The company released its 2023 annual results forecast. According to the announcement:
The company expects net profit to reach 70,000-770 million yuan (YOY +186%-215%) and 72-790 million yuan after deducting non-return to mother (YOY +601%-669%).
After conversion, the company's net profit for the fourth quarter of '23 is expected to reach 2.01-271 million yuan (YOY +144%-229%), with deducted non-return net profit of 2.07-277 million yuan (YOY +749%-1036%).
Analytical judgment:
The main reasons for the advance increase in the company's performance:
During the reporting period, the company continued to fully implement the “one goal, three main lines” business policy, adhere to value orientation, and comprehensively improve efficiency. The main industries such as refrigerators (cabinets), air conditioning, washing machines, small household appliances, and kitchen and bathroom all achieved good business performance. By business:
1. Refrigerators (cabinets), washing machines:
(1) International: In an environment where shipping costs are falling and the market is gradually recovering, we are actively seizing orders, vigorously promoting product expansion, and increasing orders and deliveries. At the same time, we insist on cold washing collaboration, and the washing machine industry is expanding rapidly;
(2) Domestic: Improve the quality of operations by releasing a series of new products, optimizing the product structure, strengthening market promotion, promoting channel transformation and refined customer management, etc.
2. Air conditioning:
(1) Domestic: Further promote “marketing transformation”, keep up with the climatic characteristics of the market and regions, lay out the market in advance, optimize the product structure, and maintain strategic cooperation with key customers;
(2) International: Promote product structure upgrading, enhance market development capabilities, increase channel development, continuously increase sales to key strategic customers, and increase market demand in some regions due to climate impact.
At the same time, prices of bulk raw materials declined year-on-year during the reporting period, and advanced manufacturing enterprises enjoyed preferential value-added tax credit policies.
In summary, during the reporting period, the company achieved year-on-year growth in operating income and net profit, while operating performance also increased.
Investment advice
Based on the annual report's performance forecast, we adjusted the profit forecast. We expect the company's revenue for 2023-2025 to be 249/273/29.7 billion yuan (previous value: 245/274,302 billion yuan), +23%/+10%/+9% year-on-year respectively, and the net profit to mother for 23-25 will be 7.4/8.4/9.3 billion yuan (previous values were 6.2, 7.4, and 850 million yuan), respectively, +201%/+14%/+11% year-on-year, respectively. Yuan (previous value was 0.60/0.72/0.83 yuan). Based on the closing price of 6.9 yuan on January 24, 2024, the corresponding PE was 8/7/6 times, respectively. Comparable companies (Haier Smart Home, Gree Electric, Hisense Home Appliances, and Midea Group) had an average PE of 10 times (using the same expectations using wind) for 24 years, maintaining a “buy” rating.
Risk warning
Downstream industry prosperity falls short of expectations, risks such as increased industry competition, falling short of expectations in order acquisition, fluctuating upstream raw material costs, etc., risks of iterative technology, deviations in industry space estimation, risk of distortion of third-party data, risk of information delays or untimely updates in public data used in research reports, exchange rate fluctuations, etc.