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A rosy 4Q24E with mid-term reform announced

原文出处: 招银国际   贡献者:研报专业户
海尔智家(06690)\r

Haier’s3Q24results were roughly inline,but we do have high hope of a decentpick up in4Q24E,thanks to favorable“old for new”trade in subsidies in Chinaand interest rate cut in the US.But more importantly,we are once again,impressed by Haier’s ability to gain efficiency and save costs in both short andlong run.We are confident on its15%net profit growth target per annum,andhence maintain BUY and raise TP to HK$36.41,based on14x FY25E P/E.\r

4Q24E outlook remains rosy,thanks to better macro in both China andthe US.Management has highlighted a rough guidance for4Q24E,aimingfor MSD or faster sales growth and faster than3Q24E net profit growth.Wedo think this is feasible,thank to sales growth drivers such as:1)gradualimprovement in sales trend during Jul to Sep in China,2)strong rebound indemand for Casarte(20%+retail sales through growth in3Q24,100%+online and60%+offline sales growth in10-1National Day holidays),3)improvement in the US housing demand(both construction and completionshave picked up)esp.after the interest rate cut,4)encouraging sales growthin Europe,yielded from the successful reforms earlier this year,and5)exceptional sales growth in South Asia(could accelerate to40%+in4Q24E).Moreover,we are even more confident on its OP margin,due tomassive efforts on efficiency gains and various costs control initiatives,namely:1)structural changes in procurement and R&D processes,2)further costs saving in manufacturing,raw material sources and by reducingthe defect rates,etc.,3)further collaborations between variousdepartments,4)clear cut KPIs in costs saving on the financial statementlevel and5)elimination of underperforming employees.\r

We remain fairly positive about the Company’s long-term growth andmargin improvement,supported by the new round of reforms.Management also announced a series of reforms in China and in overseas,to drive growth and refine efficiency.In China,Haier will:1)take a moreproactive role in developing its ToC business(to further expand its points ofservice(both online and offline)to the consumers,2)carry on itsdigitalization(esp.on the marketing function and strategy),3)refine itscorporate structure once again.In overseas,Haier is likely to:1)furtherlocalize its strategy,2)use value-added products and services to boost itsbrand equity and ASP,3)carry in its digitalization and4)improve its totaloperation efficiency(including all the factories and supply chains).\r

Maintain BUY and raise TP to HK$36.41.We revised up FY24E/25E/26E net profit forecasts by1%/3%/2%,in order to factor in the exceptionalefforts on efficiency gains and costs saving.Our new TP is based on14xFY25E P/E(rolled over from14x FY24E P/E).The stock is now trading at13x/11x FY24E/25E P/E,still much below its5-year average of15x.\r

Source:Company data,Bloomberg,CMBIGM estimates\r

MORE REPORTS FROM BLOOMBERG:RESP CMBROR http://www.cmbi.com.hk\r

Haier has reported roughly inline3Q24results.In3Q24,Haier’sby1%YoY to RMB67.3bn,missing BBG est.by4%.The missweaker-than-expected sales in China in Jul-Aug2024(esp.kitchen appliance and air conditioner categories).However,by13%YoY to RMB4.7bn,inline with BBG est.Despite theOP margin was better than expected even with higher interestregion,thanks to benefits from digitalization,efficiency gainsaddition,sales growth was-3%/+4%and OP margin has improved7.6%/+0.6ppts to5%in China/overseas.By specific regions,1%/+8%/+34%/+5%/+8%/-3%and OP margin has changed+4.3ppts/+2.6ppts/+0.9ppts/flattish in America/Europe/Southeast Asia/Japan.\r

Announced the acquisition of Goodday(also named asGoodday is an industry-leading logistic provider(mostly onHaier Smart Home,currently owned by Haier group andplanned to list in Mainland China but the plan was cancelledHome has pushed for a merger with it,as the managementbe meaningful benefits and synergies onwards,such as:1)Haier’s transformation into a more DTC Company(to betterend-customers),2)further reduction in costs,as the admin costsgroups actually increased after the previous split off,3)it couldimprove its logistic and even the supply chain management duringexpansion.In fact,management has also laid down the financialincluding:1)reducing the inventory level in China by20%to30%,RMB4to6bn cash,2)optimizing the distributors’CCC from64(20%efficiency gains),3)total logistics costs to fall by10%andSKU management(number of SKUs to go down while volume20%,starting from the air conditioner products).\r

Key risks:1)greater-than-expected drop in demand after theweaker-than-expected economic growth in the overseas,3)raw material price inflation,4)lack of product innovation,etc.
28.55 +1.06% +0.30

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