haier electronics group2019/08/29 · this presentation and the accompanying slides (the...

August 2019

Haier Electronics Group海爾電器集團有限公司

2019 Interim Results Presentation2019 Interim Results PresentationAugust 2019

August 2019

2

Disclaimer

This presentation and the accompanying slides (the “Presentation”) which have been prepared by Haier Electronics (the “Company”) do not constitute any offer or invitation to purchase or subscribe for any securities, and shall not form the basis for or be relied on in connection with any contract or binding commitment whatsoever. This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, on the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all-inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of or any omission from this Presentation is expressly excluded.

Certain matters discussed in this presentation may contain statements regarding the Company’s market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. The Company’s actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation, including, amongst others: whether the Company can successfully penetrate new markets and the degree to which the Company gains traction in these new markets; the sustainability of recent growth rates; the anticipation of the growth of certain market segments; the positioning of the Company’s products and services in those segments; the competitive environment; and general market conditions. The Company is not responsible for any forward-looking statements and projections made by third parties included in this Presentation.

August 2019

3

Business Segments

Haier Electronics Group

White goods production

- No. 1 brand in China - Margin expansion - Strong cash generation- Next generation smart

manufactory

- Distribution full range of Haier Products through online and offline

- Franchise mode based offline network

- JV of Haier electronics and Alibaba Group

- Specialized in supply chain management of large format item

*As of July, we have completed the transaction of asset swap between purified water and logistics business. Since the date of completion, purified water business will be merged into our financials, and logistics business will be deconsolidated where we will retain 47% of stake using equity method accounting.

August 2019

4

Agenda

Ø Strategic position

Ø Overall Financial Review

Ø Washing Machine Segment

Ø Water Heater Segment

Ø Channel Services Segment

Ø Logistics Segment


August 2019

5

Haier Electronics strategy plan

Leader of IoT ecosystem brands

Water heating &

Water purification

Water ecosystem

Washing Machine

Internet of Clothing

Product sets

Smart home customization

The 1st IoT eco-brand with smart whole-house water usage solutions

Key differentiation Key differentiation

Positioning Positioning PositioningThe 1st IoT smart home eco-brand with 5 physical area x 7 IoT solutions x N scenarios

Key differentiationExpanding the consumption scenario from product purchasing to life-cycle washing and care solutions

Offering 5+7+N smart home customized services with one-stop shopping experience

Developing household, whole-house and commercial ecosystem, offering all-day and integrated water usage solutions

Clothing Water

Food

SecurityClean airStorage

Care Purchase

Washing

5 Solutions

Information

Entertainment

Purification

New energy

Hot water

Heating

The 1st IoT eco-brand with Internet of clothing

Washing machine

ApparelWash & caredetergent

Balcony

Bathroom

LivingroomBedroom

KitchenSoften

August 2019

6

Strategy planning - development of water ecosystem

►Based on the water usage scenarios and leveraging U+ Cloud platform technology, we aim to provide users with

whole-house healthy drinking water, bathing and heating solutions, as well as health-related data management.

► By organic growth and strategic acquisition, we will devote to offering water using from household to

commercial areas, with all day inclusive services.

5+5+N

5 Solutions

1 Purified drinking water

2 Water softening 3 Sanitized bathing water

5 New energy adoption4 Whole-house heating

All-day & Anywhere

Household&

Commercial

Home

School

Office

Hospital

Restaurant

Airport

6

August 2019

7

Strategy planning - development of Internet of Clothing

►By making alliance with apparel & shoes manufactures, washing & caring detergent providers,

cloth ironing products and smart closet, we aim to build the clothing ecosystem on Smart

Bedroom

Washing

Chemicals ……

Marketing

R&D

Fabric

Logistics

……

Washing

Design

R&D

……

RFID

Design

WM

Deter-gent Clothes

Smart shoe closet

Shoecleaner

Iron machineWashing

machineSmart closet

Professional washing & care

Storage

Care Purchase

Washing

August 2019

8

Agenda








August 2019

9

Overall Financial Review-Revenue & Net profit growth trend

Ø The 5-year growth CAGR of FY14-18 for the group’s overall revenue and net profit attributable to owners of the Company were respectively 6.5% and 13.2%;

Ø NPM consistently gained from 3.6% to 4.41%, with 19H1 NP growth rate of 8.20%.

(￥100mn)Revenue, NP, NPM, NP growth trend yoy

671.34628.26 638.55

787.41852.5

411.8

24.47 27.03 27.85 33.32 37.90 18.06

3.60% 4.30% 4.40% 4.20% 4.40% 4.40%

10.3%

3.0%

19.6%

13.7%

8.2%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

0

100

200

300

400

500

600

700

800

900

FY14 FY15 FY16 FY17 FY18 19H1

Revenue NP NPM NP growth rate

August 2019

10

27.3%

36.2%

10.4%

10.8%

27.6%

36.2%

10.6%

9.0%

Washing Machine

Water Heater

Channel Services

Logistics

18H1 19H1

-1.8ppt

0.2ppt

0.0ppt

0.3ppt

Overall Financial Review-Revenue & GP Breakdown by Segment

Revenue increase by segment *

GP margin change by segment *

* Before inter-segment elimination

Ø The overall profitability of the Group is determined by:

1) the profitability of each segment;

2) the segment revenue mix change

Ø In 19H1, the Group’s gross profit margin increased 0.9ppt to 17.8%, which was a combined result of:

(￥100mn)

Positive Negative

Margin improvement of WM and channel services segments

Margin decrease of logistics segmentRevenue contribution

increase of high-margin segments WM & WH

93.1

32.8

342.7

46.5

98.5

34.5

327.5

49.1

Washing Machine

Water Heater

Channel Services

Logistics

18H1 19H1

+5.8%

+5.1%

-4.4%

+5.6%

August 2019

11

Overall Financial Review-Cash Usage

146.6155.9

0

20

40

60

80

100

120

140

160

180

Dec-18 June-19

Net cash(￥100mn)

1.111.23

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

18H1 19H1

Net CFO/Net income

8.56

5.54

2.02

3.14

0.00

2.00

4.00

6.00

8.00

10.00

12.00

18H1 19H1

Capex

Manufacturing Logistics

(￥100mn)

30.0

21.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Dec-18 June-19

Cash conversion cycle(day)

August 2019

12

Agenda








August 2019

13

WM Business Market - Consumer Upgrading

According to the offline data from China Market Monitor, the consumer upgrading trend continued in 19H1,

• The market share of front-load products in terms of sales value increased by 2.3ppt to 74.1%, while the ASP of front-load products is about 2.6 times of that of top-load ones. (￥4,377 vs. ￥1,711 )

• Products with higher ASP (￥5,500 and above) and higher capacity (10kg and above) have been gaining market share.

Market share changeby price range

Market share changeby product type

Market share changeby capacity

24.8%

74.1%

1.1%

top-load front-load others

* Data source: China Market Monitor (CMM)

(ppt) (ppt)

(15)

(10)

(5)

0

5

10

15

20

6.0KG-

6.1-6.9KG7.0KG

7.1-7.9KG8.0KG

8.1-8.9KG9.0KG

9.1-9.9KG

10.0KG

10.1KG+

(3)

(2)

(1)

0

1

2

3

4

5

6

750- 1000- 1500- 2000- 2500- 3000- 3500- 4000- 4500- 5500- 6500- 6500+

August 2019

14

WM Business Market – Haier’s Market Share

For 19H1,• Haier ranked No. 1 both online and offline in terms of

sales value, and the online and offline market shares further climbed by 0.68ppt and 2.67ppt yoy respectively.

• According to the offline data of CMM, Haier’s ASP (￥3,348) was about 20% higher than the domestic average (￥2,791), and for the high-end market with ASP higher than ￥5,500, Haier accounted for about 45% of total market share.

• For the market with ASP higher than ￥10,000, Casarte brand accounted for 75% of the total market share, which was 6ppt higher yoy, according to CMM offline.

Market share by price range (CMM-offline)


19H1 online market share change in terms of sales amount

19H1 offline market share change in terms of sales amount

36%

17%

10% 9% 8%

3% 3% 2%

2.67

-0.31

-2.35

2.58

-0.21 -0.37-1.25 -0.58

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

0%

5%

10%

15%

20%

25%

30%

35%

40%

Haier

Little

Swan

Siemens

Midea

Panaso

nicBosch

Sanyo

Samsu

ng

market share

market share change yoy (ppt)

34%

17%15%

7%3% 3% 2% 2%

0.68

-0.53

3.85

-3.56

0.01

-0.34

0.12

-1.68

-4.00-3.00-2.00-1.000.001.002.003.004.005.00

0%

5%

10%

15%

20%

25%

30%

35%

Haier

Little

Swan

Midea

Siemens

TCL

Panaso

nic

Hisense

Sanyo

market share


33% 34%30%

45%

13%

21%17% 18%18%

12%

7%

2%0%

5%

18%

12%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

ASP<2500 2500≤ASP<3500 3500≤ASP<5500 ASP≥5500

Haier

Little Swan

Midea

Siemens

low-mid-end mid-end mid-high-end high-endlow-mid-end mid-end mid-high-end high-end

August 2019

15

58%

82%

26%

88%

42%

11%

43%

12%

7%

31%

0% 20% 40% 60% 80% 100%

by product type

by brand

by channel

by region

WM Business Composition

* In terms of sales amount

August 2019

16

WM Financial Review-Revenue Mix Change

Revenue mix change by product type

Revenue mix change by brand Revenue mix change by channel

The revenue mix continued to optimize in 19H1,

• With a growth rate about 4.6% of front-load products, the blended ASP and sales amount further increased.

• The revenue increase for Leader brand was around 22.5%, which helped to strengthen our market status in low-to-mid-end market.

43.1%

42.3%

56.9%

57.7%

1 8 H 1

1 9 H 1

Top-load Front-load

83.1%

82.4%

11.2%

10.8%

5.7%

6.8%

1 8 H 1

1 9 H 1

Haier Casarte Leader

22.4%

26.0%

77.6%

74.0%

1 8 H 1

1 9 H 1

online offline

August 2019

17

For 19H1,• On a high basis of FY18, washing machine segment

maintained a fast revenue growth of 5.8%, with the revenue of the domestic part increased by 3.71% and the exports' part by 23.30%.

• Volume increase was the major driver for top-line growth in 19H1. Specifically, for Leader brand, volume increase contributed more than 91.4% of the sales growth.

-6.4%

20.2%

0.9%

6.4%

1.9%

1.3%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Casarte Leader Haier

volume ASP

Revenue growth

WM Financial Review-Revenue Growth

(￥100mn)

3.9%

1.6%

0.7%

-0.5%-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

front-load top-load

volume ASP

Revenue increase breakdown by volume and ASP

for each brandfor each product type

83.3 86.4

9.8 12.0

0 10 20 30 40 50 60 70 80 90

100

18H1 19H1

domestic exports

3.71%

23.30%

August 2019

18

WM Financial Review-Profitability

Segment results margin change* The positive contribution from expenses items refers to expenses ratio decline.

卡萨帝纤诺洗干组合

8.6% 0.3% 0.4% 0.1%0.6% 9.0%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

18H1 GPM S&D exp./Revenue G&A exp./Revenue others 19H1

Margin change Main factors

GPM increase Gain from raw material prices and lower VAT rate; trade off from new plants not reaching full capacity.

S&D exp. % More exp. to enlarge market expension

G&A exp. % More R&D exp.

others More gov. subsidy

卡萨帝纤见空气洗

August 2019

19

Agenda








August 2019

20

43%

53%

2%

2%

electric

gas

heat-pump

others

WH Business Market - Consumer upgrading

Market share changeby product type

Market share change by price range

Market share change (gas products only)by capacity

According to the offline data from China Market Monitor, we see a clear consumer upgrading trend in 19H1,

• The market share of gas products in terms of sales value maintained at around 53%, while the ASP of gas water heater is about 1.8 times of that of electric ones. (￥3,125 vs. ￥1,777 )

• Valuable products with lower ASP (￥1,500 and below) and gas products with higher capacity (12L and above) have been gaining market share.

(ppt) (ppt)

-2

-1

-1

0

1

1

2

600-800-

1000-1500-

2000-2500-

3000-3500-

4000-5000-

6000-7000-

8000-8000+

-8

-6

-4

-2

0

2

4

6

8

10

6L-6.1-7L

7.1-8L8.1-9L

9.1-10L

10.1-11L

11.1-12L

12.1-13L

13.1L-16L

16.1L+


August 2019

21

WH Business Market – Haier’s Market Share

For 19H1,• Haier ranked No. 2 both online and offline in

terms of sales value, and the online and offline market shares further climbed by 2.39ppt and 1.4ppt yoy respectively.

According to the offline data of CMM • Haier’s ASP (￥2,255) was about 9% higher than

the domestic average (￥2,068)• Haier’s market share for electric and gas products

were 29.5% and 10.4% respectively in 19H1.

Haier’s Market share increase by product type (CMM-offline)


19H1 online market share change in terms of sales amount

19H1 offline market share change in terms of sales amount

23%

19%

15%

8% 7%6%

4%-2.2

1.41.0

0.1 0.1

-0.6 -0.1

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

0%

5%

10%

15%

20%

25%

AOS Haier Midea Vanward Macro Rinnai Noritz

market share


27.1%

9.2%

2.4%

1.2%

E L E C T R I C G A S

18H1 Increase

29.5%

10.4%

25%24%

12%

7%6% 6%

3%

0.80

2.39

-1.50

-0.31

0.410.02

-1.53-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

2.50

3.00

0%

5%

10%

15%

20%

25%

30%

Midea Haier AOS Vanward Macro Rinnai Noritz

market share


August 2019

22

67%

81%

23%

21%

6%

56%

12%

13%

21%

0% 20% 40% 60% 80% 100%

by product type

by brand

by channel

WH Business Composition

* In terms of sales amount

August 2019

23

67.0%

67.4%

20.7%

21.3%

12.3%

11.3%

1 8 H 1

1 9 H 1

Electronics Gas Heat Pump&Solar

WH Financial Review-Revenue Mix Change

Revenue mix change by product type

Revenue mix change by brand Revenue mix change by channel

The revenue mix continued to optimize in 19H1,

• With a growth rate (about 8.2%) of gas products, the blended ASP and sales amount further increased.

• Comparing with FY18, Casarte and Leader brands both achieved accelerating top-line growth, which were about 11.6% and 20% respectively, much higher than the 1.5% growth rate of Haier brand, which helped to strengthen our market status in both higher-end and valuable products market.

82.5%

77.3%

17.5%

22.7%

1 8 H 1

1 9 H 1

offline online

83.5%

81.4%

5.1%

5.5%

11.4%

13.1%

1 8 H 1

1 9 H 1

Haier Casarte Leader

August 2019

24

7.7% 8.1% 7.9%

0.4%4.5%

-2.3%-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

gas heat-pump electric

volume ASP

26.9

32.8 34.5

05

10152025303540

17H1 18H1 19H1

Revenue growth

For 19H1,• Revenue of Water heater segment achieved

RMB3.45bn, up 5.1% yoy, which was higher than the industry average.

• Volume increase was the major driver for top-line growth in 19H1. Specifically, for Leader brand, volume increase contributed around 95% of the sales growth.

WH Financial Review-Revenue Growth

(￥100mn)

Revenue increase breakdown by volume and ASP

for each brandfor each product type

+21.9%+5.1%

-5%

19%

4%

17%

1%

-3%

-10%

-5%

0%

5%

10%

15%

20%

25%

Casarte Leader Haier

volume ASP

August 2019

25

WH Financial Review-Profitability


11.4% 0.0% 0.1% 0.1% 0.2% 11.4%

0%

2%

4%

6%

8%

10%

12%

14%



GPM no change Gain from the steady decline in raw material prices and the decline in VAT rate; trade off from more offering to the end users & product mix change.

S&D exp. % Retail transformation & network expansion

G&A exp. % Mainly due to the higher cost in new product design, development and the R&D personnel expenses.

August 2019

26

Agenda








August 2019

27

3%

-14%

5% 3%

-31%

16%

-2% -8% -4% -1%

-13%

-2%freezer air-con. washing machine water heater TV others

Haier industryGrowth rate comparison by product type

Home Appliance Industry

9.6%

2.5%

-2.6%

-9.4%

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0%

Haier

industry

offline online

Growth rate comparison by channel

Haier’s revenue growth is higher than industry in major product type.

Note:• Retail growth rate data by channel comes

from CMM.• As for the sales value growth rate data by

product type, Haier’s data comes from company report, industry data from CMM

August 2019

28

wholesale price

ex-factory price

retail price

product cost

product GP

ex-factory GP

wholesale GP

Channel Services Flowchart

Manufacturer

Channel services

to B

Haier retail partner

Haier specialty store

Haier multi-brand store

Shunguang mobile store

Online Haier specialty store

to C

Flagship storeOfficial website eHaier

August 2019

29

Revenue growth

Channel Services Financial Review-Revenue Growth

Online and offline retail revenue growth from CMM

• On a high base of 18H1, 19H1 revenue recorded a growth rate of -4.4%.

• Online revenue realized a fast growth of 4.8% and its revenue share was recorded of 27%.

(￥100mn)

-3%

10%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

offline online

291.8

342.7

327.5

260

270

280

290

300

310

320

330

340

350

17H1 18H1 19H1

+17.4%

-4.4%

August 2019

30

71%

26%

3%

70%

27%

3%

offline online Third-party

Total revenue breakdown

18H1 19H1

offline

online

Third-party

Channel Services Financial Review-Revenue Breakdown

• With a growth rate of around 5%, the revenue share of WM further increased from 21% to 23% in 19H1, and the revenue share of Air-con. and TV declined by 3ppt and 3ppt due to negative growth rate.

• The online business further gained 1ppt to 27% of the total revenue with the growth rate of 4.8%.

Revenue breakdown by product

28%

30%

28%

25%

21%

23%

9%

10%

9%

6%

5%

6%

0% 20% 40% 60% 80% 100%

18H1

19H1

Refrigerator & Freezer Air-conWashing machine Water heaterTV Kitchenware & others

August 2019

31

Channel Services Financial Review-Profitability



GPM increase Product mix optimization;

S&D exp. % the investment of Smart Home

1.8%0.2% 0.3%

0.1% 0.0% 1.8%

0%

1%

1%

2%

2%

3%


August 2019

32

Agenda








August 2019

33

19.0%

24.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

18H1 19H1

self-built warehouse rate

Logistics Financial Review

Overall revenue growth

40.3

46.549.1

0.0

10.0

20.0

30.0

40.0

50.0

60.0

FY17 FY18 FY19

+15.4%+5.6%

(￥100mn)

Revenue growth by sub-segment

30.8

8.3 7.6

2.4

7%

47%

-18% -8%

-30%-20%-10%0%10%20%30%40%50%60%

0

5

10

15

20

25

30

35

Home Appliance

Household

Supply

chain

man

agement

New industr

y

revenue yoy growth

(￥100mn)

4.705.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

FY18 19H1

warehouse space(million sq. meters)

August 2019

34

Logistics Business Operational Review

Household

* The positive contribution from expenses items refers to expenses ratio decline.

4.8% 1.8%

0.2%

0.5% 0.0% 3.7%

0%

1%

2%

3%

4%

5%

6%


Segment results margin change

August 2019

35

haier electronics group2019/08/29 · this presentation and the accompanying slides (the...

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