haier electronics group co.,ltd · 2020. 8. 21. · this presentation and the accompanying slides...

Haier Electronics Group Co.,Ltd海爾電器集團有限公司 (stock code: 01169)

2020 Interim Results PresentationAugust 2020

August 2019

2

Disclaimer

This presentation and the accompanying slides (the “Presentation”) which have been prepared byHaier Electronics (the “Company”) do not constitute any offer or invitation to purchase or subscribefor any securities, and shall not form the basis for or be relied on in connection with any contract orbinding commitment whatsoever. This Presentation has been prepared by the Company based oninformation and data which the Company considers reliable, but the Company makes norepresentation 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 inrespect 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’smarket opportunity and business prospects that are individually and collectively forward-lookingstatements. Such forward-looking statements are not guarantees of future performance and aresubject to known and unknown risks, uncertainties and assumptions that are difficult to predict. TheCompany’s actual results, levels of activity, performance or achievements could differ materially andadversely 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 Companygains traction in these new markets; the sustainability of recent growth rates; the anticipation of thegrowth of certain market segments; the positioning of the Company’s products and services in thosesegments; the competitive environment; and general market conditions. The Company is notresponsible for any forward-looking statements and projections made by third parties included in thisPresentation.

August 2019

3

Business Segments

Haier Electronics Group

Washing Machine Water heater & Water purifier

Channel Services

- 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-model based offline

network

August 2019

4

Agenda

➢ Overall Financial Review

➢ Washing Machine Segment

➢ Water Heater & Water Purifier

Segment

➢ Channel Services Segment

➢ Proposed Privatisation

Transaction Update


August 2019

5

574.0 578.7

713.2 763.4 758.8

145.7

205.1

26.8 28.0 33.8 38.4 41.9 5.0 8.4

4.7% 4.8%

4.7%

5.0%

5.5%

3.4%

4.1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

-

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

FY 15(restated) FY 16(restated) FY 17(restated) FY 18(restated) FY19* 20Q1 20Q2

revenue NP NPM

2015-2020H1 Financial Review

Growth trend from FY15 to 20H1

➢ The 5-year growth CAGR of FY15-19 for the group’s overall revenue and net profit

attributable to owners of the Company were respectively 7.23% and 11.82%;

➢ NPM consistently gained from 4.7% to 5.5% from FY15 to FY19 and decreased to

3.8% in 20H1 with NP growth rate of -27.3% due to the influence of COVID-19.

(¥100mn)

Note 1: The NP of FY19 excluding 3.16 billion RMB one-off disposal gain of logistic business

FY19 1

August 2019

6

54.2

21.3

184.2

205.1

WashingMachine

WH&WP

ChannelServices

Total

42.1

18.1

128.0

145.7

WashingMachine

WH&WP

ChannelServices

Total

2020H1 Quarterly Financial Review –

Revenue breakdown by segments

Q1 Revenue breakdown by segments1

Q2 Revenue breakdown by segments1

Note1: Before inter-segment elimination

(¥100mn)

(¥100mn)

-17.4%

-10.8%

+13.2%

+12.7%

Washing Machine

22%

WH&WP10%Channel

Services68%

Washing Machine WH&WP Channel Services

-22.4%

-22.4%

Washing Machine

21%

WH&WP8%

Channel Services

71%

Washing Machine WH&WP Channel Services

+14.1%

+10.3%

August 2019

7

5.6

3.8

4.9

WashingMachine

WH&WP

ChannelServices

Washing Machine

39%

WH&WP26%

Channel Service

35%

Washing Machine

21%

WH&WP9%

Channel Services

70%

96.3

39.5

312.2

350.8

WashingMachine

WH&WP

ChannelServices

Total

-4.7%

2020H1 Financial Review –

Revenue & EBIT breakdown by segments

Revenue breakdown by segments1

EBIT breakdown by segments1

Note1: Before inter-segment elimination

(¥100mn)

(¥100mn)

-2.2%

-0.5%

-5.1%

-37.0%

-17.6%

-14.7%

August 2019

8

148170

3524

0

50

100

150

200

250

Dec-19 June-20

Net cash & financial products

Net cash Financial products

Total:183 Total:194

2020H1 Financial Review - Cash Usage

(¥100mn)

41

33

0

5

10

15

20

25

30

35

40

45

Dec-19 June-20

Cash conversion cycle(Days)

5.54 6.16

0

1

2

3

4

5

6

7

8

9

10

19H1 20H1

Capex

Manufacturing Logistics

(¥100mn)

3.14

1.23

1.33

1

1.05

1.1

1.15

1.2

1.25

1.3

1.35

1.4

19H1 20H1

Net CFO/Net income

August 2019

9

Agenda




Segment



Transaction Update

• Market

• Business Composition

• Financial Review


August 2019

10

WM Business Market - Consumption Trend

According to the offline data from China Market

Monitor, despite the impact of COVID-19, the

consumption upgrade trend continued in 2020

• Market share of front-load products in terms of

sales value increased by 4.2pcts to 78%, while the

ASP of front-load products is about 2.6 times of

that of top-load ones (¥4,550 vs. ¥1,758 )

• Products with higher ASP (¥6,000 and above) and

higher capacity (10kg and above) have been

gaining market share

Market share change

by price range

Market share by product types

Market share change

by capacity

Note: The data source is China Market Monitor (CMM)

(pct) (pct)

21%-3.9pct

78%+4.2pct

1%

top-load front-load others

(3)

(2)

(1)

0

1

2

3

4

5

6

(10)

(5)

0

5

10

15

August 2019

11

18%

13%

7%

3% 2%2%

1%

4.9

1.6

-1.6

0.7

-0.3

-1.1

0.0

-1.6

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0%

5%

10%

15%

20%

25%

30%

35% market share

market share change yoy (pct)

WM Business Market – Haier’s Market Share

For 20H1:

• Haier ranked No. 1 both online and offline in terms

of sales value, and the online and offline market

shares further climbed by 4.9pcts and 3.6pcts yoy

respectively

• According to the offline data of CMM, Haier’s ASP

(¥3,525) was about 14% higher than the domestic

average (¥3,082), and for the high-end market with

ASP higher than ¥6,000, Haier accounted for about

50% of total market share

Market share by price range (CMM-offline)

20H1 online market share change in terms of sales value

20H1 offline market share change in terms of sales value

39%

38% 38%

31%

49%

13%

18% 20%17%

15% 14%

6%2%0%

8%

18%

12%

0%

10%

20%

30%

40%

50%

60%

ASP<2500 2500≤ASP<4000 4000≤ASP<6000 ASP≥6000

Haier

Little Swan

Midea

Siemens

39%

17%

10%8% 8%

3%1%

2%

3.6

-0.1

0.1

-0.5 -0.1 0.0

-1.4

-0.6

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

market share



August 2019

12

63

78

9398

96

0

20

40

60

80

100

120

16H1 17H1 18H1 19H1 20H1

Revenue growth

• In 20H1, washing machine revenue decrease by

2.2% to RMB 9.6 billion, higher than 20H1 industry

average of -16.0% according to CMM (online &

offline combined)

• The 16-20H1 CAGR is 11.1%

• Sales volume of Casarte and Leader brand grew by

about 8% and 27% respectively

WM Financial Review - Revenue Growth

(¥100mn)

Revenue increase breakdown by volume and ASP

for each brandfor each product type

-15%

-10%

-5%

0%

5%

10%

15%

20%

front-load top-load

3%1%

-11% -11%

volume ASP

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Casarte Leader Haier

8%

27%

-2%

-10%

0% -11%

volume ASP

August 2019

13

WM Financial Review - Revenue Mix Change

Revenue mix change by product type

Revenue mix change by brand Revenue mix change by channel

• Leader brand’s revenue share increased by 3pct with

growth rate of above 25%

• Thanks to the contactless service provided by the

e-commerce channels, online revenue gained share

to 38% due to online traffic surge42%

42%

58%

58%

19H 1

20H 1

Top-load Front-load

84%

79%

7%

10%

11%

11%

19H 1

20H 1

Haier Leader Casarte

51%

47%

23%

15%

26%

38%

19H 1

20H 1

Haier franchise stores KA channels online

August 2019

14

Margin change Main factors

GPM decrease Mianly impact from COVID-19:1. Lower capacity utilization rate and higher unit manufacturing costs2. ① Declined offline traffic volume and less than expected growth rate of high-end products ②The increased proportion of mid-to-low-end products

S&D exp. % More exp. to warehouse and logistics given the unification of warehousing and distribution

G&A exp. % More R&D exp. Less conference fee and office expense

Others Supplier penalty fee decreased

9.0% -2.6%

-0.6% +0.3% -0.3%5.8%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

19H1 GPM S&D exp./Revenue G&A exp./Revenue others 20H1

WM Financial Review - Profitability

Segment results margin change

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

August 2019

15

Agenda




Segment



Transaction Update

• Market

• Business Composition


➢ Water Heater&Water Purifier Segment

August 2019

16

WH Business Market – Consumption Polarization

Market share

by product typeAccording to the offline data from China Market

Monitor

• Market share of gas products in terms of sales

increase by 1pct to 54% while the market share of

electric products in terms of sales remained the

same as 44%

• Although the 20H1 year on year growth rate of

overall offline market sales value declined, the

month by month growth rate has shown growing

momentum since March

44%54%

2%

electric

gas

others

Overall offline market sales value change by month

57,192

16,655

48,238

61,856

81,149 83,828

-24.0%

-68.6%

177.1%

27.8%20.2%

3.4%

-36.2% -54.5% -57.4%

-21.9%-14.3% -8.9%

-100.0%

-50.0%

0.0%

50.0%

100.0%

150.0%

200.0%

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

1/1/2020 2/1/20202 3/1/20203 4/1/20204 5/1/20205 6/1/20206

Sales Value Month on Month Year on Year


August 2019

17

28%

27%

19%

3%3%

19%35%

26%

20%

3%

3%

12%

Haier AOS Midea Vanward Macro Others

18%

12%

10%

11%11%

38%

18%

17%

14%11%

10%

30%

AOS Media Haier Vanward Macro Others

19H1

23.5%

21.6%

14.9%

7.5%6.7%

5.9%

2.9%

4.3

-1.0

-1.5-0.1

-0.5

+0.4

-1.4 -2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

0%

5%

10%

15%

20%

25%

Haier AOS Midea Vanward Macro Rinnai whirlpool

market share


WH Business Market – Haier’s Market Share

Online

20H1 Market Share Change by Channel

Offline

20H1 Market Share Change by Product type

Electric Gas

19H1 20H1 20H1

27.9%25.8%

9.8%

6.6% 6.0% 5.2%

+2.5

+1.8

-2.2

-0.8 -0.2-0.4

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Media Haier AOS Vanward Macro Rinnai

market share



August 2019

18

• Volume was the major driver for each product type

in 20H1

• Heat-pump products achieved about 11% revenue

growth.

• Sales volume of Casarte and Leader brand grew by

over 77% and over 7% respectively

WH Financial Review - Revenue increase breakdown

Revenue increase breakdown by volume and ASP

for each brandfor each product type

-25%

-15%

-5%

5%

15%

25%

35%

heat-pump gas electric

23%

5%

13%

-10%-12% -13%

volume ASP

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Casarte Leader Haier

77%

7% 10%

-9% -12% -13%

volume ASP

August 2019

19

23%

29%

61%

59%

16%

13%

19H 1

20H 1

online Haier franchise stores KA channels

WH Financial Review - Revenue Mix Change

Revenue mix change by product type

Revenue mix change by brand Revenue mix change by channel

For 20H1:

• Solar&Heat Pump product achieved higher revenue

percentage

• Casarte gained noticeable revenue share

• The contribution of online revenue rose by 6pct67%

67%

22%

20%

11%

13%

19H 1

20H1

Electronics Gas Solar&Heat Pump

81%

79%

14%

13%

5%

8%

19H 1

20H1

Haier Leader Casarte

August 2019

20

84%

6%

5%3% 2%

RO ultra and nano filtration POE water dispenser drinking heater

(6)

(4)

(2)

0

2

4

6

8

WP Business Market Landscape

Market share change

by price range

Market share by product types

(pct)

According to the offline data from China Market

Monitor of 2020H1,

• the ASP of RO products is about 1.2 times of that of

ultra and nano filtration ones. (¥4,229 vs. ¥3,482 )

• Products with ASP above ¥6,000 and less than 3000

have been gaining market share, meaning that

consumers’ demand showed polarized trend

-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

RO ultra andnano

filtration

waterdispenser

drinkingheater

POE

Market share change

by product type(pct)


August 2019

21

28%

15%13% 12%

10%

2%

4.1

-6.9

-2.1

-0.9

3.5

-2.2

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

0%

5%

10%

15%

20%

25%

30%

AOS Midea anjier qinyuan Haier whirlpool

market share


WP Business Market – Haier’s Market Share

According to the offline data of CMM,

For 20H1,

• Haier ranked No.1 offline and No.5 offline in terms

of sales value, and the online and offline market

shares further climbed by 1pct and 3.8pct yoy

respectively.

• Haier’s ASP (¥3,478) was approximately equal to

the domestic average (¥3,365)

20H1 online market share change in terms of sales value

20H1 offline market share change in terms of sales value Market share by price range (CMM-offline)

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

25%21%

13%

2%3%

11%

33%

65%

12%15% 15%

7%

17% 18%

11%

2%

10%13%

12%

3%0%

10%

20%

30%

40%

50%

60%

70%

ASP<3000 3000≤ASP<4000 4000≤ASP<6000 ASP≥6000

Midea

AOS

Anjier

Qinyuan

Haier

14% 14%

11%10%

9%

4%

1.0

-1.7

1.7

-0.3-0.1

-2.6

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

0%

2%

4%

6%

8%

10%

12%

14%

16%

Haier Media Xiaomi qinyuan AOS anjier

market share



August 2019

22

11.5% -1.4%

-1.7%

-0.1%+1.2% 9.5%

0%

2%

4%

6%

8%

10%

12%

14%


WH&WP Financial Review - Profitability


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


GPM decrease Because of COVID-19, manufacturing costs increasedThe proportion of mid-to-low-end products has increased

S&D exp. % More exp. to warehouse and logisticsMore exp. to sales network of whole-house water using and network of BWT channel

G&A exp. % More R&D exp.More exp. on new factoriesLess conference fee and office expense

Others Government rewards increased

August 2019

23

Agenda




Segment



Transaction Update

• Market

• Business Flow Chart



August 2019

24

-13.7%

-24.1%

-17.6% -15.6%-18.6%

-35.7%

-24.5%-31.0%

refridgerator air-con. washing machine water heater

Haier industry

21.7%

-17.3%

0.5%

-28.4%

-40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0%

online

offline

industry haier

Growth rate (offline) comparison by product type

Home Appliance Industry

Growth rate comparison by channel

Haier’s retail sales growth rate is

higher than industry in major product

type

Note 1: Online and offline revenue consist of

refrigerator, air-con, washing machine, water

heater

Note 2: The data source is China Market

Monitor (CMM)

2 2

22

1

1

August 2019

25

45%

42%

13%

54%39%

7%

JD Tmall Haier

28%

72%

38%

62%

Online Offline

Channel Services Financial Review - Revenue Breakdown

Revenue breakdown by product

• Refrigerator & Freezer, Washing machine,

Water heater further gained share

• For online business, revenue share of JD

gained share

Online revenue breakdown

19H1 20H119H1 20H1

Revenue breakdown by channel

30%

31%

25%

24%

23%

24%

10%

11%

6%

6%

6%

4%

19H1

20H1

Refrigerator & Freezer Air-con

Washing machine Water heater

TV Kitchenware & others

August 2019

26

1.8% -0.8%

+0.3%

+0.3% 0.0%1.6%

0%

1%

1%

2%

2%


Channel Services Financial Review - Profitability


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


GPM decrease Declined offline traffic volume and less than expected growth rate of high-end products The increased proportion of mid-to-low-end products

S&D exp. % Reduction of cost input and improvement of input-output efficiency

G&A exp. % Reduction of conference fee and office expense

Others Same as 19H1

August 2019

27

Agenda



➢ Water Heater & Water Purifier Segment


➢ Proposed Privatisation Transaction

Update


Transaction Update

August 2019

28

Proposed Privatisation Transaction

Note 1: If the EB to CB Proposal is not approved or otherwise does not become effective , and EB holders exercise their exchange right after the completion of the Privatisation Proposal , EB holders will become HEG’s shareholders and HEG may not be wholly owned by HSH after the privatisationNote 2: Assuming none of the HSH Exchangeable Bonds are exercised prior to the Scheme Record TimeNote 3: Other HEG Shareholders include the HEG Trustee and certain directors of HEG

After2:

HSH(A+H+D share)

Haier Group and Other HSH Concert Parties

（A+H+D）

Other public HSH D Shareholders

Other public HSH AShareholders

HEG(Delisted)

100%1

➢ Haier Smart Home Co., Ltd. (“HSH”) is proposing to put forward a proposal for the privatisation of Haier Electronics

Group Co., Ltd. (“HEG”) by way of a scheme of arrangement. Scheme Shareholders are HEG Shareholders other than

HSH and any of its wholly-owned subsidiaries. Scheme Shareholders include HCH (HK), an indirect subsidiary of

Haier Group, and Other HSH Concert Parties

➢ Upon the Scheme becoming effective, HEG will become a wholly-owned subsidiary of HSH1 and its shares will be

delisted from the Hong Kong Stock Exchange; HSH H Shares will then be listed on the Main Board of the Hong Kong

Stock Exchange by way of a listing by introduction; the Scheme Shareholders will become HSH H Shareholders

Other HEG Shareholders

Before:

11.95%

13.94%

0.78% 41.59%

Haier Group

Other Public HSH D

shareholders

Other Public HSH A

shareholders

Other HEG Shareholders3

3.25% 56.72% 19.13%

Haier Electric Appliances

51.20%20.90%

67%

13%

HEG(SEHK:1169)

HCH(HK)

HS (HK)

31.74%

100%

HSH(SSE:600690)(A+D share)

Scheme Shareholders

Other HSH Concert Parties

35.53% 41.34% 2.37% 20.76%

August 2019

2929

Privatisation Transaction -- Key Terms

Offeror • HSH, ticker: SSE: 600690 and 690D.DF

Transaction

Structure• By way of a scheme of arrangement under Section 99 of the Companies Act 1981 of

Bermuda (as amended)

Valuation and

Implied Premium

• The theoretical total value for each Scheme Share cancelled = 1.60 Share Exchange

Ratio * the mid-point of the valuation range estimated by the Valuation Adviser of

HK$18.47 per HSH H Share + Cash Payment of HK$1.95 for every Scheme Share

cancelled, which represents premium as follows:

Offeree • HEG, ticker: SEHK: 1169

Scheme

Shareholders

will receive

• New HSH H Shares: 1.60 new HSH H Shares for every Scheme Share cancelled under

the Scheme

• Cash Payment to be made by HEG only if the Scheme becomes effective: HK$1.95 for

every Scheme Share cancelled under the Scheme

August 2019

30

Consolidate Product Portfolio

Strong water heaters segment

HEG

For examples: smoother collaboration between HEG and GEA in water heaters business after the transaction

Leverage on HSH’s global platform in the development of washing machines and water appliance business

Global production optimization

12

Improve Efficiency and Reduce Cost

Enhance operational efficiency and reduce cost through end

to end digital operation

3

Accelerate Development of Washing Machines and Water Appliance Overseas

Provide full scenario and customized user experience

HSH Product

HEGProduct

Experience cloud platform

Develop Experiential Cloud4

FullProcess Integration

Business of HEG pre transaction Business of HSH pre transaction (excluding HEG)

Upon the completion of the transaction, all product categories could utilize a unified experiential cloud, through which HSH Group could accelerate online and offline integration and provide users with customized services during the entire life cycle

Smar

t H

om

e S

olu

tio

ns

Internet of Air

Internet of Water

Internet of Clothing,

Washing and Caring

Internet of Kitchen

Manufacturing Manufacturing

E-commerce, franchised stores and logisticsGome、Suning

Experience cloud platform

R&DR&D

R&D system

Procurement

Brand

Potential Synergies of Privatisation Transaction

-- Enhance operational efficiency

August 2019

31


-- Increase shareholder return

40%

Annual Dividend/Profit Attributable to the

Owners of the Company（%）

2015 2016 2017 2018 20195-year Avg.

HSH 30.1 30.0 30.0 29.9 30.1 30.0

HEG 10.4 15.3 20.2 24.7 16.7 17.4

Dividend Pay-out Ratios of HSH and HEG in 2015-20191

Aggregate capital allocation

HSH

HEG

Onshore

Offshore

Onshore

Dividend

Dividend

Operating Entity of

HEG

Dividend

tax under

red-chip

structure

Optimize capital structure

• Reduce leverage ratio

Increase the dividend pay-out ratio in 3 years to1

Optimize Capital Allocation1

Improve Shareholder Return2

Note 1: Calculated based on audited financial figures of HSH and HEG for FY2015-2019 by total cash dividends and net profit attributable to ordinary shareholders

August 2019

32


-- Improve Corporate Governance

Connected Party Procurement by HEG from HSH and its associates 2

As % of COGS

Note 1: Environment, Social Responsibility and Corporate Governance

Note 2: HEG’s information. Figures derived from management accounts on an unrestated basis; Connected party procurement as % of COGS and connected party sales as % of revenue are higher in 2019 due to deconsolidation of logistic business; Connected party procurement includes purchase of finished goods, equipment and raw materials, and mould; Connected party sales includes export sales of products after expense and domestic sales of products

Design Incentive Programme for Global Employees Raise ESG Standards

Commit to sustainable business

development

Comply with the disclosure

requirements of the Task Force on

Climate-related Financial Disclosures

(TCFD) and standards of the

Sustainable Accounting Standards

Board (SASB), to constantly improve

information disclosure standard

Reduce Connected Party Transactions

1 3

2

(RMB mn)

Connected Party Sales by HEG to HSH and its associates 2

As % of Revenue

(RMB mn)

The listing of H share accommodates our

desire for a global and flexible approach in

retaining the best of the talent.

The Enlarged HSH Group attaches great

importance in aligning management

compensation with shareholders’ return,

and the programme will be designed to

reflect immediate performance and longer

term sustainability.

Reap the benefits of simpler corporate structure

72.2% 73.9% 89.2%2

46,915

51,770 52,917

2017 2018 2019

2.4% 2.5% 3.8%2

1,8552,106

2,849

2017 2018 2019

August 2019

33

Thanks! [email protected]

haier electronics group co.,ltd · 2020. 8. 21. · this presentation and the accompanying slides...

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