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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
Ø Strategic position
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
Ø Strategic position
Ø Overall Financial Review
Ø Washing Machine Segment
Ø Water Heater Segment
Ø Channel Services Segment
Ø Logistics Segment
Ø Overall Financial Review
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
Ø Strategic position
Ø Overall Financial Review
Ø Washing Machine Segment
Ø Water Heater Segment
Ø Channel Services Segment
Ø Logistics Segment
Ø Washing Machine Segment
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)
* Data source: China Market Monitor (CMM)
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
market share change yoy (ppt)
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
Ø Strategic position
Ø Overall Financial Review
Ø Washing Machine Segment
Ø Water Heater Segment
Ø Channel Services Segment
Ø Logistics Segment
Ø Water Heater Segment
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+
* Data source: China Market Monitor (CMM)
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)
* Data source: China Market Monitor (CMM)
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
market share change yoy (ppt)
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
market share change yoy (ppt)
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
Segment results margin change* The positive contribution from expenses items refers to expenses ratio decline.
11.4% 0.0% 0.1% 0.1% 0.2% 11.4%
0%
2%
4%
6%
8%
10%
12%
14%
18H1 GPM S&D exp./Revenue G&A exp./Revenue others 19H1
Margin change Main factors
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
Ø Strategic position
Ø Overall Financial Review
Ø Washing Machine Segment
Ø Water Heater Segment
Ø Channel Services Segment
Ø Logistics Segment
Ø Channel Services Segment
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
Segment results margin change* The positive contribution from expenses items refers to expenses ratio decline.
Margin change Main factors
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%
18H1 GPM S&D exp./Revenue G&A exp./Revenue others 19H1
August 2019
32
Agenda
Ø Strategic position
Ø Overall Financial Review
Ø Washing Machine Segment
Ø Water Heater Segment
Ø Channel Services Segment
Ø Logistics Segment
Ø Logistics Segment
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%
18H1 GPM S&D exp./Revenue G&A exp./Revenue others 19H1
Segment results margin change
August 2019
35