Text | Little Lou Fish
Edit | Yang Xuran
Recently, a number of home appliance companies have announced their 2023 annual reports, and the performance of leading white appliance companies has continued to grow steadily, while the performance of small household appliance companies has been remarkable, driving the stock price of the home appliance sector to rise, and Hong Kong home appliance stocks have also begun to rise against the trend.
Home Appliances Index Performance (Jan 2024 to date)
Midea Group, the home appliance company with the highest market capitalization, will have a total operating income of 373.7 billion yuan in 2023, a year-on-year increase of 8.10%, and a net profit attributable to the parent company of 33.7 billion yuan, a year-on-year increase of 14.10%. In addition, the company plans to pay a dividend of 3 yuan per share, with a dividend rate of 62%, corresponding to the stock price on March 29, with a dividend yield of 4.67%.
In 2023, Hisense Home Appliances will achieve operating income of 85.6 billion yuan, a year-on-year increase of 15.5%, and a net profit attributable to the parent company of 2.837 billion yuan, a year-on-year increase of 97.73%, leading the home appliance industry in terms of profit growth. At the same time, the company plans to distribute a cash dividend of 10.13 yuan per 10 shares, an increase of 95.9% over last year.
In 2023, Haier Smart Home will achieve operating income of 261.428 billion yuan, a year-on-year increase of 7.3%, and net profit attributable to the parent company of 16.597 billion yuan, a year-on-year increase of 12.8%. The company will also launch a three-year shareholder return plan with a cash dividend ratio of not less than 50%.
It is not difficult to see from the above-mentioned companies' generous dividends that home appliance companies not only make real money, but also are relatively optimistic about the future - the good role of overseas markets in promoting their performance growth has almost become a clear card.
01 Production and sales are booming
In 2023, the export value of the household appliance industry will exceed 100 billion US dollars (103.07 billion US dollars), ranking second in the light industry, accounting for 11.5%.
This year's home appliance exports are off to a better start. According to the data of the General Administration of Customs, in January and February 2024, the overall export volume, export value (USD), and export value (RMB) of household appliances increased by 38.6, 20.8, and 24.3% respectively, and the volume achieved rapid growth.
In terms of regions, Chinese home appliance brands have performed the most prominently in South America, with exports of most categories growing rapidly, followed by Africa, and kitchen and personal care small appliances in the Asian market performing relatively well.
The European market, which is traditionally an export hub, has also recovered. The U.S. market was relatively lukewarm. At present, Mexico has replaced China as the largest exporter of TV products to the United States, and Vietnam has replaced China as the largest exporter of vacuum cleaners to the United States.
This is also reflected in the performance reports of major appliance companies,Hisense home appliances2023Overseas revenue increased by 12.3% to 27.92 billion,H1、H2-0.6% year-on-year、+29.7% respectively,Effectively improve the profitability situation。
In 2023, Haier Jiazhi will achieve overseas revenue of 136.412 billion yuan, a year-on-year increase of 7.6%, accounting for 52.2% of revenue. Among them, the business revenue of the Americas, Australia, South Asia, Europe, Southeast Asia, the Middle East and Africa, and Japan was +4.1%, -11.8%, +14.9%, +23.9%, +11.6%, -1.8%, and +2.6% year-on-year, respectively.
Such achievements are related to the fact that China's home appliance enterprises are actively investing in and building factories overseas. Domestic brands are not only passively building factories in Mexico, Vietnam and other places in order to avoid Sino-US trade frictions and seek lower production costs, but also to explore emerging markets such as Southeast Asia, South America and Africa, and invest more actively in local factories.
Southeast Asia has a huge population base, investment enthusiasm is pouring in, trade, consumption, culture and other aspects are "adjacent" to China, the growth potential is greater than the declining popularity of the European and American markets, and the legal risk is lower than India, which is undoubtedly a more realistic choice for Chinese home appliance enterprises to go overseas.
Taking air conditioning as an example, the export value of air conditioning products in mainland China will increase by 7.7% year-on-year in 2023, mainly from the Asian and Latin American markets, of which the Asian market accounts for 50.5% of the mainland's air conditioning exports, a year-on-year increase of 9.7%, while the Latin American market has become the third largest export destination, with a year-on-year increase of 36.7%.
Hisense Home Appliances established its ASEAN headquarters at the beginning of 2023,Hope to continue to expand Hisense TV's business in the Asia-Pacific market while consolidating the European, American and Japanese markets。 This move has driven Hisense's revenue growth in ASEAN by more than 20%, of which the growth of its own brand is more than 70%.
Latin America and Africa are both "The Belt and Road" radiation areas, also rich in growth potential, Haier, Midea and other home appliance companies to invest in Egypt, the importance is to accelerate the pace of entering the Middle East, Africa and even the European market through Egypt, and bring outstanding performance growth.
For example, the recent acceleration in the export of washing machine products is due to the positive performance in Russia, Italy, Spain, Uzbekistan, Kazakhstan and other countries, and the export value of TV products in 2023 will increase by 14.4% year-on-year, which is also driven by the European and Latin American markets.
The industrial layout and cooperation mode of China's home appliance enterprises in overseas countries have already blossomed and borne fruit.
02 Increase profits
If you look at the lessons of Japanese home appliance brands, you can understand why Chinese home appliance companies must "go global."
According to the data of the Japanese media "President Online", in 2002, Japan's home appliance manufacturers ranked first in the global consumer electronics market share, and five of them entered the top ten. However, now, only Panasonic is left in the top 10.
Matsushita Electric, which was once popular all over the world, was lonely with the death of Konosuke Matsushita, and never released a best-selling product that swept the world like the VHS tape recorder. Panasonic Shanghai Plasma Display Co., Ltd. from production to closure (2001-2011) also indicates that its market share will be captured by local competitors in China.
At the same time, Toshiba's black electricity business was acquired by Hisense, and the white electricity business was acquired by Midea, and the company was eventually delisted; Sanyo Electric's white electricity business in Southeast Asia was acquired by Haier, Hefei Sanyo was successively acquired by Whirlpool and Galanz, and Sanyo's domestic TV business was acquired by Changhong, and the company eventually disappeared.
It can be said that Japanese home appliance brands have been swallowed up by Chinese home appliance companies one after another, and at the same time have lost their global market share and industrial chain position. If China's home appliance enterprises want to continue to win, they must not only rely on high quality and low prices, but also go more thoroughly on the international route and ensure that new household appliances continue to be launched and occupy the first opportunity.
The fierce competition in China's home appliance market and even a high degree of involution can force domestic brands to quickly iterate products and accumulate technical experience, which is also difficult to replace in emerging industry clusters such as Southeast Asia, but it also buries the hidden danger of "exchanging price for quantity" for domestic brands.
Sweeping robot is a typical example, this industry category first appeared in the United States, and the leading market segment at that time was iRobot in the United States. Nowadays, the mainstream consumer market for sweeping robots is still in Europe and the United States, and if Chinese brands want to survive and develop in this field, they must be able to compete with local brands such as iRobot.
Since 2022, affected by factors such as weak consumption, the sweeping robot industry, as a representative of high-end smart home appliances, has had to temporarily put down the high-end strategy and start a "price war" instead, hoping to effectively increase market share, but the result is that the performance and stock price are under pressure.
Therefore, for new products with low penetration, overseas markets with higher profit margins should be the focus of domestic sweeping robot brands, and Ecovacs has been able to supply new products in China, Europe, Southeast Asia, South Korea, Japan, Australia, and New Zealand from the second half of 2023, and will soon be launched in the United States.
Roborock's share price performance (since listing)
Roborock continues to establish a global distribution network, and has set up overseas companies in the United States, Japan, Germany, South Korea and other places, and opened online brand stores on online platforms such as Amazon and WalMart in the United States, and the company's products have achieved the top three market share in 14 countries including Germany, Australia and Japan.
In 2023, Roborock's gross profit margin in domestic regions increased by 4.16 pct year-on-year to 49.26%, while the gross profit margin in overseas regions increased by 8.55 pct year-on-year to 61.65%.
Because although Roborock is the first all-base station product in the 2000+ price band among the leading brands in mainland China, and its domestic operating growth rate is also better than that of overseas markets, the company's overall profit recovery mainly depends on the revenue growth in overseas regions and the accelerated upgrading of product structure.
03 Dividends continue
Similar to sweeping robots, small household appliances are also confined to the domestic market, and they will face the problem of a low ceiling, and the performance differentiation is more obvious. In 2023, the overall retail sales of small household appliances represented by small kitchen appliances will only be 54.93 billion yuan, a year-on-year decrease of 9.6%, and the online and offline retail volume and average price will show a trend of decline across the board.
Joyoung, which started with small kitchen appliances, performed poorly, achieving operating income of 9.613 billion yuan in 2023, a year-on-year decrease of 5.54%, and net profit attributable to shareholders of listed companies of 389 million yuan, a year-on-year decrease of 26.58%.
After the former has experienced the transfer of overseas orders and the expansion of core categories, the company's export scale has increased from about 7 billion yuan in 19 years to about 11 billion yuan at present, and the latter's export revenue in 2023 will increase by 19.2% year-on-year, effectively improving the company's profitability.
Because of the low entry threshold and the difficulty of achieving scale effect, expanding categories and strengthening channels to meet the specific needs of different markets has also become the key to whether small household appliance enterprises can swim against the current.
Different from the subdivided track players who are easily affected by the big environment and struggle on the profit and loss line, the big leaders in home appliance companies have been sitting firmly in Diaoyutai and can always enjoy the dividends of the development of the times.
In the early days of reform and opening up, household appliances began to be popularized in China and in short supply, Haier, Gree, Changhong and other national brands were founded, from only importing, assembling, and introducing development to independent research and development and large-scale production, and gradually laid the model of China's home appliance industry chain, which is a wave of dividends.
In the melee between foreign brands and domestic brands, the state has successively introduced three policies to expand domestic demand: "household appliances to the countryside", "household appliances for new" and "energy-saving projects for the people" during the 2009-2012 period, comprehensively promoting the growth of domestic demand and industrial structure adjustment, and supporting the growth of domestic household appliances brands, which is another wave of dividends.
By about 2010, the competition pattern of China's home appliance market was basically laid, and foreign brands were defeated one after another, with Midea, Gree, Haier and other leading brands as the main body occupying most of the domestic market share. On this basis, domestic home appliance brands have explored the high-end brand path of consumption upgrading - the most typical representative is Haier's Casarte, as well as the relatively high price of Gree air conditioner, and another wave of dividends.
Today, China accounts for nearly ninety percent of the world's total home appliance market production, far more than any other region.
Recently, with the issuance of the "Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in" issued by the State Council, a new round of policies to stimulate consumption is about to be implemented, and many home appliance companies will directly benefit. It is reported that Suning Tesco's more than 10,000 retail cloud stores have joined hands with more than 30 home appliance manufacturers such as Midea, Haier, Hisense, Boxi, and Samsung to carry out home appliance trade-in activities, which drove sales growth by more than 3 times in March.
Calculated with a life cycle of 10 years for household appliances, air conditioners, refrigerators, washing machines, and color TVs have the largest demand for upgrading, with a gap of at least tens of millions of units, which is also the most dominant field of leading companies such as Midea, Gree, and Haier, if nothing else, the performance of these companies will continue to grow steadily.
Midea Group's share price performance (since listing)
What's more, these leading home appliance companies have already successfully gone overseas, and in 2023, Midea's overseas revenue will exceed 150 billion yuan, and Haier's overseas revenue will be 135.7 billion yuan.
With the consolidation of the global competitiveness of Chinese home appliance brands, in the future, Chinese home appliance products will also gain more market share, voice and initiative in the international market, and another round of dividends in the process of the times is close at hand - consumers in Africa, Latin America and Asia are waving money, and the deepening and upgrading tide of international home appliance consumption is close at hand.