08 billion (previous value was 8.9/10.5/12) (+9%/+16%), corresponding to the 24-year PE of 10X, maintaining the buying rating.

Risk warning: Real estate completion risk, risk of air conditioning growth falling short of expectations, risk of raw material price fluctuations, export sales falling short of expectations, risk of exchange rate fluctuations, risk of untimely research information updates.