Huachuang Securities·2024-08-28 13:46Investment Rating - The report maintains a "Strong Buy" rating for Haier Smart Home (600690) with a target price of 31 CNY, compared to the current price of 23.86 CNY [2]. Core Views - The company's profitability continues to improve, with a stable operational outlook. The first half of 2024 (24H1) saw revenue of 135.62 billion CNY, a year-on-year increase of 3.0%, and a net profit attributable to shareholders of 10.42 billion CNY, up 16.3% year-on-year [2]. - Despite weak demand and intensified competition, the revenue performance remains stable. Domestic market revenue in 24H1 grew by 2.3% year-on-year, while overseas market revenue increased by 3.7% [2]. - The company's digital transformation is supporting ongoing profitability improvements, with a net profit margin of 8.6% in 24H1, up 1.1 percentage points year-on-year [2]. - The outlook for the company's operations is expected to improve, driven by new policies and investments in production capacity [2]. Summary by Sections Financial Performance - In 24H1, Haier Smart Home achieved a revenue of 1356.2 billion CNY, with a net profit of 104.2 billion CNY, reflecting a year-on-year growth of 16.3% [2]. - The second quarter (24Q2) revenue was 666.5 billion CNY, with a net profit of 56.5 billion CNY, showing a year-on-year increase of 13.2% [2]. Market Analysis - The domestic market showed a slowdown in growth, with a 2.3% increase in 24H1 compared to 8.1% in Q1, attributed to external demand weakness and increased competition [2]. - The overseas market maintained a growth rate of 3.7%, with North America facing stagnant demand due to high inflation, while Europe and Southeast Asia experienced double-digit growth [2]. Profitability and Cost Management - The company's net profit margin improved to 8.6% in 24H1, supported by cost management strategies and digital transformation efforts [2]. - The sales and management expense ratio was optimized to 17.6%, a decrease of 0.8 percentage points year-on-year [2]. Future Outlook - The company is expected to benefit from new policies promoting upgrades in appliances, which may alleviate revenue pressure in the second half of the year [2]. - Investments in new production capacity for air conditioners are anticipated to drive revenue and profit growth [2].