There is still significant uncertainty as to whether Haier’s potential privatization will proceed.
After the Hong Kong stock market on March 26, Haier Electric (HK: 01169) issued an annual results announcement for the year ended December 31, 2019.
The results announcement shows that Haier Electric recorded revenue of 75.88 billion yuan (RMB, the same below) in 2019, a year-on-year decrease of 0.6%; the profit for the year attributable to shareholders of the company was 7.351 billion yuan, a significant increase of 91.2% year-on-year, including The gains from disposal of logistics business.
The one-time income from logistics, which has increased Haier’s annual revenue. After deducting non-cash income of RMB 3.16 billion from disposal of logistics business, net profit attributable to shareholders increased by approximately 9%.
In addition, Haier Electric ’s profit for the year from continuing operations includes the profits of Bingji Group, which is attributable to shareholdings since July 26, 2019.
Haier Electric stated that on July 26, 2019, Haier Electric and Haier Electric International Co., Ltd. completed an asset replacement transaction. Bingji Group has since become an associate of Haier Electric. Bingji Group is an investment holding company. Its non-wholly owned subsidiary, Ri Ri Shun Logistics, is principally engaged in the provision of logistics services.
Data source: Haier Electric’s financial report; Mapping:
Data source: Haier Electric’s financial report; Mapping:
Haier Electric’s revenue is mainly derived from washing machine business, water heater and water purification business, and channel services. In the washing machine business, Haier Electric recorded revenue of 23.40 billion yuan in 2019, a year-on-year increase of 8.9%. At the same time, Haier’s washing machine market share rose by 0.1 percentage point to 14.9%, ranking first in the world.
The proportion of Haier Electric’s classified revenue and performance in 2019 (Image source: Haier Electric’s financial report)
Specifically to the Chinese domestic market, according to data from Zhongyikang, the group ’s market share of the washing machine business ’s offline channel reached 36.3%, a year-on-year increase of 2.77 percentage points; the online channel market share was also 36.3%, a year-on-year increase 1.95 percentage points. Among them, the high-end brand Casa Di grew at an annual rate of nearly 15%, and its sales share in the overall washing machine business further increased to more than 10%. The commander-in-chief brand, which focuses on cost performance, has an annual growth rate of more than 30% and a sales share of more than 8%.
As for the overseas export of washing machines, Haier Electric’s revenue increased by more than 30% year-on-year, and the export business accounted for about 12% of the total sales of washing machines. Currently, Haier’s export markets for washing machines include the Americas, Europe, and South Asia.
Through the water heater and water purifier business, Haier Electric recorded revenue of 8.75 billion yuan, a year-on-year increase of 8.8%. Separately, the year-on-year growth rate of water heater business income was 8%, while the revenue of water purification business increased 13.8% year-on-year. Haier Electric’s water heaters currently cover electric heating, combustion, air energy heat pumps and other categories. Its overall sales share in the industry is 20.5%, and sales account for 21.4% of the industry, an increase of 2.39 and 2.15 percentage points respectively.
At present, Haier Electric’s water purification business mainly includes the provision of household end water purification, household whole house water purification and commercial water purification solutions. According to Zhongyikang’s data, Haier’s water purification business’s online market share in 2019 is 13%, and its offline market share is 7%.
However, Haier’s sales revenue in channel service business decreased compared to the same period last year, reaching 66.47 billion yuan, a decrease of 2.3%.
In 2019, in terms of strategic investment in the logistics sector, Ri Ri Shun, a subsidiary of Haier Group, provided Tmall platform with large-scale home appliance storage, delivery, assembly, last mile and reverse integration services. The speed is 8%. In the field of offline home appliance logistics, Haier Electric replaced the decentralized warehouse and distribution system through the Rishun logistics network. In addition, Ri Ri Shun Logistics further expanded the value-added services of social household appliances, and its revenue in the social household appliances business increased by 35% year-on-year. Xiaomi, Skyworth, Galanz, etc. all served customers.
Under the rapid development of emerging technologies such as 5G and AI, smart home appliances and interconnection have become a trend. In response, Haier Group proposed a “5 + 7 + N” strategy, namely smart living room, smart kitchen,5 living spaces including smart bedroom, smart bathroom, smart balcony, 7 solutions including high-end water use, health management and N smart living scenes.
In December 2019, Haier Electric announced that the company’s controlling shareholder is discussing a privatization plan. If the potential privatization proceeds, the company may withdraw from listing on the Hong Kong Stock Exchange. On March 16 this year, Haier Electric issued another announcement saying that the potential bidder has not yet proposed a concrete potential privatization plan, and there is still significant uncertainty as to whether the potential privatization will proceed.
On March 26, the Hong Kong Hang Seng Index closed down 0.74%, and Haier’s shares closed up 1.41% to HK $ 20.20.
(The title picture is from “Haier” official Weibo)