Haitian International
　　Interim preview: decent growth
　　We expect sales and net profit growth would be high in 1H24 and slightly lower in 2H24 for Haitian, due to strong new order growth in 1H and low base. We forecast sales and earnings to grow by 22% and 19% YoY respectively in 1H24. We expect the new order growth to slow a bit in 3Q24, but whether 4Q new order growth will be good would depend on the domestic market demand and the timing of the US interest rate cut. If the property or monetary easing policies can reignite the demand, the good new order growth can be retained. Haitian’s interim results would be one of the best in such environment. We also like the long-term outlook of Haitian on its global expansion. We raise sales and net profit growth estimates for 2024 to 17% and 15% YoY. TP is adjusted to HK$28.81 by applying a slightly higher target multiple, 15x 24E P/E from previous 14x to factor in a higher growth outlook. New TP implies 29% upside, reiterate BUY rating.
　　Key Factors for Rating
　　Due to very strong new order in March-June, Haitian’s sales and earnings growth would likely beat our expectation. Haitian guides new order to grow by 40%+ YoY in March, 50%+ in April, 40%+ in May, and 30%+ in June. The strong growth is mainly driven by the decent growth in both domestic and overseas markets. In 1H24, domestic order grew faster than overseas order. Downstream electric vehicle and home appliance secured stable demand while general appliance saw demand more than double. The increase in export of household goods brought a higher demand for PIMM (plastics injecting molding machine).
　　We forecast sales to grow by 22% and net profit to increase by 19% YoY in 1H24. Gross margin is estimated to expand slightly. But the lack of foreign exchange gain in 1H24 might cause slower growth of bottom line compared to top line growth.
　　Haitian is attractive in both short and long term. Haitian has the most developed global expansion plan to build overseas manufacturing capacity, including Malaysia, India, Serbia, and Mexico. Haitian has developed the sales distribution channel in overseas markets in the past 15 years. To build capacity is the second stage of its global expansion plan. Overseas accounted for 39.4% of sales in 2023, and is forecasted to contribute 50% of revenue in the long term, one of the highest among China’s industrial manufacturers.
　　Key Risks for Rating
　　New order has only 1-3 months lead time, thus unpredictable with little visibility.
　　Valuation
　　We raise sales and net profit growth estimates for 2024 to 17% and 15% YoY respectively because the new order is stronger than our expectation. We slightly raise target multiple from 14x to 15x 24E P/E to derive the new TP HK$28.81, to reflect an upward outlook. Haitian is the best play of the global economic recovery on USD interest rate cut. Reiterate BUY rating.