HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<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 (6690 HK)</a> is less exposed to China's real estate market than one would have thought. Despite poor property industry, HSH still generated 12.9% earnings growth in 3Q23.</li>
<li>We are delighted to see further margin pick-up in 2Q23-3Q23, thanks to digitalisation and better efficiency. We believe such a trend can be sustained over the next 12-18 months. </li>
<li>More innovative products will drive market share, and better margin can support a 13% 3-year earnings CAGR. ROE is high at 17-8% despite net cash (8.8% of share price).   </li>
</ul>



Haier Smart Home (6690 HK) is less exposed to China's real estate market than one would have thought. Despite poor property industry, HSH still generated 12.9% earnings growth in 3Q23.
We are delighted to see further margin pick-up in 2Q23-3Q23, thanks to digitalisation and better efficiency. We believe such a trend can be sustained over the next 12-18 months. 
More innovative products will drive market share, and better margin can support a 13% 3-year earnings CAGR. ROE is high at 17-8% despite net cash (8.8% of share price).   


<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>Besides as nationalistic consumption play, <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> also offers attractive investment theses with bright growth prospects. Despite share price rebound, valuations are still not yet reflecting fundamentals.</li>
<li>The surge in demand for refrigerators and freezers during the pandemic-led lockdowns has boosted HSH's business in 4M22 while it will also reap benefits from Rmb depreciation.</li>
<li>The government's support of healthy development of residential real estate market will be positive towards smart home appliance demand which HSH is set to gain from its leadership position. </li>
</ul>


Besides as nationalistic consumption play, Haier Smart Home (6690 HK) also offers attractive investment theses with bright growth prospects. Despite share price rebound, valuations are still not yet reflecting fundamentals.
The surge in demand for refrigerators and freezers during the pandemic-led lockdowns has boosted HSH's business in 4M22 while it will also reap benefits from Rmb depreciation.
The government's support of healthy development of residential real estate market will be positive towards smart home appliance demand which HSH is set to gain from its leadership position. 


<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 (6690 HK)</a>'s acquisition of Carrier commercial refrigeration business is earnings accretive. It will also be strategically positive to its growth outlook. </li>
<li>With net cash of Rmb17.3bn, HSH has no problem funding the deal internally. Instead of earning a single-digit return on cash, the business' 9% earnings yield is attractive. </li>
<li>The transaction will extend HSH's application scenarios from household to commercial while elevating its competitiveness in Europe and allowing it to capture the B-end customers. </li>
</ul>



Haier Smart Home (6690 HK)'s acquisition of Carrier commercial refrigeration business is earnings accretive. It will also be strategically positive to its growth outlook. 
With net cash of Rmb17.3bn, HSH has no problem funding the deal internally. Instead of earning a single-digit return on cash, the business' 9% earnings yield is attractive. 
The transaction will extend HSH's application scenarios from household to commercial while elevating its competitiveness in Europe and allowing it to capture the B-end customers. 


Haier Smart Home (6690 HK): Further Expansion of Footprint

<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

China

Vesync Co Ltd develops smart home platform that connect air quality, health monitoring, kitchen, lighting, and outlet systems.The Company helps users to manage home, save energy, and bring remote items within handheld reach.

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Vesync (2148 HK)

Haier Smart Home (6690 HK): Stays Smart

Haier Smart Home is less exposed to real estate market than expected. Digitalisation and efficiency improvements are driving margin; and...

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): Smart Moves

Haier Smart Home has seen good refrigerators/freezers sales amid the lockdowns and it will also benefit from Rmb depreciation and the government's...

Osbert Tang, CFA

Haier Smart Home (6690 HK): Further Expansion of Footprint

Haier Smart Home's acquisition of Carrier's commercial refrigeration business is financially beneficial and strategically advantageous, expanding...

Osbert Tang, CFA

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Haier Smart Home (6690 HK): Stays Smart

​Haier Smart Home is less exposed to real estate market than expected. Digitalisation and efficiency improvements are driving margin; and...

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): Smart Moves

Haier Smart Home has seen good refrigerators/freezers sales amid the lockdowns and it will also benefit from Rmb depreciation and the government's...

Osbert Tang, CFA

Haier Smart Home (6690 HK): Further Expansion of Footprint

​Haier Smart Home's acquisition of Carrier's commercial refrigeration business is financially beneficial and strategically advantageous, expanding...

Osbert Tang, CFA

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 is less exposed to real estate market than expected. Digitalisation and efficiency improvements are driving margin; and...

Haier Smart Home's acquisition of Carrier's commercial refrigeration business is financially beneficial and strategically advantageous, expanding...