Guotai Junan Securities·2024-05-05 02:02Investment Rating - The investment rating for Haier Smart Home (600690) is upgraded to "Buy" with a target price of 34.34 CNY, up from the previous target of 28.95 CNY [4][21]. Core Insights - The company's Q1 2024 performance exceeded expectations, with domestic sales showing steady growth and significant recovery in overseas profitability. The overall profitability for the year is expected to improve beyond initial forecasts [3][21]. Summary by Sections 1. Performance Overview - In Q1 2024, Haier Smart Home achieved a revenue of 68.978 billion CNY, representing a year-on-year increase of 6.01%, and a net profit attributable to shareholders of 4.773 billion CNY, up 20.16% year-on-year [15]. 2. Revenue: Steady Domestic Growth and Brand Upgrade in Europe - Domestic revenue grew by 8% year-on-year, while overseas revenue increased by 4%. Key domestic segments like refrigerators and washing machines are expected to grow by 5-10%, with water appliances seeing double-digit growth. The high-end brand Casarte saw a 14% increase in revenue [16]. - In Europe, the dual-brand strategy with Haier and New Candy has led to a market share increase of 0.9 percentage points, reaching 9.0% [16]. 3. Profitability: Significant Improvement in Operating Margins - The gross margin for Q1 2024 was 28.95%, up 0.26 percentage points year-on-year, while the net margin was 7.04%, an increase of 0.84 percentage points. The company reported over 30% growth in operating profit in the Chinese market [17]. - Overseas profitability also improved significantly, with double-digit growth in operating profit driven by cost optimization in procurement and logistics [17]. 4. Strong Cash Position and Positive Cash Flow - As of the end of 2023, the company had cash and cash equivalents plus trading financial assets totaling 54.46 billion CNY, a decrease of 1.77% from the end of 2023. The net cash flow from operating activities in Q1 2024 was 1.725 billion CNY, up 27.31% year-on-year [19]. 5. New A/H Employee Stock Ownership Plan - The A-share plan has a funding source of 711.5 million CNY, with a maximum of 2,400 participants. The performance targets include a compound growth of not less than 15% in net profit and a return on equity (ROE) of not less than 16.8% for 2024-2025 [20]. 6. Investment Recommendations - The company is expected to continue its deep overseas expansion and high-end product development, supported by digital transformation and improved operational efficiency. The EPS forecasts for 2024-2026 are adjusted to 2.02, 2.27, and 2.50 CNY, respectively, reflecting year-on-year growth of 15%, 12%, and 10% [21].