Lyon: Lower Haier Smart Home(06690) target price to HKD 25; China and US markets both weaken in performance

Zhitong Finance APP learned that Lyon released a research report stating that, due to weakening demand in China and the United States, it has lowered Haier Smart Home’s (06690) net profit forecasts for this year and next by 25% and 21%, respectively. The target price for A-shares of Haier Smart Home (600690.SH) was reduced from 34 yuan to 28 yuan; the target price for H-shares was lowered from HK$32 to HK$25. The firm remains optimistic about Haier’s high-end positioning but believes the company needs to emerge from the cyclical lows in these two markets to realize its value; it maintains a “Outperform the Market” rating.

In the fourth quarter of last year, revenue declined 7% year-over-year to 68 billion yuan, and net profit fell 39% to 2.2 billion yuan, in line with the bank’s expectations. During this period, revenue in the Chinese market decreased by 15% year-over-year, mainly due to the trade-in-for-upgrade policy which accelerated demand release ahead of previous quarters. Sales in the U.S. remained roughly flat, but due to weak market conditions, the company was unable to pass on increased costs (including tariffs) to consumers, leading to a significant decline in profit margins.