Core views

Haier Smart Home released its report for the third quarter of 2024. Revenue bucked the trend and increased slightly. The profit side relied on structural adjustments and digital efficiency improvements, and profitability continued to improve. Subsequent companies are expected to seize the opportunities of the national supplement era, adjust the product structure, optimize the multi-channel layout, and achieve steady growth in revenue and profit through product innovation. At the same time, the company also listed Rishun Logistics in this issue. This move is expected to accelerate the transformation of the company's domestic retail model and enhance overseas localization capabilities.

occurrences

On October 29, 2024, Haier Smart Home released its report for the third quarter of 2024.

In the first three quarters of 2024, the company achieved total operating income of 202.971 billion yuan, +72.17% year over year; net profit to mother 15.154 billion yuan, +15.72% year over year; deducted non-net profit of 14.685 billion yuan, +15.44% year over year.

Looking at a single quarter, the 23Q3 company achieved total operating income of 67.348 billion yuan, +0.47% year over year, net profit to mother 4.734 billion yuan, +13.15% year over year; after deducting non-net profit of 4.525 billion yuan, +9.91% year over year.

Brief review

1. Revenue side: The industry sentiment declined in Q3. Haier bucked the trend and maintained a steady domestic sales side. Since the third quarter, Haier's domestic sales have declined, and Haier's domestic sales have been dragged down accordingly. The revenue side: the Q3 industry sentiment has declined, Haier's domestic sales have declined somewhat since the third quarter, and Haier's domestic sales have been dragged down accordingly. Q3 is expected to decline by a single digit. Since September, national supplements have been launched one after another. The company has actively seized trade-in opportunities and actively promoted original technological innovation. While maintaining the leading competitiveness of individual products, it is leading the industry to give full play to the trend of integration, and has advantages in high-end brands, full category lineup, and multi-channel layout, driving retail growth.

On the export side, ① The mature market boom in Europe and America is still in a low range. The company continues to increase its share through initiatives such as leading innovative products, breaking through new industries, and deepening the supply chain layout, and has bucked the trend as a whole. ② In emerging market countries, the company is deepening the construction of a localized supply chain; deepening high-end brand creation; driving structural upgrading through leading product launches to achieve rapid growth, improving the product price index, etc.; overall, it is expected to achieve single-digit growth overseas in Q3.

2. Profit side: The gross margin increased steadily, and the overall cost optimization control Q3 achieved a gross profit margin of 31.32% in a single quarter, an increase of 0.07 pct over the previous year. The increase in gross margin comes from the joint contribution of the domestic market and overseas markets: ① The domestic market benefits from the company's continuous promotion of digital transformation in procurement, R&D and manufacturing, and the construction of a digital production and marketing collaboration system, and the gross margin increased year-on-year; ② Overseas markets built digital procurement platforms to improve cost competitiveness, improve capacity utilization through global supply chain collaboration, and gross margin increased year-on-year.

The overall cost ratio has been reduced, and profitability has steadily increased. The 24Q3 company achieved a sales expense ratio of 14.2% (-0.5pct), a management expense ratio of 3.8% (-0.3pct), a R&D expense ratio of 4.52% (basically the same), and a financial expense ratio of 0.1% (+0.1pct). The main reason for the decline in the sales expense ratio is that the company is promoting digital transformation, improving efficiency in marketing resource allocation, logistics distribution and warehousing operations; the main reason for the decline in management expenses is that domestic and overseas management cost ratio optimization benefits from the application of digital tools to optimize business processes and improve organizational efficiency; the increase in financial expense ratio is mainly due to increased overseas interest expenses affected by interest rate increases, offsetting the company's increased interest income by improving capital management efficiency.

3. Merge the daily logistics schedule to help retail transformation

The company achieved merger with Nissun Supply Chain Technology Co., Ltd., which helped advance the company's retail transformation. In the domestic market, the company relies on the end-to-end advantages of Japan and Japan to build an intelligent logistics platform with a unified system architecture to improve full-link operation efficiency and accelerate retail model innovation; in overseas markets, the company will strengthen global localized operations, improve the level of overseas logistics management, further optimize costs, improve efficiency, and accelerate global business development. Following the announcement, Rishun opened up a new blue ocean of social business and created a new growth engine for the company through deep participation in the company's localized logistics system and capacity building in overseas markets.

Investment advice: Globalization, high-end and intelligence are the future breakers of the white power industry. Relying on long-term hard work and accumulation, Haier has taken a leading position in both domestic high-end and export sales autonomy, and is optimistic about the performance certainty brought about by the company's α attribute. It is expected to achieve operating income of 276.2 and 293.4 billion yuan in 2024-25, up 5.65% and 6.23% year on year, and net profit to mother of 19.1 and 21.7 billion yuan, up 15.24% and 13.58% year on year. Corresponding PE is 14.7X and 12.9X, respectively, maintaining the “buy” rating.

Risk analysis

1. The macroeconomic growth rate fell short of expectations. Household appliances are durable consumer goods and are closely related to residents' income expectations. If macroeconomic growth slows down, it may have a big impact on the company's product sales; 2. The decline in raw material prices falls short of expectations: the company's raw material costs account for a large share of operating costs, and if bulk prices rise again, the company's profitability will weaken;

3. Overseas market risk: Uncertainty in the overseas environment has intensified in recent years, and the company's export sales account is relatively high. If external demand falls, performance will be impacted accordingly; 4. Market competition has intensified: in a weak market environment, industry competition is more intense, and the company has the risk of losing share and low price competition dragging down profits.