HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>The weak share price of <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home (6690 HK)</a> looks unjustified given its healthy 1H23 result and solid financial position with net cash equals 11% of share price. </li>
<li>We anticipate product advancement and innovation will allow HSH to gain more market share. Its high-end brand Casarte will sustain as an important driver for earnings performance.</li>
<li>Gross margin looks to have room to expand due to better cost dynamics with digitalisation and AI initiatives. Continued growth in developing overseas market is also positive. </li>
</ul>


The weak share price of Haier Smart Home (6690 HK) looks unjustified given its healthy 1H23 result and solid financial position with net cash equals 11% of share price. 
We anticipate product advancement and innovation will allow HSH to gain more market share. Its high-end brand Casarte will sustain as an important driver for earnings performance.
Gross margin looks to have room to expand due to better cost dynamics with digitalisation and AI initiatives. Continued growth in developing overseas market is also positive. 


Haier Smart Home (6690 HK): Healthy Growth Despite Challenges

<ul>
<li>The weak share price performance of <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home Co Ltd (6690 HK)</a> is unwarranted given the healthy earnings trend, solid net cash position and undemanding valuations.</li>
<li>The 15.9% 1Q23 recurring earnings growth showed its low correlation with the property market while demonstrated the achievement in cost control and rising premium product contribution.</li>
<li>It is set to benefit from government's push for higher penetration of household appliances in rural areas. Meanwhile, recent Rmb depreciation may bring exchange gain for 1H23.</li>
</ul>


The weak share price performance of Haier Smart Home Co Ltd (6690 HK) is unwarranted given the healthy earnings trend, solid net cash position and undemanding valuations.
The 15.9% 1Q23 recurring earnings growth showed its low correlation with the property market while demonstrated the achievement in cost control and rising premium product contribution.
It is set to benefit from government's push for higher penetration of household appliances in rural areas. Meanwhile, recent Rmb depreciation may bring exchange gain for 1H23.


Haier Smart Home (6690 HK): Value Emerging

<ul>
<li>
<a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home Co Ltd (6690 HK)</a> revealed that domestic sales are performing well in the "Double-11" festival and overseas sales have outperformed peers in Black Friday.</li>
<li>The high-end brand Casarte has maintained good market shares in refrigerators, drum washing machines and air-conditioners. Overseas market also saw positive upgrade demand. </li>
<li>Its digitalisation strategy has enhanced customers' shopping experience and increased repurchases. HSH has also achieved improvements in overall efficiency through such efforts.</li>
</ul>



Haier Smart Home Co Ltd (6690 HK) revealed that domestic sales are performing well in the "Double-11" festival and overseas sales have outperformed peers in Black Friday.
The high-end brand Casarte has maintained good market shares in refrigerators, drum washing machines and air-conditioners. Overseas market also saw positive upgrade demand. 
Its digitalisation strategy has enhanced customers' shopping experience and increased repurchases. HSH has also achieved improvements in overall efficiency through such efforts.


Haier Smart Home (6690 HK): Further Updates from Management

<ul>
<li>Acceleration in earnings growth at <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home Co Ltd (6690 HK)</a> is an encouraging trend. We are happy to see expansion in both gross and operating margin in 3Q22.</li>
<li>Further channel additions for Casarte and digitalisation efforts will bring positive profitability impact. Meanwhile, we welcome HSH's increase in engagement of suppliers in product design process.</li>
<li>Overseas growth has also accelerated in 3Q22 and there are numerous opportunities for HSH to expand its high-end presence and introduce new products in developed country markets. </li>
</ul>


Acceleration in earnings growth at Haier Smart Home Co Ltd (6690 HK) is an encouraging trend. We are happy to see expansion in both gross and operating margin in 3Q22.
Further channel additions for Casarte and digitalisation efforts will bring positive profitability impact. Meanwhile, we welcome HSH's increase in engagement of suppliers in product design process.
Overseas growth has also accelerated in 3Q22 and there are numerous opportunities for HSH to expand its high-end presence and introduce new products in developed country markets. 


Haier Smart Home (6690 HK): Opportunity Knocks as Depressed Valuation Cannot Reflect Outlook

<ul>
<li>Driven by recovery of Casarte after lockdown removed and premiumisation of product and pricing, <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home (6690 HK)</a> should see sustained healthy earnings growth in 2H22.</li>
<li>We expect room to improve gross margin sequentially as cost pressure subsides in 2H22. Meanwhile, overseas markets still present good expansion opportunities. </li>
<li>Premium valuations are justified by its brand strength, global presence and strong execution capability. Healthy 1H22 should clear market's concerns on impact of weak property market. </li>
</ul>


Driven by recovery of Casarte after lockdown removed and premiumisation of product and pricing, Haier Smart Home (6690 HK) should see sustained healthy earnings growth in 2H22.
We expect room to improve gross margin sequentially as cost pressure subsides in 2H22. Meanwhile, overseas markets still present good expansion opportunities. 
Premium valuations are justified by its brand strength, global presence and strong execution capability. Healthy 1H22 should clear market's concerns on impact of weak property market. 


Haier Smart Home (6690 HK): A Trusted Name that Delivers

China

Haier Smart Home Co. Ltd. manufactures and distributes appliances. The Company produces air conditioners, refrigerators, freezers, small household electrical appliances, and other related products. Haier Smart Home markets its products domestically and internationally.

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Haier Smart Home (690D GR)

Haier Smart Home (6690 HK): Healthy Growth Despite Challenges

Weak share price seems unwarranted despite strong 1H23 results and solid financial position. Market share growth, high-end brand sustainability,...

Osbert Tang, CFA

Haier Smart Home (6690 HK): Value Emerging

Weak share price is unjustified given healthy earnings, net cash position and undemanding valuations. It will benefit from government's push to...

Osbert Tang, CFA

Haier Smart Home (6690 HK): Further Updates from Management

Sales have performed well in "Double-11" festival and Black Friday. Overseas markets have seen positive upgrade demand and digitalisation has...

Osbert Tang, CFA

Haier Smart Home (6690 HK): Opportunity Knocks as Depressed Valuation Cannot Reflect Outlook

HSH's weak share price performance YTD is not justified given good profit trend and strong financial position. Solid 3Q22 and 9M22 results should...

Osbert Tang, CFA

Haier Smart Home (6690 HK): A Trusted Name that Delivers

Healthy profit growth should sustain into 2H22 with upside from better margin as cost pressure subsides sequentially. Premium valuations are...

Osbert Tang, CFA

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