Event: On August 30, 2024, Hisense Home Appliances released its 2024 semi-annual report. 2024H1 achieved revenue of 48.642 billion yuan (+13.27%), net profit due to mother 2.016 billion yuan (+34.61%), and net profit of non-return to mother 1.703 billion yuan (+34.82%).
2024Q2's performance is growing rapidly, and 2024H1's own-brand business in the ASEAN region is growing rapidly. 1) Quarterly: 2024Q2's revenue reached 25.156 billion yuan (+6.98%), net profit to mother reached 1.035 billion yuan (+17.26%), steady revenue performance, and rapid profit growth. 2) By product: 2024H1's HVAC/ice washing/other main businesses achieved revenue of 22.767/14.693/6.074 billion yuan, respectively, +7.59/+26.81/ +1.97% year-on-year, respectively. Among them, the ice washing category grew rapidly or was due to the company's high-end products, technology upgrades, and channel-side optimization. 3) By region: 2024H1 achieved revenue of 253.28/182.05, respectively, of +3.52/ +27.87% year on year, respectively; in the American region, the company used the advantages of its factory layout in Monterrey, Mexico to supplement the American product lineup, and the 2024H1 revenue in the American region was +40% year-on-year, achieving rapid growth; at the same time, it also established new joint ventures to expand brand building in the ASEAN region. Overall revenue in the ASEAN region increased by +39.46% compared to the same period last year, and its own brand business increased rapidly (+64.37%). 2024H1
2024Q2 profitability is under pressure in the short term, and financial expense ratios have increased due to exchange rate fluctuations. 1) Gross profit margin:
2024Q2 has a gross margin of 20.95% (-0.92pct), which may be due to increased competition in the industry combined with rising raw material prices and shipping costs. 2) Net interest rate: The net interest rate of the 2024Q2 company was 5.93% (-0.21pct), and the decline was slightly less than the gross profit margin. 3) Expense side: 2024Q2's sales/management/R&D/finance expense ratios were 10.38/2.30/3.46/ 0.13%, respectively, -0.39/+0.14/+0.62/+1.01pct, respectively. Among them, the increase in financial expense ratios was due to a decrease in foreign exchange evaluation and exchange earnings.
The fresh air conditioning segment leads the industry, and Sandian Company continues to make breakthroughs in thermal management business expansion. 1) HVAC business: 2024H1's air conditioning business revenue +7.59% YoY, gross profit +7.87% YoY, multi-connection market share of more than 20%; the company also continues to lead the industry in the field of fresh air conditioning, and the 2024H1 Hisense fresh air conditioning offline market share climbed to 45.3%. 2) Sanden: Sanden continues to break through the comprehensive thermal management system for new energy vehicles. The fifth-generation electric compressor platform is compatible with different refrigerants such as R1234yf, CO2, and R290, enhancing its technical advantages in terms of performance, quietness, and modularity. Next-generation thick film heating technology has also enhanced and expanded the ECH product line; at the same time, it continues to improve manufacturing efficiency. The absolute value of 2024H1 working time loss improved 2.3% year on year, UPPH improved 5.3% year on year, and single manufacturing cost increased 4.4% year on year.
Investment suggestions: On the industry side, with a new round of domestic “trade-in” policies catalyzed, demand for white electricity is expected to continue to recover as the export chain recovers; the upstream compressor and other parts industries are expected to grow by developing Dongfeng with new energy vehicles. On the company side, the high-end layout of white power products continues to deepen, the new energy thermal management business is actively expanding, and the company's revenue performance is expected to continue to grow. We estimate that in 2024-2026, the company's net profit to mother will be 3.338/3.817/4.272 billion yuan, respectively, and the corresponding EPS will be 2.41/2.75/3.08 yuan, respectively. The PE corresponding to the current stock price is 10.28/8.99/8.03 times, respectively. Maintain a “buy” rating.
Risk warning: the risk of exchange rate fluctuations, the risk of price fluctuations in bulk raw materials and core components, the risk of rising shipping and labor costs, market risks brought about by trade protectionism, technological iteration, etc.