Company discloses 24Q3 results

Q3: Revenue of 67.3 billion (+0.5%), net profit of 4.7 billion (+13%), net profit of 4.5 billion (+10%); Q1-3: Revenue 203 billion (+2%), net profit due to mother 15.2 billion (+15%), net profit of non-return to mother 14.7 billion (+15%). The Q3 results were in line with market expectations.

Q3 revenue split: domestic and foreign sales growth rate similar to Q2

Q3 Domestic sales -3%, export sales 4% (North America -1%, Europe +8%, South Asia +33%, Australia +5%, Southeast Asia +8%).

Domestic sales were lackluster, and Q3 maintained a downward trend in Q2. Mainly, air conditioning was dragged down, but domestic sales were optimized month by month, and export sales increased marginally due to high growth in South Asia.

Q3 Profit side: Continued reduction in rates to improve profits

① By region: Q3 operating margin: 9.6% domestic (+1.1pct), overseas 5% (+0.6pct).

② Q3 The company's gross margin did not change much year-on-year. Thanks to digital transformation, the company's fee reduction was remarkable. Q 3-0.4% (sales rate -0.5% /management rate -0.2% /R&D rate +0% /financial rate +0.2%). Currently, digital transformation is undergoing digital optimization of logistics, marketing, and production, and there is still plenty of room for lower rates.

Profit forecasting, valuation and investment ratings

① Consolidated schedule: Previously, it had to be independently listed, then withdrawn and officially merged by Haier in 24Q4, which is beneficial to fully collaborate with Haier and help it to do retail transformation and logistics cost reduction.

② Overseas outlook: 1) Currently, the company's production capacity in North America covers most sales, so there is no need to worry about tax increases; 2) Furthermore, the US cuts interest rates to increase the operating rate, which is beneficial to engineering channels. GE has a clear advantage here. We expect North America's revenue to rise from flat to single-digit growth in 25 years.

③ Domestic outlook: Q4 trade-in is driving positive retail data. In particular, Casadi's growth rate is fast. We expect to help Haier achieve its target for the full year of 24.

Affected by the environment, the company's domestic sales were lackluster. We adjusted revenue. We estimated 24-26 revenue of 267.7/284.4/302.2 billion yuan, and YOY of +2%/+6%/+6% (previous value was 272.4/289.4/307.5 billion yuan, YOY +4%/+6%/+6%).

Digitalization surpassed expectations to release profits, and we maintained a general profit growth rate. Net profit to mother was 19/21.4/24 billion yuan, YOY +15%/+13%/+12% (previous value was 19/21.3/23.9 billion yuan, YOY +15%/+12%/+12%), corresponding to 24/25/26 PE of 14/13/11X, maintaining a “buy” 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.