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Can the 36-year-old Haier encounter a "midlife crisis" restructuring and listing usher in a new life?

via:博客园     time:2020/9/16 10:01:41     readed:64


By Wang Dake

Source: business data

2020 is a year of change for Haier.

On July 31 this year, Haier announced the privatization of Haier electrical appliances, more than a month later, Haier Zhijia chose to integrate Haier electrical business,

Behind the capital market reform is Haier's adjustment of its own strategy and the deep integration and combing of the two companies. Haier Group was founded in 1984,36 years after the reorganization, in the traditional home appliances decline, overseas markets to support the business half of the time, can give

Why is this reorganization?

Haier Zhijia (predecessor),1993


(picture from Guotai Junan Securities)

According to the latest prospectus submitted by Haier Zhijia, the division of business fields between Haier Zhijia and Haier electric appliances has led to a large number of related party transactions between Haier Zhijia and Haier electric appliances.

For example, Haier Electric purchased 70% of raw materials, components and finished products from Haier Zhijia. After the reorganization of the company, the existing related party transactions in the original R & D, procurement and sales will be eliminated, which will help reduce the management and compliance costs.

The financial performance of the two companies is also different, in 2018,2019 and the first half of 2020, Haier Zhijia's income growth rate exceeded Haier electrical appliances revenue growth rate of 8.2,12.1 and 3.5 percentage points, respectively.

From 2017 to 2019, the historical average profit margin and average return on equity of Haier Zhijia's going concern business were 0.2% and 3.4% higher than that of Haier electric. In addition, the dividend payout ratio of Haier Zhijia from 2017 to 2019 was maintained at 28%.

There is a certain overlap between Haier electric appliances and Haier Zhijia in the operation links. Once the reorganization is completed, the expanded Haier Zhijia group will realize the resource sharing and capacity building of Haier electric appliances and Haier Zhijia products across the whole industrial chain of R & D, procurement, manufacturing and sales, so as to promote technical cooperation, achievement sharing and optimize the operation level.

On the one hand, by integrating the R & D, procurement, manufacturing and sales channels of Haier Zhijia, Haier Electric's washing machines, water heaters, water purifiers and other products can further achieve significant synergy and profit. On the other hand, business process optimization measures such as reducing internal settlement and simplifying approval process are expected to reduce sales and management costs.

Haier Zhijia said that the reason why it chose to carry out internal integration of the company is mainly because it has built a global operation system through years of strategic investment and integration. In the stage of the ecological brand strategy of the Internet of things, it is necessary to break through the advantageous resources of the two listed companies, straighten out the company structure, and carry out deep business integration and operational efficiency improvement.

The market share is the first, it is difficult to improve the profit level

According to Euromonitor, Haier took three retail sales rankings and market share in China in 2019



Nevertheless, if Haier Zhijia's financial data is compared with Gree and the United States, Haier Zhijia's net profit margin is really not high, in 2019, Haier Zhijia's net profit margin is 6.2, Gree is 12.2, and the United States is 8. Not only that, Haier's revenue scale also lost to the other two companies in 2019.



Haier Zhijia lost to the other two peers in profit margins, mainly because in the white electricity industry, air conditioning gross profit margin is the highest, followed by refrigerators, laundry machines, but Haier Zhijia's revenue in the air conditioning sector is only 11.3%, although the market share is third, but leaving it with only 12% market share. The top two in the air conditioning industry stole 56.5% of the market share.

The main reason why Gree's net profit margin ranks first among the three household appliance enterprises, reaching 12.2% in 2019, is mainly because Gree's main force lies in air conditioning. In 2019, Gree Electric Appliances occupied the first place in the offline market share of domestic air conditioning in China, with retail sales accounting for 36.83%.

According to the analysis of securities companies, different from Midea and Gree, although Haier Zhijia has a large scale, its profit side has not been fully released. The complex structure and low efficiency at the bottom cause high costs. If the enterprise structure can be reformed and the market outside Shanghai begins to gradually enter a stable period, it will be conducive to expanding the company's profit space.

However, it is not difficult to see from the income sources of Haier Zhijia that although the company occupies the first place in the market for laundry equipment and refrigeration equipment, these businesses are not the main source of income of the company, accounting for 23.2% of the total. However, the overseas smart family business is the real one that accounts for a large proportion of Haier Zhijia's income.


In the past decade, Haier Zhijia has been taking the lead in the market by continuously acquiring overseas brands.

In 2011, Haier Zhijia purchased Sanyo Electric's white appliance business in Japan and some parts of Southeast Asia with JPY 10 billion. In 2012, Haier Zhijia purchased New Zealand's national treasure class home appliance Fisher & payck with NZ $927 million, acquired general electric appliance business with us $5.58 billion in 2016, and purchased European home appliance company candy with EUR 475 million in 2018.

According to Euromonitor, in terms of retail sales, Haier's market share in the global household electricity industry is the first, reaching 14.7% in 2019.

As of June 30, 2020, Haier Zhijia has operated 10 R & D centers, 109 manufacturing centers (15 of which are specially designed interconnected factories), 108 operation centers in the world, and nearly 130000 sales outlets in overseas markets.


Although Haier Zhijia performs well in overseas markets, it is because of the acquisition that Haier Zhijia's financial expenses are extremely high. On the other hand, it is difficult for the company's profit margin to be improved in the short term.

Run smart home

The competition pattern of the traditional home appliance industry has been basically shaped, and the situation of negative growth appeared last year. According to the data released by the China Household Appliance Research Institute and the national household appliance industry information center, the domestic market retail scale of the home appliance industry in 2019 will be 803.2 billion yuan, down 2.2% year-on-year.

However, with the transformation of industrial structure, intelligent, high-end and healthy products may be the main characteristics of market upgrading and development in the future.

At present, the penetration rate of smart home market is only less than 10%, and all major brands are competing with smart home. However, for some household appliance enterprises with single category, they may not be able to beat those with rich product lines.

In traditional home appliance enterprises, Haier Zhijia has been very active in the layout of this track. In 2019, Haier Zhijia's sales revenue of complete sets of smart home products accounted for 27.5% of China's smart home business income, an increase of 5.4% compared with that in 2018, reaching 10.6 billion yuan. At the same time, the number of Internet appliances activated by Haier Zhijia increased by 68% compared with that in 2018. In June 2020, the number of active users of Haier Zhijia app reached 4.29 million.

Haier Zhijia said that after the privatization of Haier Electric, Haier Group will take this opportunity to fully integrate into the Haier experience cloud platform, and the company developed the cloud platform system in 2019, mainly based on AI IoT technology.


In fact, Midea, Gree and Xiaomi have been focusing on IOT for many years. Xiaomi, in particular, has not only launched its own speaker, bracelet and other products, but also built an IOT ecological chain through investment.

Xiaomi reported that in 2019,235 million IoT equipment had been connected, with a partial income of 62.1 billion yuan for IoT and consumer products, an increase of 41.7 yuan over the same period last year. This growth rate and operating income do make traditional home appliances enterprises envy.

For Gree, Midea and Haier smart home, it is not so easy to really enter the IOT smart home market. According to IDC's global quarterly smart home device tracking data, video entertainment devices will take the lead in various smart home devices, but there are not many opportunities and choices left for traditional home appliance players like Gree, Midea and Haier Zhijia.

Hong Kong Electric Appliance stocks are not favored

Although Haier Zhijia has broken through Hong Kong stock market for the second time, many investors are familiar with the name of Haier electric appliances. However, compared with the A-share market, investors in Hong Kong stock market do not favor home appliance stocks. The performance of TCL, Skyworth and Hisense in the H-share market is very ordinary, and the P / E ratio is 5-8 However, in contrast, Midea, Gree and Haier Zhijia are listed in a shares, with P / E ratios of more than 10 times.



If Haier Zhijia again landed in the Hong Kong stock market, the entire plate activity and valuation, are very adverse factors.

Some data show that the price-to-earnings ratio of the whole plate of household appliances listed in Hong Kong is only 7.44 times, the total turnover of the whole plate is only 270 million, and the turnover of Haier Zhijia in A shares is already 616 million. Even if Haier is listed in H shares, its volume and valuation may not be optimal.

To attract Hong Kong investors, Haier's family let go

Although Haier Zhijia tried to play a good overseas market card, but the traditional home appliances industry has indeed begun to lonely. 36 years old

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