Company Profile Hisense Visual Technology Co Ltd is engaged in the distribution and servicing of home appliances, telecommunications, green energy-saving refrigeration technology, and information technologies. Its brand includes Kelon, Ronshen, Vidaa among others. (Source:MorningStar) Event Hisense Visual Technology Co Ltd (the company) announced its third-quarter financial results of 2023. In the first three quarters of 2023, the company reported revenue/ net income attributable to shareholders/ net income deducting non-recurring items at CNY 39.23 billion/ CNY 1.63 billion/ and CNY 1.36 billion, a year-on-year increase of 20.7%/ 47.1%/59.6%, with Q3 seeing CNY 14.35 billion /CNY 590 million /CNY 510 million, 16.7%/15.2%/14.1% higher than it was a year ago. The gross margin/ net margin attributable to shareholders/ net margin deducting non-recurring items was 16.6%/ 4.1%/ 3.6% in the first nine months, down 1.4pps/ 0.05pps/ 0.08pps from the same period of last year, each in Q3 at 17.0%/ 4.2%/ 3.5%, down 0.77pps/ up 0.75pps/ up 0.84pps from a year ago. Investment Highlights The Q3 revenue achieved steady growth thanks to the upgrading of high-end products in China and rapid growth overseas, in terms of its color televisions, the company’s main business, and to the accelerated growth of its new display business. By businesses, in the first three quarters, the revenue of the company’s intelligent display terminal rose by 19.47%YoY, up 11.06%YoY in China and 25.55%YoY overseas; in Q3, the sales volume of Hisense 100-inch and above household laser display products jumped by over 40%. By regions, the revenue from its main business in the first three quarters rose by 21.01% from a year ago, up 17.09%YoY in China and 24.42YoY overseas. In China, the company continued to develop high-end products with bigger display screen. The sales of 75-inch and above intelligent display terminals in Q3 surged by 49.5% and sales volume up 47.1%. According to data in the company’s announcement, the market share of the retail sales/ sales volume of Hisense series in Q3 jumped by 3.8pps/ 2.6pps from a year ago. In overseas markets, the company continued to step up its shipment, with the sales of 65-inch and above intelligent display terminals overseas in Q3 surged by 82.5%YoY and by 58.8%YoY in sales volume, thanks to the major increments from North America and Europe whose sales volume in the first three quarters saw double-digit growth. As a better product mix, efficiency improvements and expense controls made a dent in its costs, the company’s profitability sustained steady growth in Q3. The company bettered its product mix to respond to price hikes in panels, making its decline in gross margin in Q3 basically flat with a quarter earlier. With prices of panel during September and October gradually falling down steadily, the follow-up costs will be lower. Meanwhile, the company improved its operation efficiency and its expense rates bettered. Thanks to its better product mix and higher efficiency, the company’s net margin attributable to shareholders in Q3 was basically flat with a year ago, showing its profit resilience. Earnings forecast and investment recommendation As a leading player of display in China, Hisense Visual Technology Co Ltd has consolidated its product matric with multiple technological routes and differentiated brand combination. Its new display business helps expand its business scope and strengthen its leading position. Plus, the continuous acceleration in its overseas shipment makes its future promising. Its EPS is expected at CNY 1.75 in 2023, CNY 2.09 in 2024, and CNY 2.50 in 2025, implying a P/E ratio to 12.5x, 10.5x, and 8.8x, respectively, based on the closing price on October 24, 2023. Maintain “Outperform”. Potential risks price spike in panels; less-than-expected overseas demand; intensified competition 【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。
【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。
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