The company released the 2024Q3 performance report:

Q3: Revenue 21.937 billion yuan (-0.08% YoY), net profit attributable to mother 0.777 billion yuan (YoY -16.29%); net profit not attributable to mother 0.586 billion yuan (YoY -26.67%);

Q1-Q3: Revenue 70.579 billion yuan (YoY +8.75%), net profit 2.793 billion yuan (YoY +15.13%); net profit not attributable to mother 2.289 billion yuan (YoY +10.99%).

Basically as expected.

Revenue analysis: export sales continue to boom

Subregion: We expect domestic and export sales revenue in Q3 to be about -16%/+30% year over year, and we expect Q2 internal/export sales to be about -8%/+35% year over year respectively, and export sales will continue to thrive in Q3. By country, we expect revenue growth in Q3: America > Europe > Middle East Africa;

By product: We expect revenue growth to continue in the Q2 ranking of cold washing > home air > central air; among them, we expect export sales of home air and ice washing to accelerate compared to Q2:

1) Central Airlines: We expect Q3 revenue to drop by double digits year on year. We expect domestic sales to drop by about double digits and export sales by about +25%;

2) Home emptiness: We expect Q3 revenue to be +5% year-on-year, domestic sales will drop by about double digits, and export sales will be about +50%;

3) Ice washing: We expect Q3 revenue to be +10% year-on-year, domestic sales are expected to drop by about a single digit, and export sales are about +40%;

4) Sanden: We expect a slight year-on-year decline, continuing the Q2 trend.

Profit analysis: The profit level of export sales has improved

The Q3 gross profit margin was 20.8%, or 2.4 pct year on year. We expect the year-on-year decline to be mainly limited by fluctuations in the average price of domestic sales and cost factors, and the gross profit level of export sales will still increase. Q3 net profit to mother declined by 0.15 billion yuan year on year. We split the source:

CCTV: We expect the Q3 net interest rate to be about -1 pct year on year. Compared with the same period last year, the impact on net profit to mother is about -0.09 billion yuan;

Home gap: We expect the Q3 net interest rate to be about -2pct year on year. Compared with the same period last year, the impact on net profit to mother is about -0.06 billion yuan;

Ice washing: We expect the Q3 net interest rate to be about -1 pct year on year. Compared with the same period last year, the impact on net profit to mother is about -0.04 billion yuan;

Sanden: We expect a year-on-year loss reduction of about 0.04 billion in Q3.

Investment advice:

Our point of view:

Looking at the merger, the core of Q3 revenue and profit suppression comes from the central air and home air sector under the two major factors of “domestic sales boom fluctuations and copper and aluminum price increases”. We expect Q3 to be the darkest hour. Short-term Q4 national compensation is expected to significantly boost the air conditioning business repair, and long-term companies actively expand the growth of the central aviation business (expand overseas markets+expand category+expand engineering and construction business+multi-brand development), and there is still room for profit optimization.

Profit forecast: We maintain our previous profit forecast. In 2024-2026, the company's revenue is expected to be 94.608/103.175/110.475 billion yuan, +10.5%/+7.1% YoY, and net profit to mother of 3.269/3.672/4.094 billion yuan, +15.2%/+12.3%/+11.5% YoY; corresponding to PE 12/11/10X, maintaining a “buy” rating.

Risk warning:

Competition in the industry is intensifying, and raw material costs fluctuate.