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Public company info - Haier Electronics Group Co. Ltd. , 01169.HK

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Haier Electronics Group Co. Ltd., 01169.HK - Company Profile
Chairman Zhou Yun Jie
Share Issued (share) 2,817,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Household Appliances
Corporate Profile Business Summary: During the year, the Group was involved in the following principal activities: manufacture and sale of washing machines, manufacture and sale of water heaters and water purifiers, sale and distribution of home appliances and other products as well as the provision of after-sales and other value-added consumer services, provision of logistics services, which have been classified as a discontinued operation during the year. Performance for the year: In 2019, the Group’s revenue amounted to RMB75,879,970,000, representing a decrease of 0.6% from RMB76,335,602,000 (restated) in 2018. The profit attributable to owners of the Company was RMB7,350,810,000, representing an increase of 91.2% from RMB3,844,497,000 (restated) in 2018. The basic earnings per share attributable to ordinary equity holders of the Company was RMB2.63, representing an increase of 90.6% from RMB1.38 (restated) in 2018. The basic earnings per share from continuing operations attributable to ordinary equity holders of the Company was RMB1.47, representing an increase of 13.1% from RMB1.30 (restated) in 2018. Business Review In 2019, the Group recorded a revenue of RMB75.88 billion with a slight decline of 0.6% year-on-year (2018 comparison has been restated following the Group’s asset swap transactions relating to the logistics and water purification businesses). Net profit attributable to parent company was RMB7.35 billion, representing a year-on-year increase of 91.2%. Excluding one-off gain generated from the disposal of the logistics business, growth of net profit attributable to parent company was 9%. The overall growth of the white goods industry was sluggish under the influence of the macro economy. However, with the Group’s persistence in delivering supreme products and services, the Group sustained satisfactory profit growth trajectory amid adverse market conditions. At the same time, the retail market share of the Group’s entire product categories has further improved, which effectively strengthened the Group’s leading position. In the washing machines, water heaters and water purification segments, the Group’s rich brand matrix and innovative products and services have enabled us to capture diversified consumption needs, which fueled a growth in sales revenue and profit. Facing the emergence of new competitions, the Group’s channel services business continued to intensify the Group’s four-network integration and push ahead with the Group’s smart home customization strategies, thereby enhancing the Group’s competitiveness in e-commerce and the Group’s own franchise stores. Through the establishment of the Internet of Clothing and the Water-related ecosystem, the Group transformed users’ living scenarios with Internet of Things (IoT) concepts and technology, which enables the participants of the ecosystems and their interested parties to further derive revenue of more than RMB2 billion. Washing Machine Business In 2019, the overall performance of the washing machine industry was sluggish as macroeconomic growth was cooled and consumer confidence remained subdued. According to CMM’s overall industry data, the retail volume of washing machines recorded a slight increase of 4.2%, while average price dropped 4.6%, and retail sales declined by 0.6%. By actively responding to market changes through superior product offerings, comprehensive brand matrix and flexible marketing strategies, the Group’s washing machine business achieved remarkable results. The Group recorded a total revenue of RMB23.40 billion and a revenue growth of 8.9%, which greatly surpassed the industry’s negative growth rate. The Group’s market share also further increased. According to market statistics from Euromonitor International, sales volume of Haier’s washing machines accounted for 14.9% of the global market in 2019, an increase of 0.1percentage points year-on-year, enabling us to rank first in the world for the eleventh consecutive year. In the China market, the Group’s washing machine retail value accounted for the largest market shares on both online and offline channels according to data published by CMM, which were recorded at 36.3% for each of the offline and online channels, representing year-on-year increases of 2.77 and 1.95 percentage points respectively. Specifically, the Group’s high-end brand Casarte maintained an annual growth rate of around 15%, and its share in overall sales of the Group’s washing machines further rose to more than 10%. The Group’s Leader brand, targeting young consumers with a focus on products that offer value for money, achieved an annual revenue growth of over 30%, with its share of sales increased to more than 8%. The Group’s three major brands have offered complementary coverage for a diverse range of price segments to fulfil the laundry needs of consumers. In terms of overseas exports, large-capacity front-load washers were progressively becoming the mainstream. The washing machine industry was also growing rapidly due to the development of e-commerce and community washing stores, as well as the economic boom in emerging markets. During the period, the Group’s overseas export recorded a revenue increase of more than 30% year-on-year. The export business accounted for around 12% of the Group’s overall washing machine business sales value, with spectacular performances achieved in the American, European and South Asian markets. In the U.S. market, the American style large capacity front-load washers have been in mass production for the collaboration with GEA this year, which doubled the growth of the Group’s U.S. exports. The European market maintained steady growth, contributed by an upgrade in technology standards on energy consumption and the Group’s collaboration with Candy. In the South Asian market, Haier washing machine ranked first in terms of market shares in Pakistan and experienced rapid growth in India. During the period, raw material prices remained at a low level, the reduction of VAT also gave room to cost optimization in the industry. However, the launching of new factories, corresponding sales promotions and the rise of market shares on online channels have brought pressure to the Group’s gross margin. Haier’s washing machine business continued to reduce costs and improve efficiency by developing smart mega-factories, streamlining product models, creating best-selling models, and increasing the proportion of high-end products. During the period, these strategies helped maintain the Group’s level of gross profit while eliminated 40% of SKUs for the Group’s domestic sales, which effectively improved the production efficiency of the Group’s factories and reduced associated costs. During the year, the washing machine business actively drove forward the development of mega-factories and smart customization, which greatly improved the Group’s manufacturing efficiency. Throughout the entire process from creative project establishment, order collection, product design to production, with the implementation of whole-process management and big data analysis, the Group has optimized decision-making and improved response speed. Order-to-delivery was shortened from 22 days to 18 days. The Group’s existing production lines for washing machine had a broad area coverage and is undergoing continuous optimization of capacity utilization. Meanwhile, the Group’s washing machine factories were actively exploring technological applications including 5G, AI, virtual reality, blockchain and industrial cloud. The Group strive to continue to enhance the Group’s efficiency and competitiveness while reducing production costs, setting the benchmark of large-scale smart customization for the industry. Water Heater and Water Purification Business This business segment comprises the complete line of water heater and water purification products, which aims to providing users with safe, comfortable and energy-efficient whole-house water usage solutions. In 2019, in spite of unfavorable factors including the global economic slowdown and a sluggish real estate industry, Haier’s water heater and water purification business maintained a steady growth, benefiting from consumers’ quests for healthy water usage and continuous advancements of the Group’s products. The business recorded a revenue of RMB8.75 billion, representing a year-on-year increase of 8.8%. During this year, the water heater business achieved a year-on-year growth of 8.0% in sales revenue. Remarkable performance was observed among the electric heater, gas heater and air energy heat pump product categories. The Group’s market share also further increased. According to CMM’s monitoring data, Haier’s market share of the water heater industry reached 20.5% in terms of sales value and 21.4% in terms of sales volume, representing year-on-year increases of 2.39 and 2.15 percentage points respectively. The growth of the water heater business mainly stemmed from continuous technological innovations, increase in sales volume of pre-installed products, the launch of top-selling products as well as the diversification of the Group’s product matrix. In 2019, the Casarte water heater business that targeted the high-end market grew over 30%, whereas the Leader brand that focused on young consumers achieved a growth of more than 10%. Haier water purification currently provides residential point-of-use, residential wholehouse and commercial usage solutions. In 2019, the revenue of water purification business achieved a year-on-year rise of 13.8%, with steady growth in both online and offline market shares. According to the monitoring data from CMM, Haier’s water purification business achieved online and offline market shares of 13.0% and 7.0% respectively in 2019, representing year-on-year increases of 0.5 and 2.1 percentage points year-on-year. While the Group aim at reinforcing the residential point-of-use water purification market, the residential whole-house and commercial water purification markets will be the Group’s important growth momentum in the future. With the increasing demand for water usage of varied qualities, varied personal needs and varied scenarios, whole-house water purification as a subdivision of the household water purification segment has attracted increasing attention. This year, Haier water purification collaborated with the China Association for Standardization to publish the “General Technical Specifications for Smart Whole-House Water Purification System (《智慧全屋淨水系統通用技術要求》)” standard. Based on consumption upgrades in IoT era and demands for novel user experience, the Group put forward for the first time the standardized and systematic requirements for the general technical specifications for smart whole-house water purification system. The Group also launched the Borui whole-house water purification product set series which was equipped with the FEV2.0 technology, offering consumers the smart experience of “Automatic Cartridge + Large Display Screen + Whole-Process Visualization of Purification Effect”. This product series is an innovative integration of IoT, cloud platform and big data analysis, providing users with one-stop housekeeping services such as water quality monitoring, filter lifespan warning, filter replacement reminder and regular maintenance. In 2019, the Group entered into an agreement with BWT AG, a reputable European water treatment corporation, to establish a joint venture manufacturing company and a joint venture sales company in China, which aim to provide high-end whole-house water purification products to consumers. The Group and BWT AG join hands to promote the Group’s dual-brand strategy, fully synergizing the Group’s competitive edges on technology, resources, platforms and services. Together the Group are building a world-class production factory that is smart and interconnected to support ongoing upgrading of smart products, so as to create whole-house water solutions that cater for all types of weather and scenarios for high-end users. Construction of the household whole-house water purification factory has commenced in the second half of this year. It is expected to be put into operation in 2020. The joint venture sales company has opened 11 stores and has started to sell whole-house water purification products imported from BWT AG in the second half of the year. Following the integration of the Group’s water heater and water purification businesses, the two have been working together to construct a water-related ecology and drive the development of smart whole-house water usage solutions, while mobilizing the hardware industry on smart bathrooms and showering to create a smart bathroom ecosystem. The integration of the Group’s two water segments have created synergies in the dimensions of sales networks, supplier resources and joint procurement, R&D collaborations and technologies, production installation and after-sales services networks. The Group have a shared total of 900 product specialty stores at the retail-end, and have opened 736 special stores to promote the implementation of whole-house water usage solutions. These stores successfully transformed individual product sales into the sales of product sets, and greatly improved the competitiveness of the Group’s brands. The integrated water heating and water purification businesses will enable the Group to become a smart solutions provider for point-of-entry water purifying, softening, hot water, heating, as well as energyefficient water usage. CHANNEL SERVICES BUSINESS In 2019, the channel services business achieved a sales revenue of RMB66.47 billion, this represented a 2.3% decrease year-on-year. According to the offline statistics from CMM, the Group’s market shares of refrigerators, washing machines, air conditioners and water heaters have increased by 1.4, 2.77, 0.78 and 2.4 percentage points respectively. The Group’s e-commerce channels maintained steady growth, with sales revenue amounted to over RMB20 billion, a year-on-year increase of about 20%. Its revenue proportion in the Group’s channel services segment further rose to about 30%. Online retail shares of refrigerators, washing machines and water heaters each experienced growth of more than 2 percentage points. The Casarte brand continued to focus on high-end communities, capturing markets with product sets that were superior in multiple dimensions of intelligence, comfort and quality. It dominated the high-end price segment in multiple product categories and recorded a growth over 25% in sales value. On the other hand, Leader was positioned for the urban, young and fashionable communities, and targeting users in search of value for money. It achieved a revenue growth of 3% through dynamic marketing strategies and product strategies, including turning top-selling products into product sets. In face of the overall sluggish white goods industry, the integration of online and offline channels, as well as the penetration of e-commerce in lower-tier markets during the period, the Group continued to further the Group’s reforms, advancing the Group’s 5+7+N smart home transformation, and integrating the four networks of sales, information, logistics and services for the Group’s franchise store channel. The Group also leveraged the Smart Home App to foster integration of online and offline channels, while embracing lower-tier markets through the use of the e-commerce channel. The Group adopted targeted content marketing tactics to acquire users and enhance customers’ loyalty. STRATEGIC INVESTMENT — LOGISTICS SEGMENT In 2019, the Gooday Logistics recorded a continued growth. The growth mainly stemmed from home appliance logistics scenarios, household logistics scenarios and crossborder logistics scenarios. During the reporting period, the scale of e-commerce sales continued to grow, and the penetration rate of e-commerce for large-format household products such as home appliances and home furnishings also continued to rise. According to data from the National Household Appliances Industry Information Center, online retail sales of the home appliance industry in 2019 amounted to RMB310.8 billion, which was a year-onyear increase of 4.2% and an online penetration rate of 38.7%. Gooday Logistics continued to intensify its collaborations with major e-commerce platforms, providing the Tmall platform with unified services of large-format home appliance warehousing, distribution, installation, last-mile delivery and reverse logistics. The online home appliance business experienced a growth of 8% year-on-year. In regard to online customers’ needs, Gooday has continuously optimized the logistics product structure, and launched four major service categories and twelve sub-categories to cater for personalized needs of users. In an effort to lower inventory turnover and optimize cash-use efficiency for e-commerce customers, the Group reduced the number of e-commerce warehouses from 33 to 7, which enabled merchants to afford national sales with even smaller inventories. While supporting customers on inventory optimization, Gooday Logistics has further optimized the routings, reducing distribution and delivery lead time from 2.1 days to 1.9 days. The Group’s online user reputation (DSR) reached 4.92, surpassing the industry average of 4.89 and that of the Group’s rivals. During the reporting period, Gooday Logistics continued to refine the operation management of the Group’s warehouses and has trained a group of experienced warehouse management teams, which helped to improve the Group’s warehouse utilization and overall efficiency. Gooday Logistics also continued to optimize and adjust the Group’s network arrangements, resulting in enhancements in the Group’s truck lines, regional distribution and lastmile delivery. While optimizing the overall routing of the Group’s lines, the Group streamlined intermediate transport nodes which significantly improved the Group’s distribution network efficiency. As of December 31, Gooday Logistics deployed a national network of 26 pre-positioned warehouses, 7 collection warehouses, 33 originate warehouses, 100 transit warehouses, and 6,000 delivery and installation network nodes. The Group managed a total warehouse area of 5 million square meters, and covered 2,915 districts and counties across the country with no dead zones. Prospects: The Covid-19 outbreak, undoubtedly the largest black swan event in the beginning of the year, will certainly bring massive impacts on various industries. This year, especially the first quarter, will pose a huge challenge to the Group, but please believe that the Group is fully prepared. Through devising innovative strategies such as health management initiatives, digital marketing, and interconnected factories, Haier Electronics is equipped to overcome the challenges brought by this novel coronavirus pandemic. Once the crisis is over, the Group will seize the opportunities of the Group’s times and embark on the fast track of healthy development.

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