GREE(000651) 光大证券·2024-05-06 04:08Investment Rating - The report maintains a "Buy" rating for Gree Electric Appliances (000651.SZ) with a current price of 42.12 CNY and a target price of 46.62 CNY [1]. Core Insights - Gree Electric Appliances reported record high performance in 2023, achieving revenue of 205 billion CNY (up 8% year-on-year) and a net profit attributable to shareholders of 29 billion CNY (up 18% year-on-year). The Q1 2024 results also exceeded market expectations with revenue of 36.6 billion CNY (up 3% year-on-year) and a net profit of 4.7 billion CNY (up 14% year-on-year) [5][6]. - The annual dividend proposal is set at 2.38 CNY per share, surpassing market expectations, with a cash dividend payout ratio of 45.3% for 2023, remaining stable compared to 2022 [5]. Revenue Analysis - In 2023, Gree's air conditioning revenue reached nearly a historical peak at 151.2 billion CNY, accounting for 74% of total revenue and growing by 12%. The sales volume increased by 2%, with domestic sales outperforming exports. Price increases contributed more to revenue growth than volume [6]. - Other business revenues declined by 18% to 29.4 billion CNY, returning to a more reasonable proportion of total revenue [6]. Profitability Analysis - The net profit margin for 2023 was close to historical highs, with gross margins of 30.6% in 2023 and 29.5% in Q1 2024. The air conditioning segment achieved a gross margin of 37.0% [6]. - The increase in gross margin is attributed to product price increases, a decrease in low-margin business revenue, and improved product mix due to currency depreciation [6]. Financial Position - Gree's operating cash flow reached a historical high of 56.4 billion CNY in 2023, with inventory levels decreasing to 32.6 billion CNY, indicating strong sales in the air conditioning sector [6]. - The company maintained stable other current liabilities and saw a significant increase in contract liabilities in Q1 2024, suggesting a recovery in dealer inventory levels [6]. Earnings Forecast and Valuation - The report forecasts Gree's net profit attributable to shareholders for 2024-2026 to be 30.3 billion CNY, 32.9 billion CNY, and 36.4 billion CNY respectively, with corresponding P/E ratios of 8, 7, and 7 times [7][8]. - The company is recognized for its strong brand, product quality, and channel barriers, with ongoing initiatives in new retail models and employee incentive plans enhancing corporate governance [7].