Changhong Meiling (SZ:000521) Huachuang Securities·2025-05-06 10:04Investment Rating - The report maintains a "Strong Buy" rating for Changhong Meiling, with a target price of 10.4 CNY [1][7]. Core Insights - The company reported a revenue of 7.36 billion CNY in Q1 2025, representing a year-on-year increase of 23.8%. The net profit attributable to shareholders was 180 million CNY, up 16.9% year-on-year, while the net profit excluding non-recurring items decreased by 6.2% to 170 million CNY [1][7]. - The company's performance is driven by strong domestic and overseas demand, with domestic sales benefiting from the continued "old-for-new" policy. The report indicates that the company's domestic sales growth aligns with industry performance, while overseas sales are expected to outperform domestic sales due to favorable market conditions [7][8]. - The report highlights that the company's profitability is slightly under pressure, with a gross margin decrease of 1.6 percentage points to 11.8% and a net margin decline of 1.4 percentage points to 2.5% in Q1 2025. This is attributed to fair value changes from foreign exchange orders and asset impairment provisions [7][8]. Financial Projections - The projected total revenue for the company is expected to grow from 28.6 billion CNY in 2024 to 37.5 billion CNY by 2027, with year-on-year growth rates of 18.0%, 11.5%, 8.9%, and 8.1% respectively [3][8]. - The net profit attributable to shareholders is forecasted to increase from 699 million CNY in 2024 to 1.004 billion CNY in 2027, with growth rates of -5.6%, 14.9%, 12.9%, and 10.8% [3][8]. - The earnings per share (EPS) is projected to rise from 0.68 CNY in 2024 to 0.97 CNY in 2027, with corresponding price-to-earnings (P/E) ratios of 11, 10, 9, and 8 [3][8]. Market Position and Strategy - The company is undergoing internal reforms aimed at improving operational efficiency, which is expected to enhance profitability. The report notes that the company has a high proportion of domestic sales, which positions it well to benefit from national subsidy policies [7][8]. - The report emphasizes the structural market advantages due to the company's focus on emerging markets with high economic growth and low penetration rates, which helps mitigate tariff risks associated with exports to the U.S. [7][8].