GREE(000651) 交银国际证券·2024-05-05 02:00Investment Rating - The report assigns a Buy rating to Gree Electric Appliances (000651 CH) with a target price of RMB 52.96, representing a potential upside of 25.7% from the current price of RMB 42.12 [1][2] Core Views - Gree Electric's 2023 profit exceeded expectations, with net profit margin reaching a 6-year high of 13.6% [1] - The company's air conditioning business showed robust growth, with revenue increasing by 12.1% YoY to RMB 151.2 billion in 2023, driven by both volume growth and price increases [1] - Other business segments, including industrial products, smart equipment, and green energy, also experienced high double-digit growth, contributing 8% of total revenue [1] - Domestic sales accelerated in the second half of 2023, with a 20% YoY increase, while overseas sales rebounded strongly with a 27% YoY growth in H2 2023 [1] - The report expects Gree Electric to maintain double-digit profit growth in 2024, supported by improved profitability and market leadership [1] Financial Performance - In 2023, Gree Electric's revenue grew by 7.8% YoY to RMB 205.0 billion, while net profit attributable to shareholders increased by 18.4% YoY to RMB 29.0 billion [1] - The company's gross margin, operating margin, and net profit margin all improved significantly in 2023, reaching 30.4%, 16.1%, and 13.6%, respectively [1] - For Q1 2024, revenue increased by 2.5% YoY to RMB 36.6 billion, with net profit attributable to shareholders rising by 13.8% YoY to RMB 4.67 billion [1] - The company announced a cash dividend of RMB 23.8 per 10 shares, maintaining a payout ratio of around 45% [1] Business Segments - Air conditioning business revenue reached RMB 151.2 billion in 2023, accounting for the majority of total revenue, with a gross margin of 37% [1] - Industrial products, smart equipment, and green energy businesses collectively contributed RMB 17.77 billion in revenue, showing high double-digit growth [1] - The company maintained its leading market position in the air conditioning sector, with a market share of 31.2% in 2023 [1] Valuation and Projections - The target price of RMB 52.96 is based on 9.0x average P/E for 2024-2025 and a PEG ratio of 0.8x [1] - Revenue is projected to grow at a CAGR of 6.2% from 2023 to 2026, reaching RMB 248.6 billion by 2026 [2] - Net profit is expected to increase at a CAGR of 9.1% from 2023 to 2026, reaching RMB 36.7 billion by 2026 [2] - The company's ROE is forecasted to remain above 24% through 2026, indicating strong profitability [7]