HAIER SMART HOME(600690)2025-04-03 04:16Summary of Haier Smart Home (A/H) Conference Call Company Overview - Company: Haier Smart Home Co Ltd - Ticker: 6690 HK (H-shares), 600690 CH (A-shares) - Market Cap: Approximately 35.328 billion (A-shares) [4][23] Key Financial Highlights - 2024 Performance: - Organic sales growth of 3.5% and earnings growth of 15.1% year-over-year (YoY) [2][21] - Reported sales and earnings grew by 4.3% and 12.9% YoY, respectively [2][21] - Domestic sales increased by 3% YoY, rebounding from a decline in earlier quarters [22] - Overseas sales achieved 4% organic growth, with emerging markets contributing significantly [22] - 2025 Guidance: - Sales growth expected in the mid-high single digits (M/HSD) and earnings growth in the double digits (DD) [2][21] - Anticipated 7% sales growth in China, driven by premium brand Casarte [22] - Overseas sales forecasted to grow by 5% YoY with stable operating profit margins [22] Strategic Initiatives - Digitalization and Efficiency: - Deployment of AI to enhance sales management and supply chain efficiency, targeting a reduction in SG&A ratio by 40-50 basis points in 2025 [2][21] - Tariff Mitigation Strategies: - Plans to upgrade product mix, pass some tariff costs to suppliers, and improve production efficiency in the US [2][21] - Establishing a backup supply chain in Southeast Asia to mitigate tariff impacts [2][21] Market Position and Valuation - Valuation Metrics: - Haier-H trades at 10x 2025 P/E with a 4.9% dividend yield, more attractive compared to Haier-A's 12x/4.1% and Midea-A's 13.6x/4.5% [2][21] - Price Target: - New price target for Haier-H raised to HK31) and for Haier-A to Rmb31 (from Rmb30) [2][21][14] Earnings Estimates - Adjusted EPS Estimates: - FY25E adjusted EPS for Haier-H increased from Rmb2.14 to Rmb2.23, and for Haier-A from Rmb2.14 to Rmb2.23 [7][18] - Long-term Growth Projections: - Forecasted sales and earnings growth of 6% and 11.9% YoY in 2025, with CAGRs of 3.7% and 8.7% over 2025-2027 [25][31] Risks and Considerations - Market Concerns: - Haier has been perceived as disproportionately discounted due to fears surrounding US tariff hikes [24][30] - Operational Challenges: - Potential impacts from restructuring costs in Europe and fluctuating consumer sentiment in the US and EU markets [22][24] Conclusion - Investment Thesis: - Haier's balanced product portfolio and geographical diversification are seen as strengths. The company is expected to improve its operating margins and close the gap with competitors like Midea and Gree [24][30]