Company discloses 24Q3 results

Q3: Revenue of 102.2 billion yuan (+8%), net profit of 10.9 billion yuan (+15%), net profit of non-return to mother 10.2 billion yuan (+11%);

Q1-3: Revenue of 320.4 billion yuan (+10%), net profit of 31.7 billion yuan (+14%) to mother, net profit of 30.4 billion yuan (+13%) after deducting non-return to mother.

Q3 revenue: We expect a high increase in export sales in the C-side business, better than the industry; B-side domestic sales growth rate is more impressive 1) C-side: We expect revenue +9%, domestic sales revenue+low single digit, export revenue+ high double digits; all by category, there is positive growth, with refrigeration revenue growth rate > air conditioning > small kitchen.

① Domestic sales: The growth rate of cold washing > air conditioning > small kitchen (decline). The trend of domestic sales of white appliances is similar, but Midea's performance is better than that of its peers.

② Export sales: The growth rate of air conditioners > ice washing > small kitchens, the trend is consistent with the industry.

2) B-side: We expect revenue growth+low orders, domestic sales revenue+double digits, export revenue - number of units. Specifically, building revenue growth+low orders, industrial+high orders, robotics -9%. Domestic sales in all three segments are higher than export sales. Among them, central air export sales plus low orders. The slowdown in growth is mainly due to the high base of heat pumps.

3) The company maintained high-quality growth: the two categories of “other current liabilities” with withheld rebates and “contract liabilities” with advance payment both increased significantly year-on-year and month-on-month in Q3, and the quality of the company's growth was high.

Q3 Profit: Financial rate reduction improves profit

1) The gross margin was 26% (-1% compared to the same period), mainly due to the increase in raw material price+low overseas gross margin but fast growth.

2) The fee rate is 14.4% (-1.4% year over year), mainly due to some benefits such as exchange this year, which led to an improvement in financial rates.

3) The difference between return to mother and deduction of non-growth mainly comes from the effects of asset disposal, taxes, minority shares, etc.

Profit forecasting, valuation and investment ratings

24H2 export sales have a high base impact. We expect the Q4 growth rate to slow down, but the company's Q1-3 OBM revenue growth rate is +25% faster; the trade-in domestic sales clearly drives the company's average price and structure, and we look forward to Q4. We expect to maintain high revenue and double-digit profit targets for the full year of '24. In the long run, the balance sheet accounts are excellent, and there is sufficient margin for performance.

We adjusted the company's performance according to Q1-3. We expect revenue for 24-26 to be 410.1/434.5/459.1 billion yuan, YOY +10%/+6%/+6% (previous value was 402.9/426.9/451.2 billion yuan, YOY +8%/+6%/+6%).

Net profit to mother was 38.9/42.8/46.8 billion yuan, YOY +15%/+10%/+9% (previous value was 37.3/40.9/44.3 billion yuan, YOY +11%/+10%/+8%), corresponding to the 24/25/26 PE was 14/13/12X, 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.