Event: On August 16, 2024, Changhong Meiling released its 2024 semi-annual report. 2024H1's revenue was 14.948 billion yuan (+16.52%), net profit attributable to mother was 0.415 billion yuan (+15.91%), after deducting non-attributable net profit of 0.433 billion yuan (+13.22%). Looking at a single quarter, 2024Q2's revenue was 9.008 billion yuan (+15.43%), net profit due to mother 0.259 billion yuan (+10.18%), after deducting non-return net profit of 0.247 billion yuan (-11.46%).

Revenue side: The 2024H1 washing machine business is growing rapidly, and the overseas growth rate is higher than that at home. 1) By product, 2024H1's air conditioning/refrigerator/freezer/washing machine revenue was 8.5/4.739/0.784 billion yuan, respectively, +21.47/+12.18/+40.65% year-on-year, respectively. Among them, the main increase in air conditioning contributions may be due to product structure optimization to meet different market needs, and key markets in Latin America and the Middle East are gaining strength; the washing machine business continues to grow rapidly, the domestic focus on key markets and channel scale increases, and core customers in key overseas regions have accelerated breakthroughs. 2) By region, 2024H1's domestic/overseas revenue was 10.13/4.817 billion yuan, respectively, +14.56/ +23.78% year-on-year, respectively. The export performance was better, or benefited from the industry's export dividends, adding to the company's product, customer, and channel expansion optimization.

Profit side: The net interest rate improved month-on-month, and the cost side was optimized. 1) Gross profit margin: 2024Q2's gross profit margin was 9.89% (-1.81 pct year on year), or due to rising prices of bulk raw materials such as plastics and copper. 2) Net interest rate: 2024Q2's net interest rate was 2.96% (-0.14pct, month-on-month +0.29pct). Profitability improved month-on-month, and the year-on-year decline was less than gross profit margin, which is reasonable control on the cost side. 3) Cost side: 2024Q2's sales/management/R&D/finance expense ratios were 4.63/0.96/1.72/ -0.66%, respectively, -0.37/-0.39/-0.04/+0.32pct, respectively. The overall cost ratio decreased, and operating efficiency continued to improve.

Investment advice: On the industry side, the export boom in white power combined with domestic sales trade-in policies catalyzes or supports the short- to medium- to long-term growth of the industry. On the company side, the domestic product structure and market channels are continuously expanded and optimized, and the company's revenue performance is expected to continue to grow with the help of overseas markets in the Middle East, Latin America, Africa, etc., and internal and external collaboration and industrial collaboration. We expect the company's net profit to be 0.863/1.006/1.194 billion yuan in 2024-2026, the corresponding EPS is 0.84/0.98/1.16 yuan, and the corresponding PE is 9.55/8.19/6.90 times the current stock price. Maintain a “buy” rating.

Risk warning: Increased industry competition, risk of exchange rate fluctuations, risk of price fluctuations of commodities, trade frictions and geopolitical impacts.