Core views:
The company disclosed its 2024 quarterly report. 24Q1 achieved revenue of 106.48 billion yuan (YoY +10.2%), net profit to mother of 900 billion yuan (YoY +11.9%), gross profit margin 27.6% (YoY+3.2pct), and net profit margin of 8.5% (YoY+0.1pct). Sales/management/finance/R&D expense rates were +1.2pct/+0.2pct/+1.3pct/-0.02pct, respectively.
Smart home sector: 24Q1 revenue increased 11% year over year. According to the company's official website, the company vigorously expanded new channels and markets. Overseas e-commerce retail sales increased by about 60% year on year, and sales of its own brands in Brazil, Egypt, Malaysia and the Middle East increased by more than 50% year over year. According to industry online data, (1) Air conditioning: 24Q1 air conditioning industry sales volume +17% year over year, export sales volume +22% year over year, total sales volume +19%. Among them, domestic sales in the US were +8.8% year on year, export sales were +17.5% year over year, and total sales volume was +13.3% year over year. (2) Ice washing: 24Q1 refrigerator industry sales volume +8.3% YoY, export sales +31.2% YoY, total sales +18.8% YoY, washing machine industry sales +0.3% YoY, export sales +30.4% YoY, total sales +14.0% YoY. According to third party data, we expect the smart home business to grow at a better rate of overseas revenue than at home.
Commercial and industrial solutions: 24Q1 revenue increased 9% year over year. Among them, new energy and industrial technology, intelligent building technology, robotics and automation achieved revenue of 77, 82, and 6.7 billion yuan, respectively, +23%, +6%, and -12%, respectively. According to the company's official website, household energy storage products developed and produced by the subsidiary Hekang Xinneng have been shipped in batches. The distributed photovoltaic EPC business has been developed in more than 10 provinces in China, helping to grow revenue rapidly; in terms of building control, the company released a new generation of automatic energy saving technology, which can save an average of 10% to 30% of energy on the existing HVAC automatic control system.
Profit forecast and investment advice: The company's net profit for 24-26 is expected to be +10.7%, +10.2%, and +9.9%, respectively. Referring to comparable company valuations, the company is given 15 x PE for 24 years, corresponding to a reasonable value of 80.27 yuan/share, and a “buy” rating.
Risk warning: Increased industry competition, sluggish real estate market, rising raw material prices, etc.