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>'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

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>1H23 result was far more than good, with industry leading sales and net profit growth, plus a declining inventory.</li><li>And we do think the turnaround is not just here but solid.</li><li>With such an undemanding valuation of 7x FY23E P/E, backed by a 20% sales CAGR during FY22-25E, we maintain BUY.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

1H23 result was far more than good, with industry leading sales and net profit growth, plus a declining inventory.And we do think the turnaround is not just here but solid.With such an undemanding valuation of 7x FY23E P/E, backed by a 20% sales CAGR during FY22-25E, we maintain BUY.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Vesync (2148 HK) – An All-Rounded Beat and a Bullish Outlook

<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>After a fairly disappointing FY22 (sales dragged by Amazon’s de-stocking and net profit hurt by products recall and shipping costs etc.), there are signs of turnaround (sell-in growth had finally picked up and GP margin expansion begins) in 1Q23 for Vesync.</li><li>With undemanding valuation, we maintain BUY.</li><li>1Q23 gross sales growth was at 24%, inline with guidance but way faster than the industry.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

After a fairly disappointing FY22 (sales dragged by Amazon’s de-stocking and net profit hurt by products recall and shipping costs etc.), there are signs of turnaround (sell-in growth had finally picked up and GP margin expansion begins) in 1Q23 for Vesync.With undemanding valuation, we maintain BUY.1Q23 gross sales growth was at 24%, inline with guidance but way faster than the industry.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Vesync (2148 HK) – Signs of turnaround are forming in 1Q23

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): 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

Vesync (2148 HK) – An All-Rounded Beat and a Bullish Outlook

1H23 result was far more than good, with industry leading sales and net profit growth, plus a declining inventory. And we do think the turnaround...

CMB International

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

Vesync (2148 HK) – Signs of turnaround are forming in 1Q23

With undemanding valuation, we maintain BUY.1Q23 gross sales growth was at 24%, inline with guidance but way faster than the industry.

CMB International

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

Vesync (2148 HK) – An All-Rounded Beat and a Bullish Outlook

1H23 result was far more than good, with industry leading sales and net profit growth, plus a declining inventory. And we do think the turnaround...

CMB International

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

Vesync (2148 HK) – Signs of turnaround are forming in 1Q23

With undemanding valuation, we maintain BUY.1Q23 gross sales growth was at 24%, inline with guidance but way faster than the industry.

CMB International

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