Qingdao Haier: Optimize Product Structure in Accordance with Consumption Upgrade

Respond to consumption upgrades and optimize product structure. The announcement of 3 million sets of non-fluorinated inverter energy-efficient air-conditioning projects to comply with the general trend of consumer upgrading, in line with the current energy-saving environmental protection industry upgrade direction. The project will be completed in April next year, which can effectively resolve the pressure on the production of inverter air conditioners and optimize the product structure. According to the monitoring data of China Yikang Market, the proportion of sales of inverter air conditioners has increased rapidly since the second half of last year, from 11% in July 2009 to the current 25%. The company's sales volume of inverter air conditioners this year is equivalent to the industry level. Considering that the project will reach production next year, it is expected that this proportion will increase significantly.

According to industry online statistics, in 2009 China's annual sales of household air conditioners totaled 65.86 million units, of which 37.67 million units were sold domestically; it is expected that the compound sales growth rate of the industry in the next three years will be 8%. Currently, Haier’s share of shipments is about 10%, and its market share has continued to increase since the end of last year.

It shows the determination of the Group to strengthen its air-conditioning business. Among the four main businesses of ice-washing air-conditioning, air-conditioning business is a short-term development of the company in recent years. In December last year, the Group integrated home air-conditioning and commercial air-conditioning and established Haier Air-Conditioning Group. Chai Yongsen, Senior Vice President of the Group, took up the post of Chief Minister of BU Long Home Air Conditioning Division and was responsible for the overall operation of air-conditioning products. Both inside and outside the group have given higher expectations to Chai’s appointment. According to the shipment data of the industry online, Haier’s domestic share of air conditioners has continued to increase this year. The layout of 3 million sets of non-fluorinated inverter air conditioner capacity will reach a total of 15 million units of air-conditioning capacity after reaching production, showing that the company is full of confidence in the competitiveness of its products, industry development and product market share.

Earnings forecasts and investment advice. The air-conditioning business of the company bottomed out; Haier Electronics was incorporated into the company from the second quarter of the second day. It is expected that the income scale will exceed 20 billion yuan in the current year, and will share the market opportunities for the rapid development of the tertiary market in the future; since the equity incentive, corporate governance has continued to improve, but There is still room for improvement in agency fees, minority shareholders' equity and other aspects; there are expectations of further asset integration in the future. We maintain our company's 10-12 year earnings forecast to 1.25, 1.53, and 1.89 yuan, and the company's compound annual growth rate will reach 30% in the next three years, giving 20x PE, 6-month target price of 25 yuan, and maintaining a “buy” rating.