Changhong Meiling (000521) 华创证券·2024-09-04 09:10Investment Rating - The report assigns a "Strong Buy" rating to the company with a target price of 10.9 CNY, compared to the current price of 8.72 CNY [1][6]. Core Insights - The report highlights the internal governance reforms and external business improvements since 2019, which have enhanced operational efficiency and growth potential for the company [5][14]. - The company is positioned as a second-tier leader in the domestic white goods market, with significant growth driven by air conditioning and refrigerator segments [19][22]. - The report anticipates a robust increase in profitability and market capitalization, projecting a net profit of 11.0 billion CNY by 2026, with a corresponding market value of 110 billion CNY [1][6]. Summary by Sections Internal Governance - The company has implemented various reforms to improve operational efficiency, including the establishment of a China regional platform for marketing integration, which reduced the sales expense ratio from 15% in Q1 2018 to 5% in Q2 2024 [1][5]. - Logistics and supply chain management have been strengthened, leading to a doubling of inventory turnover from 2018 to 2023 [1][5]. - The company has shifted focus from traditional retail channels to e-commerce and lower-tier markets, enhancing sales growth [1][5]. Domestic Market - The company is expected to benefit from the recent "trade-in" policy, with projected retail growth in home appliances of 14% to 47% in the second half of 2024 [1][5]. - The air conditioning market share has increased from 3% in early 2020 to approximately 5% in 2024, supported by partnerships with Xiaomi and competitive pricing [1][5]. - The refrigerator segment has seen a shift towards high-capacity and embedded models, with price increases exceeding 20%, outperforming industry averages [1][5]. Export Expansion - The company has focused on expanding its export business, particularly in emerging markets, which are less saturated and present significant growth opportunities [1][5]. - The export revenue has shown strong growth, with air conditioning exports expected to continue double-digit growth in the second half of 2024 [1][5]. - The company has a low exposure to the U.S. market, mitigating risks associated with potential tariffs [1][5]. Financial Projections - The report forecasts net profits of 8.4 billion CNY, 9.7 billion CNY, and 11.0 billion CNY for 2024, 2025, and 2026, respectively, with corresponding EPS of 0.81, 0.94, and 1.07 CNY [2][6]. - The company is expected to maintain a stable cash flow, with a DCF valuation method applied to reach the target price of 10.9 CNY, reflecting a PE ratio of 14 for 2024 [6][1].