JiaAir performs better than the industry and is optimistic about cold washing exports
Recently, we had discussions with the company's management. We are optimistic about the Q2 company's air business growth and ice washing export sales performance; the traditional white power business drives overall growth, and the logic of reversing losses in the Sandian business remains unchanged. We maintained our 24-26 EPS forecast of 2.36, 2.70, and 3.01 yuan, respectively. Using the segmented valuation method, the average PE value of wind comparable companies in 24 years was 14.6x/23.7x, respectively. Considering the leading attributes of the company's central air conditioning business, improvements in the home appliance business led to positive net profit performance, and gave the central air conditioning and home appliance business 20 xPE in 24 years, corresponding to a market value of 65.5 billion yuan. The auto zero business slowly recovered, giving the zero auto business 22 x PE in 24 years, corresponding to a market value of 625 million yuan The overall target price for A shares is $47.64 (previous value: $40.21), and refers to the H/A share price = 71% in the past year, corresponding to HK$37.17 for H shares (previous value: $31.37), maintaining the “overholding” rating.
Jiakong's business performance is superior to that of the industry, and CCCC's multi-brand strategic layout deepens JiaAir market production and sales are still booming. According to industry online data, the cumulative production/sales volume of JiaAir from January to January was +19.6%/+19.4% year-on-year, respectively, continuing the high growth trend of last year. Among them, in January-March, the company's cumulative sales volume was +32.2% year-on-year, and the cumulative domestic sales market share was +0.72 pct year-on-year. The company's sales growth rate is much higher than that of the industry. It continues to seize market share, and brand awareness continues to rise. According to industry online data, we are optimistic about the company's Q2 business growth in May compared to the same period last year. Coupled with the improvement in overseas demand, we are optimistic about the company's Q2 Jia Air business growth. In addition, the company is deepening the strategic layout of CCAC's multi-brand strategy, targeting different customer groups with the three sub-brands Hitachi, Hisense, and York, respectively, and expanding the breadth of the consumer base.
Optimistic about cold washing exports; the Sandian business is expected to reverse losses
Since its Rongsheng brand launched its first borderless embedded refrigerator in 2022, the company's refrigerator product structure has been continuously optimized. According to Aowei Cloud Network data, the cumulative average price of Hisense brand refrigerators online/offline was +14.12%/+10.73%, respectively. Considering that domestic built-in refrigerators continue to penetrate, and although the embedded product market in Europe and the US is mature, there is still demand for replacement, it is expected that the profitability of the ice washing business will continue to improve. Meanwhile, according to industry online data, the company's domestic and export sales of refrigerators were +18.0%/+31.3% year-on-year, respectively. Overseas demand was significantly better than domestic demand, which is optimistic about the company's Q2 ice washing export business. Furthermore, since starting the Sandian business, the company has actively promoted the signing of orders through group synergy, but due to the long order conversion time and pressure on upfront profits, it is expected to reverse losses this year.
The multi-phase incentive plan establishes a sound and long-term incentive mechanism to help the company achieve a steady increase in performance since the release of the first equity incentive plan and employee stock ownership plan in early 2023. With the exception of 23Q4, which was affected by the high 22Q4 performance base, net profit for the first three quarters of '23 all doubled year-on-year; 24Q1 still achieved +60% year-on-year net profit on the basis of last year's high base.
The implementation of the new 24-year employee stock ownership plan this year further promoted the normalization of the incentive mechanism, maintained the enthusiasm of key employees, and worked together to promote the healthy and rapid development of the company.
Risk warning: raw material prices are rising; real estate recovery is weak; overseas demand falls short of expectations.