Changhong Meiling (SZ:000521) KAIYUAN SECURITIES·2025-04-02 03:23Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Views - The company's profitability is expected to continue improving due to multiple reforms, with a focus on enhancing operational efficiency and adapting to market demands [4]. - The company has shown steady revenue and profit growth, with projected net profits for 2024-2026 at 703 million, 807 million, and 911 million yuan respectively, corresponding to EPS of 0.68, 0.78, and 0.88 yuan [4][5]. - The report highlights the company's strong performance in both domestic and international markets, with a significant focus on product quality and price competitiveness [4]. Company Overview - The company, originally established as a refrigerator manufacturer, has diversified into a range of home appliances following a strategic restructuring with Sichuan Changhong [14]. - The current major revenue sources are air conditioning and refrigerators, which together account for nearly 95% of total revenue [17][34]. - The company has a professional management structure, with a significant portion of its executives having backgrounds in Sichuan Changhong, enhancing operational efficiency [20][23]. Financial Performance - The company reported revenues of 24.25 billion yuan and a net profit of 741 million yuan in 2023, with a CAGR of 6.75% for revenue and 80.52% for net profit from 2018 to 2023 [25]. - The gross profit margin has been gradually recovering, reaching 13.9% in 2023, although it is expected to face pressure in 2024 due to rising raw material costs and increased competition [39][44]. - The company maintains a strong cash flow position, with operating cash flow net amounting to 2.75 billion yuan in the first three quarters of 2024, reflecting a 14.1% increase [54]. Industry Insights - The home appliance industry is witnessing a trend towards high-end products in the domestic market, while the international market is experiencing a recovery in demand [57]. - The refrigerator market is projected to see a total shipment of approximately 96.71 million units in 2024, with exports growing faster than domestic sales [57][64]. - The company is focusing on health preservation and innovative designs in its refrigerator offerings, aligning with consumer preferences for quality and aesthetics [64].