Main points of investment
Maintain the "overweight" rating and raise the target price to HK $6.50: the company's home appliance business continues to open up the global market, the new energy business expands rapidly, and maintains its leading position in the industry. As the company shifts from manufacturing to service, profit margins are expected to continue to improve. We expect the company's adjusted net profit from 2022 to 2024 to be 17.74,24.45 and 3.494 billion yuan respectively, with year-on-year changes of-9.7%, + 37.8% and + 42.9%, respectively. The target price corresponds to the PE of 9x, 6x and 5x from 2022 to 2024 respectively.
Skyworth Group's net profit in 2022 is expected to decline by 10% year-on-year, Skyworth digital profit is expected to increase: in 2022, the company's adjusted home net profit is expected to decline by about 10% year-on-year, and home net profit will drop by about 50% year-on-year. This is mainly due to the decline in the share price of listed equity securities held by the group at fair value into profit and loss, resulting in a fair value unrealized loss. In 2022, Skyworth, a non-wholly owned subsidiary of Skyworth Group, recorded a net profit of 73.1% to 910 million yuan, an increase of 73.1%, 115.8%, and a year-on-year increase of 156.6%, 232.8%, and 830 million yuan, respectively. The growth is mainly due to the increase in the number of digital intelligent set-top boxes and broadband network connection equipment, revenue scale and gross profit margin of Skyworth digital intelligent terminals compared with the same period last year.
It is expected that the rapid expansion of household photovoltaic business in 2023 will lead to income expansion and profit repair:
The new energy business has gradually grown into the company's main source of income, and its proportion in total operating income has increased from 8.1% of the total operating income in 2021, 13.9% of the 2022Q1 and 17.3% of the 2022H1 to 20.3% of 2022M9.
China's household photovoltaic industry is in a period of rapid growth. In the nine years from 2022 to 2030, China's household photovoltaic industry is expected to increase by more than 300GW, about seven times the existing installed capacity. Skyworth Group has added more than 100000 household photovoltaic power stations in operation and grid-connected power generation by the end of 2022M9, and a total of more than 150,000 household photovoltaic power stations have been built. Skyworth Group is expected to maintain its leading position in the industry by virtue of its first-mover advantage in China's household photovoltaic market and its own channels. Driven by the rapid growth of new energy business, it is expected to lead to 19.8% year-on-year growth in total revenue in 2023, profit end will usher in repair, and adjusted net profit is expected to increase by 37.8% in 2023.
2022M9 performance review, intelligent TV system sales pressure: the company's multimedia business, intelligent system technology business, new energy, intelligent electrical appliances business, modern service business 2022M9 revenue accounted for 44.2%, 23.4%, 20.3%, 8.8% 3.3%, respectively. The overall turnover of 2022M9 Group was 38.419 billion yuan, an increase of 7% over the same period last year. The gross profit margin was 15.7%, down 0.6pct from the same period last year.
Risk tips: 1) intensified competition in the home appliance market; 2) photovoltaic business development is not up to expectations; 3) supply chain problems continue; 4) raw material price fluctuations; 5) business fluctuations.