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Haier Electronics Group Co.,Ltd
2019 Annual Results PresentationMarch 2019
2019 Annual Results PresentationMarch 2019
2019 Annual Results Presentation
March 2019
2019 Annual Results PresentationMarch 2020
海爾電器集團有限公司 (stock code: 01169)
August 2019
2
Disclaimer
This presentation and the accompanying slides (the “Presentation”) which have been prepared by HaierElectronics (the “Company”) do not constitute any offer or invitation to purchase or subscribe for anysecurities, and shall not form the basis for or be relied on in connection with any contract or bindingcommitment whatsoever. This Presentation has been prepared by the Company based on information anddata which the Company considers reliable, but the Company makes no representation or warranty, expressor implied, whatsoever, on the truth, accuracy, completeness, fairness and reasonableness of the contents ofthis Presentation. This Presentation may not be all-inclusive and may not contain all of the information thatyou may consider material. Any liability in respect of the contents of or any omission from this Presentationis expressly excluded.
Certain matters discussed in this presentation may contain statements regarding the Company’s marketopportunity and business prospects that are individually and collectively forward-looking statements. Suchforward-looking statements are not guarantees of future performance and are subject to known andunknown 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 expressedin or implied by this Presentation, including, amongst others: whether the Company can successfullypenetrate new markets and the degree to which the Company gains traction in these new markets; thesustainability of recent growth rates; the anticipation of the growth of certain market segments; thepositioning of the Company’s products and services in those segments; the competitive environment; andgeneral market conditions. The Company is not responsible for any forward-looking statements andprojections made by third parties included in this Presentation.
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
➢ Strategic position
➢ Overall Financial Review
➢ Washing Machine Segment
➢ Water Heater & Water Purifier Segment
➢ Channel Services Segment
➢ Logistics business
➢ Strategic position
August 2019
5
Haier Electronics Strategies Overview
What drives our long-term growth?
Innovation in our DNA Solid brand portfolio Superior User Experience
5+7+N Smart Home
Clothing Water
Food
SecurityClean air
Information
Entertainment
Balcony
Bathroom
LivingroomBedroom
Kitchen
loT Ecosystem
Cutting-edge
technology
Innovative
organization
(premium)
(mass)
(value)
August 2019
66
Delivering Scenario-Based Solution
– Internet of Clothing
User Experience
Upgrade
Smart Home
Scenario
Washing
Chemicals ……
Marketing
R&D
Fabric
Logistics
……
Washing
Design
R&D
……
RFID
Design
WM
Deter-gent
Clothes
Storage
Care Purchase
Washing
Smart balcony
►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
5 Physical areas
7 loT solutions
N scenarios
August 2019
7
►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
Delivering Scenario-Based Solution
– Water ecosystem
August 2019
8
Digital Empowerment
across the Value Chain(Launched in Dec 2019)
Smart HomeApp
Whole process
Multi-dimensional
Full Life-cycle
Digital Transformation –
Winning the digital consumer journey
Marketing
Online
Product
Online
Productiononline
Service
Online
Research
Online
Efficient delivery to consumers
Employee
Online
August 2019
9
Agenda
➢ Strategic position
➢ Overall Financial Review
➢ Washing Machine Segment
➢ Water Heater & Water Purifier Segment
➢ Channel Services Segment
➢ Logistic business
➢ Overall Financial Review
August 2019
10
2015-2019 Overall Financial Review
Growth trend from FY15 to FY19
➢ 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 4.8% and 11.6%;
➢ NPM consistently gained from 5.0% to 5.5%, with NP growth rate of 2019 reaching
9.0%( excluding one-off non-cash gain of 3.16bn RMB from disposing logistic
business).
(¥100mn)
628.3 638.5
713.2 763.4 758.8
27.0 27.9 33.8 38.4 41.9
4.3% 4.4%4.7%
5.0%5.5%
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 FY 16 FY 17(restated) FY 18(restated) FY19
revenue NP NPM
August 2019
11
2019 Overall Financial Review –
Revenue & EBIT breakdown by segments
Revenue breakdown by segments
EBIT breakdown by segments
* Before inter-segment elimination
Washing Machine
24%
WH&WP9%
Channel Services
67%
234.0
87.5
664.7
WashingMachine
WH&WP
ChannelServices
+8.8%
+8.9%
-2.3%
(¥100mn)
Washing Machine
49%
WH&WP24%
Channel Service 27%
22.8
11.1
12.8
WashingMachine
WH&WP
ChannelServices
+11.3%
-3.4%
+11.1%
(¥100mn)
August 2019
12
2019 Overall Financial Review - Cash Usage
17.3
15.4
14
14.5
15
15.5
16
16.5
17
17.5
FY18(restated) FY19
Capex(¥100mn)
150 148
47 35
0
50
100
150
200
250
FY18(restated) FY19
Net cash & financial products
Net cash Financial products
(¥100mn)
total: 197total: 183
41.0 41.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
FY18(restated) FY19
Cash conversion cycle(Days)
43.5
47.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
FY18(restated) FY19
Cash flow from operation (¥100mn)
August 2019
13
Agenda
➢ Strategic position
➢ Overall Financial Review
➢ Washing Machine Segment
➢ Water Heater & Water Purifier
Segment
➢ Channel Services Segment
➢ Logistics business
• Market
• Business Composition
• Financial Review
➢ Washing Machine Segment
August 2019
14
WM Business Market - Consumption Upgrade
According to the offline data from China Market
Monitor, the consumption upgrade trend continued
in 2019
• Market share of front-load products in terms of
sales value increased by 2.6ppts to 76%, while the
ASP of front-load products is about 2.6 times of
that of top-load ones (¥4,407 vs. ¥1,725 )
• Products with higher ASP (¥6,500 and above)
and higher capacity (10kg and above) have been
gaining market share
Market share change
by price range
Market share change
by product type
Market share change
by capacity
* Data source: China Market Monitor (CMM)
(ppt) (ppt)
(3)
(2)
(1)
0
1
2
3
4
5
6
750- 1000- 1500- 2000- 2500- 3000- 3500- 4000- 4500- 5500- 6500- 6500+
(15)
(10)
(5)
0
5
10
15
20
23%-2.5ppt
76%+2.6ppt
1%
top-load front-load others
August 2019
15
WM Business Market – Haier’s Market Share
For FY19:
• Haier ranked No. 1 both online and offline in terms
of sales value, and the online and offline market
shares further climbed by 1.9ppts and 2.8ppts yoy
respectively
• According to the offline data of CMM, Haier’s ASP
(¥3,409) was about 19% higher than the domestic
average (¥2,868), and for the high-end market with
ASP higher than ¥6,500, Haier accounted for about
50% of total market share
Market share by price range (CMM-offline)
* Data source: China Market Monitor (CMM)
FY19 online market share change in terms of sales value
FY19 offline market share change in terms of sales value
36%
36%
18%
10% 9% 8%
3% 2% 2%
2.8
-0.1
-1.7
1.5
-0.3 -0.6
-1.2
-0.6
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0%
5%
10%
15%
20%
25%
30%
35%
40% market share
market share change yoy (ppt)
34% 32% 33%
50%
13%15% 17% 18%17%
7%4%
1%0%
7%
18%
11%
0%
10%
20%
30%
40%
50%
60%
ASP<2500 2500≤ASP<4500 4500≤ASP<6500 ASP≥6500
Haier
Little Swan
Midea
Siemens
low-mid-end mid-end mid-high-end high-end
17% 14%
7%
3% 3% 2% 2%
1.9
-0.3
1.9
-2.5
-0.1
-0.5
0.1
-1.7
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
0%
5%
10%
15%
20%
25%
30%
35% market share
market share change yoy (ppt)
August 2019
16
Revenue growth
• In FY19, washing machine revenue grew by 8.9% to
RMB23.40 billion, higher than FY19 industry
average of -0.6% according to CMM (online &
offline combined)
• The FY15-19 CAGR is 11.9%
• Casarte and Leader brand grew by about 15% and
more than 30% respectively
WM Financial Review - Revenue Growth
(¥100mn)
Revenue increase breakdown by volume and ASP
for each brandfor each product type
149.5159.2
195.4214.9
234.0
0.0
50.0
100.0
150.0
200.0
250.0
FY15 FY16 FY17 FY18 FY19
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
front-load top-load
12%
5%
-3%
-5%
volume ASP
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Casarte Leader Haier
8%
36%
4%6%
-1% -2%
volume ASP
August 2019
17
WM Financial Review - Revenue Mix Change
Revenue mix change by product type
Revenue mix change by brand Revenue mix change by channel
• Front-load products further gained share
• Leader brand’s revenue share increased by 2% with
growth rate of over 30%
• Online revenue gained share to 29%42%
40%
58%
60%
F Y 1 8
F Y 1 9
Top-load Front-load
84%
82%
6%
8%
10%
10%
F Y 1 8
F Y 1 9
Haier Leader Casarte
52%
48%
24%
23%
24%
29%
F Y 1 8
F Y 1 9
Haier franchise stores KA channels online
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
%
9.5%0.2% 1.5%
0.6%
2.5%9.7%
0%
2%
4%
6%
8%
10%
12%
FY18 GPM S&D exp./Revenue G&A exp./Revenue others FY19
Margin change Main factors
GPM decrease Mainly due to productivity ramp-up in new factories and online share gained
S&D exp. % More exp. to enlarge market expension
G&A exp. % More R&D exp.
others More gov. subsidy; relocation compensation for the launch of new factories
August 2019
19
Agenda
➢ Strategic position
➢ Overall Financial Review
➢ Washing Machine Segment
➢ Water Heater & Water Purifier
Segment
➢ Channel Services Segment
➢ Logistics business
• Market
• Business Composition
• Financial Review
➢ Water Heater&Water Purifier Segment
August 2019
20
WH Business Market – Consumption Polarization
Market share change
by 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
• Market share of electric products in terms of sales
remained the same as 44%, while the ASP of gas
water heater is about 1.9 times of that of electric
ones(¥3,079 vs. ¥1598)
• Value for money products (¥2,500 below and
¥3000) and gas products with higher capacity (12L
and above) have been gaining market share
(ppt)(ppt)
* Data source: China Market Monitor (CMM)
-1
0
1
2
-8
-4
0
4
8
44%+0ppt53%
-0.01 ppt
3%
electric
gas
others
August 2019
21
WH Business Market – Haier’s Market Share
* Data source: China Market Monitor (CMM)
Online
FY19 Market Share Change by Channel
Offline
FY19 Market Share Change by Product type
Electric Gas
2018 2019
24.1% 23.9%
11.3%
7.3% 6.5%5.6%
3.2%
2.0
-0.1
-2.2
0.2
0.6
0.1
-1.4
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Haier Media AOS Vanward Macro Rinnai Noritz
market share
market share change yoy (ppt)
22.2%
20.5%
14.6%
7.7% 7.3%
5.6%4.0%
--2.1
2.4
0.7
0.2 0.2 -0.7
1.4
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0%
5%
10%
15%
20%
25%
AOS Haier Midea Vanward Macro Rinnai whirlpool
market share
market share change yoy (ppt)
19%
10%
12%
11%11%
38%
18%
12%
12%
11%11%
36%
AOS Haier Vanward Macro Midea Others
2018 2019
27%
29%
18%
4%
4%
19% 30%
26%
19%
3%
3%
18%
Haier AOS Midea Vanward Macro Others
August 2019
22
• Volume was the major driver for each product type
in FY19
• Heat-pump products achieved about 22% revenue
growth, about 4 times of that of electric one
• Carsate and Leader brand grew by over 35% and
over 10% respectively
WH Financial Review - Revenue increase breakdown
Revenue increase breakdown by volume and ASP
for each brandfor each product type
-10%
-5%
0%
5%
10%
15%
20%
25%
heat-pump gas electric
21%
15%13%
0%-2%
-7%
volume ASP
-10%
-5%
0%
5%
10%
15%
20%
25%
Casarte Leader Haier
11%
21%
8%
22%
-7%-5%
volume ASP
August 2019
23
WH Financial Review - Revenue Mix Change
Revenue mix change by product type
Revenue mix change by brand Revenue mix change by channel
For FY19:
• Gas product achieved higher revenue percentage
• Leader and Casarte both gained revenue share
• The contribution of online revenue rose by 5ppt
66%
65%
22%
23%
12%
11%
F Y 1 8
F Y 1 9
Electronics Gas Solar&Heat Pump
83%
81%
13%
14%
4%
5%
F Y 1 8
F Y 1 9
Haier Leader Casarte
29%
34%
61%
57%
10%
10%
F Y 1 8
F Y 1 9
online Haier franchise stores KA channels
August 2019
24
WP Business Market Landscape
Market share change
by price range
Market share change
by product type
* Data source: China Market Monitor (CMM)
(ppt)
Market share change
by product type
(6)
(4)
(2)
0
2
4
6
-1.00
-0.50
0.00
0.50
1.00
water dispenser drinking heater ultrafiltrationmachine
RO Machine
According to the offline data from China Market
Monitor of 2019,
• the ASP of RO machine products is about 1.3 times
of that of ultrafiltration ones. (¥3,994 vs. ¥2,995 )
• Products with ASP from ¥4,000 to ¥5,000 and
product types including water dispenser and
drinking heater have been gaining market share.86.4%
6.3%5.7%
1.6%
RO Machine ultrafiltration machinewater dispenser drinking heater
August 2019
25
WP Business Market – Haier’s Market Share
According to the offline data of CMM,
For FY19,
• Haier ranked No.2 offline and No. 5 offline in
terms of sales value, and the online and offline
market shares further climbed by 0.5ppt and
2.4ppt yoy respectively.
• Haier’s ASP (¥3,453) was approximately equal to
the domestic average (¥3,529)
* Data source: China Market Monitor (CMM)
FY19 online market share change in terms of sales value
FY19 offline market share change in terms of sales value Market share by price range (CMM-offline)
23%21%
15% 13%
7%
5%
0.6
-5.7
-0.5 -0.1
2.4 2.5
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
0%
5%
10%
15%
20%
25%
AOS Midea anjier qinyuan Haier whirlpool
market share
market share change yoy (ppt)
17%
24% 23%
16%
2%
7%
20%
53%
14% 15% 15% 14%16%
20%15%
5%
9%11%
8%
2%0%
10%
20%
30%
40%
50%
60%
ASP<2500 2500≤ASP<3500 3500≤ASP<5500 ASP≥5500
Midea
AOS
Anjier
Qinyuan
Haier
low-mid-end mid-end mid-high-end high-end
14%
13%12%
11%10%
6%
-1.0
0.5
3.1
-2.3
0
-1.1
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
0%
2%
4%
6%
8%
10%
12%
14%
16%
Midea Haier Xiaomi qinyuan AOS anjier
market share
market share change yoy (ppt)
August 2019
26
WH&WP Financial Review - Profitability
Segment results margin change
* The positive contribution from expenses items refers to expenses ratio decline.
Margin change Main factors
GPM Gain from the steady decline in raw material prices and the decline in VAT rate; product structure optimization and switched channel.
S&D exp. % Lower logistics cost and warranty cost.
G&A exp. % Mainly due to the cost of new factories and the R&D expenses.
12.4% 0.3%0.6% 0.9%
0.3% 12.7%
0%
2%
4%
6%
8%
10%
12%
14%
FY18 GPM S&D exp./Revenue G&A exp./Revenue others FY19
August 2019
27
Agenda
➢ Strategic position
➢ Overall Financial Review
➢ Washing Machine Segment
➢ Water Heater & Water Purifier
Segment
➢ Channel Services Segment
➢ Logistics business
• Market
• Business Flow Chart
• Financial Review
➢ Channel Services Segment
August 2019
28
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:
• Online and offline revenue consist of
refrigerator, air-con, washing machine, water
heater
• Haier’s data and industry data come from
CMM
10.8%
-1.7%
3.9%
-9.0%
-10.0% -5.0% 0.0% 5.0% 10.0% 15.0%
online
offline
industry haier
0.9%
-7.8%
4.4%
0.7%
-2.6%
-10.1%
-2.8%
-9.0%
fridgerator air-con. washing machine water heater
Haier industry
August 2019
29
Channel Services Financial Review - Revenue Breakdown
Revenue breakdown by product
• Refrigerator & Freezer, Washing machine,
Water heater, and Kitchenware further
gained share
• For online business, revenue share of Tmall
gained share
Online revenue breakdown
FY18 FY19FY18 FY19
Revenue breakdown by channel
43%
43%
14%
44%
43%
13%
Tmall JD eHaier+Shunguang
25%
75%
31%
69%
Online Offline
29.3%
30.8%
24.9%
22.1%
23.2%
25.5%
9.3%
10.4%
8.1%
6.5%
4.3%
4.7%
0% 20% 40% 60% 80% 100%
FY18
FY19
图表标题
Refrigerator & Freezer Air-con
Washing machine Water heater
TV Kitchenware & others
August 2019
30
Channel Services Financial Review - Profitability
Segment results margin change
* The positive contribution from expenses items refers to expenses ratio decline
Margin change Main factors
S&D exp. % Online business gained share and led to more interactive marketing expense
G&A exp. % Downsized management expense andimproved management efficiency
1.9% 0.0% 0.1% 0.1% 0.0% 1.9%
0%
1%
1%
2%
2%
FY18 GPM S&D exp./Revenue G&A exp./Revenue others FY19
August 2019
31
Agenda
➢ Strategic position
➢ Overall Financial Review
➢ Washing Machine Segment
➢ Water Heater & Water Purifier
Segment
➢ Channel Services Segment
➢ Logistics business
• Financial Review
➢ Logistics business
August 2019
32
Logistic Services Financial Review – Revenue growth
+6%
Revenue Growth
• In FY19, logistics revenue grew by 6%,
among which home appliance products
contributed 62% of the revenue
• Revenue from Cross-border and Ecological
both achieved fast growth
0
20
40
60
80
100
120
2018 2019
(¥100mn)
• Since Jul.26th 2019, the asset swap between
logistic business and water purification
business has been completed.
• Logistic business is now an associate
company where Haier Electronics holds 47% of
shares and book its shared profit using equity
method.
August 2019
33
Logistic Services Financial Review - Profitability
Logistics business margin change
* The positive contribution from expenses items refers to expenses ratio decline.
Margin change
Main factors
GPM increase
Routes optimization and business mode adjustment led to lower cost
G&A exp. % Scale effects led to efficiency optimization
Others Mainly due to the disposal of Shengfeng business and warehouse in Wuhan
3.9%
1.7%0.4%
0.1%2.6%
3.6%
0%
1%
2%
3%
4%
5%
6%
7%
FY18 GPM S&D exp./Revenue G&A exp./Revenue others FY19
August 2019
34
Thanks! ir@haier.hk
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