[ET Net News Agency, 17 February 2021] Morgan Stanley initiated coverage on Haier Smart
Home (06690) with an "overweight" rating and a target price of HK$43, derived from a 25x
2021 P/E.
The research house thinks Haier's net margin expansion, benefiting from the SG&A
savings, will become the growth driver in the next two to three years. The upcoming share
incentive plan will also improve the overall corporate governance of the company.
Haier-H is currently trading at 21x 2021 P/E, a 15% discount to Haier-A (Shanghai code:
600690). Morgan expects earnings growth and the narrowing H/A valuation discount to be the
share price drivers.
Morgan expects Haier's 2021/22 revenue to grow 7%/12% and earnings to increase 13%/39%,
implying that the net margin will expand to 5.4%/6%. (KL)