<Meeting takeaways> Haier (600690 CH/6690 HK): continuous expense optimisation, performance in line
- Domestic/overseas revenue increased by 6-7%/7-8% y-o-y in Apr 2022.
- Haier targets to reach 10% and 15% y-o-y growth in top- and bottom-line, respectively, for 2022.
- Given accelerated digitalisation, it is expected that the SG&A expense ratio could decrease by c.0.5ppt in 2022. Maintain BUY with TP unchanged at HK$39.58 (H-Share) and RMB32.98 (A-share).
Please refer below for a summary of key highlights of our home appliance mini-conference for Haier:
- Domestic/overseas revenue increased by 6-7%/7-8% y-o-y in Apr 2022.
- Targets for 2022:
- Haier targets to reach 10% y-o-y growth in the top-line, with 10-15% growth for domestic market and 8-10% growth for overseas market.
- Segmentally, the company targets to achieve 8-10% growth in the refrigerator and washing machine segments, and around 15% growth in the air conditioner and kitchen appliance segments.
- The company aims to attain a moderate increase in GP margin for the domestic market, and a flattish GP margin for the overseas market.
- Net profit targets to achieve approximately 15% growth.
- Haier also aims at achieving a No.1 market share across all its overseas markets within 2 years.
- The annual R&D investment of about 3% of sales is mainly used to improve the functional experience of products and develop scenario-based product features.
- Given accelerated digitalisation, it is expected that the SG&A expense ratio could decrease by c.0.5ppt in 2022
- In 3 years, the small home appliance segment is expected to contribute c.10% of total revenue in 3 years.
- In terms of the impacts of rising raw material costs on GP margin: it was around 4-6ppt in 2021, of which about 70% was offset by product-mix improvement and price increases, and the remaining 30% by improving production efficiency.
- Casarte is aiming at a 25% y-o-y growth for 2022. Currently, the set-purchase rate of Casarte is around 60-70%.
- Haier plans to open 500-1000 Three-Winged Bird stores in 2022 to help further scale-up the sales of its higher end products. The company has already rolled out about 170 stores in 1Q22.
- Maintain BUY with TP unchanged at HK$39.58 (H-share) and RMB32.98 (A-share).