Matters:
In 2024, the company achieved operating income of 189.164 billion yuan, net profit of 32.185 billion yuan, +10.91% year over year; of these, 24Q4 revenue was 42.441 billion, -13.35% year over year, and net profit to mother of 10.224 billion yuan, +14.55% year on year. 2025Q1 achieved operating income of 41.51 billion, +14.1% year over year; net profit to mother of 5.9 billion, +26.3% year over year; net profit without return to mother of 5.72 billion, +26.3% year over year.
Comments:
Export sales performed well in 2024, with 25Q1 revenue growth exceeding expectations. Looking at the 2024 revenue subregion, domestic sales were 141.513 billion, -5.45% YoY. Export sales were 28.203 billion yuan, +13.25% over the same period. Overseas markets grew significantly, with independent brands accounting for nearly 70%. Sales in Brazil increased 75% year over year. The number of Gree specialty stores in Eastern Europe exceeded 200, winning bids for many iconic projects such as the Aoyama Industrial Park in Indonesia, the largest shopping mall complex in Iraq, and the Ferrari Museum office building in Greece. 25Q1's revenue increased 14.1% year on year, exceeding market expectations. On the one hand, it is expected that the trade-in policy will drive growth, especially in the air conditioning category, and on the other hand, it is expected that overseas markets will continue to perform well.
25Q1 net margin increased significantly, and the quality of operations improved significantly. The company achieved net profit of 5.9 billion yuan in 25Q1, +26.3% year-on-year. The profit side growth rate exceeded market expectations, mainly due to reduced costs and depreciation over the same period last year.
25Q1 achieved a gross profit margin of 27.36% and -1.18pct year on year, which is expected to increase the share of export sales, which is dragged down; the gross sales gap is 21.94%, or -0.15 pct year on year. Sales, management, R&D, and financial expense ratios were -1.03, -1.37, flat, and -0.12 pct, respectively. Credit impairment losses decreased by 0.385 billion year over year, asset impairment losses decreased by 0.068 billion year over year, and fair value change earnings increased 0.189 billion year over year. Under the combined influence, the 25Q1 net profit margin reached 14.2%, an increase of 1.3 pcts over the previous year. Net cash flow from operating activities was 11 billion, compared to -2.94 billion in the same period last year, a significant improvement over the previous year.
The dividend rate continues to rise, and digital operations accelerate channel efficiency. The 2024 dividend plan is to distribute a cash dividend of 20 yuan (tax included) for every 10 shares. Combined with the 2024 mid-term dividend, the annual cumulative dividend was 16.76 billion yuan, accounting for 52.06% of the net profit due to the annual dividend, which will continue to increase shareholder returns compared to the 45.3% dividend rate for the year 23. The company continuously optimizes the efficiency of the entire channel link through refined management and digital operation methods; predicts market demand through data analysis to reduce the risk of inventory stagnation; uses digital tools to monitor product circulation and improve product turnover.
Investment advice: As an industry leader with undervalued and high dividends, the company fully enjoys the dividends of the pattern. With the implementation of policies driving demand in the home appliance industry, the cost performance ratio of the company's configuration is prominent. We adjusted the 25/26 net profit forecast to be 35.01/37.24 billion yuan (original value 34.11/36.42 billion yuan), and added the 2027 net profit forecast to be 39.09 billion yuan. The corresponding PE for 25-27 years was 8/7/7 times, respectively. Using the DCF valuation method, the target price was adjusted to 60 yuan to maintain the “strong recommendation” rating.
Risk warning: Domestic market demand is weak, new product development falls short of expectations, and raw material prices are rising.
