Qingdao Haier posted both its FY18 and 1Q19 results last night. FY18 net profit rose 8% to RMB7.4b while 1Q19 net profit increased 9% YoY to RMB2.1b.

FY18 net profit was 3-4% below ours and the street’s expectations, while 1Q19’s net profit was 24% of our full year figure and was within expectations. 1Q19 gross margin went up slightly by 0.2ppt to 29.1%, while net margin was down 0.1ppt to 4.4%.

Since our upgrade to BUY in mid Jan, the stock price has appreciated by 25% to its peak of about RMB19 in early April, but has since lost some ground with the broad-based market correction in China. Still, the stock is still up about 10% since our upgrade.

Pending more details from management, we put our Buy rating and fair value estimate of RMB19.05 under review.

Source: OCBC Research - 30 Apr 2019