As a generation of "air conditioner double pride", the story of Midea and Gree dates back to 30 years ago.
In 1968, He Xiangjian established the "Beijiao Street Office Plastic Production Group", from plastic to hardware and auto parts. After 10 years of reform and opening up, the spring breeze is blowing, and China has set off a "home appliance fever", He Xiangjian patted his thigh and said that the hardware screws of plastic bottle caps have no gold content.
Therefore, in 1980, the production team successfully transformed into home appliances, and in the subsequent continuous competition, the strategic direction was clarified, and the business focus shifted from fans to air conditioners.
It was at this time that Gree appeared. Initially, the Zhuhai Special Economic Zone Industrial Development Corporation built a plastic factory, which spent 100,000 yuan in the 80s of the last century, but eventually developed into a well-known bad factory.
It turned out that Zhu Jianghong, who was just a factory technician, took over, and he also aimed at the electric fan, and he achieved a turnaround with the efforts of the times and individuals, and the head office then delivered another mess of Haili air conditioning to him, and with the arrival of Haili air conditioning, there is also a legend, Dong Mingzhu.
By 1996, the air-conditioning market was getting bigger and bigger, and Gree and Midea went on different paths.
Under the leadership of Dong Mingzhu, Gree has formed a sales army, and Dong Mingzhu, who has been sleepless in grassroots positions for 40 days to recover 420,000 old accounts, has both courage and novelty, and has achieved 17% sales growth in that year by subsidizing dealers to seize channels in the off-season.
On the other hand, in the United States, He Xiangjian took the path of research and development, changed the blood of workers, and emphasized high quality and high education.
It is said that at that time, 1,600 of the 4,000 employees of the United States had a technical secondary school degree or above, which was a rare team in the manufacturing industry at that time.
The time comes to 2024, and the competition between Gree and Midea continues. China's home appliances are gradually going global, and they who once only saw each other have begun to look to the long term, and the next chapter of the home appliance market is opened here.
Performance growth "exceeds expectations"
Judging from Midea's recently released annual report, 2023 can be called "better than expected".
The financial report shows that Midea's revenue and net profit in 2023 will increase, with the former increasing by 8.1% year-on-year to 373.7 billion yuan, and the latter increasing by 14.1% to achieve revenue of 33.72 billion yuan. On January 16, Fang Hongbo, chairman of Midea Group, predicted that Midea's operating performance will reach the best level in history in 2023.
Judging from the overall performance of major enterprises, Midea's excellent performance is also supported by the already hard market.
At the annual meeting, Gree, who sat in the audience and watched the employees sing "My mother is Dong Mingzhu", the 2023 performance forecast estimates that its total operating income will reach up to 210 billion yuan, and the net profit attributable to shareholders of listed companies will be between 27 billion yuan and 29.3 billion yuan, a year-on-year increase of about 10.2%~19.6%.
That is, on the stage of the annual meeting on January 28, Dong Mingzhu said that 2023 is the best year for Gree Electric since its establishment 33 years ago.
Looking at Haier, Hisense, and Fotile, almost all well-known home appliance companies are officially announcing their extraordinary performance.
On January 24, Jia Shaoqian, chairman of Hisense Group, said that in 2023, Hisense Group's revenue will exceed the 200 billion yuan mark, which is also the first time that Hisense Group's revenue has reached this height. At the 2024 Global Customer Conference not long ago, Hisense further disclosed specific information, revenue increased by 9% year-on-year at the same time, overseas markets have become a new engine of growth, with revenue of 85.8 billion yuan in 2023, a year-on-year increase of 13%.
Liang Haishan, vice chairman of the board of directors and president of Haier Group, said that in 2023, Haier Group's total global revenue will be 371.8 billion yuan, a year-on-year increase of 6%, and the total global profit will be 26.7 billion yuan, a year-on-year increase of 6%. Recently, Haier Smart Home's annual report released that only Haier Smart Home's operating income has exceeded the 250 billion level to 261.428 billion yuan, and the operating profit was 16.921 billion yuan, a year-on-year increase of 7.33% and 15.8% respectively.
In terms of overseas business, Haier's business in the United States and Europe both grew against the trend. The year-on-year growth rate in the United States was 4.07%, and the revenue growth in Europe was 23.93%, while the industry as a whole fell by 4%, but Haier has maintained the fastest market growth rate for 8 consecutive years.
In addition, Mao Zhongqun, chairman and president of Fangtai Group, also revealed in January that Fangtai's performance will continue to improve in 2023, with revenue from completed sales of 17.629 billion yuan, higher than 16.243 billion yuan in 2022. In the past five years, Fotile's performance has maintained growth, and in the high-end kitchen appliance track, Fotile has obviously gained a firm foothold.
As a downstream real estate industry, compared with the increasingly stable or even shrinking real estate market, the upward performance of home appliance companies is undoubtedly surprising. Chen Yihua, a researcher in the home appliance industry, believes that there are two main reasons.
On the one hand, although there is a long-term trend of recession in real estate in the long run, the market for housing still exists, and the group of buyers will continue to be active. "The reduction of the budget for buying a house will make more people choose to renovate their houses and renovate their home appliances to improve their quality of life. ”
On the other hand, the competition in the home appliance industry has been gradually increasing. The top brands continue to extend their product lines to find incremental markets, and the middle and tail brands either disappear or swallow up in the process of industry fluctuations, "The big fish eats the shrimp that the small fish and the small fish used to eat, hedging the decline of the overall market. ”
Chen Yihua concluded that this is also the reason why Midea Group's management and investors are concerned about this, growth is a fact, and it is difficult to guarantee whether growth is sustainable. After the announcement of the financial report, Midea ushered in a short period of positive growth, but as of press time, Midea's share price has fallen 2.11% to 65.32 yuan per share, with a total market value of 455.212 billion yuan.
Is listing in Hong Kong a good choice?
"It is said that Midea's financial report is good and its performance is strong, if it is really so powerful, why does it rush to go to the Hong Kong stock market?" In the forum discussing Midea's financial report, many investors asked their souls.
Judging from the current situation, Hong Kong stocks are indeed not the best investment market.
On March 26, Alibaba withdrew Cainiao's application to list in Hong Kong, and on March 12, Reuters, citing sources familiar with the matter, said that Li Ning was considering privatizing the company from Hong Kong stocks. According to iBrandi statistics, a total of 12 companies will complete the privatization process of their Hong Kong stocks in 2023, 22 in 2020 and 20 in 2021, compared with only 19 Hong Kong-listed companies privatized in five years from 2014 to 2018.
Ricky, a senior investor who has been paying attention to Hong Kong stocks and U.S. stocks for a long time, said that this is closely related to the low liquidity and sluggish market characteristics of Hong Kong stocks.
"The Hang Seng Index has fallen for the fourth consecutive year in 2023, and the 50 largest and most liquid companies on the Hong Kong Stock Exchange are not doing well, and the competitiveness of Hong Kong stocks for companies and investors will definitely continue to decline. ”
Ricky mentioned that factors such as declining liquidity and low turnover rates also affect investors' valuations of Hong Kong-listed companies. As the world's largest offshore RMB liquidity pool, the Hong Kong stock market has few retail investors, mostly foreign capital and professional investors, and its activity is already low.
In addition, it is deeply affected by the liquidity of the US dollar, and the problems of geopolitics and the violent interest rate hike of the US dollar are all hitting the vitality of Hong Kong stocks.
Why did Midea choose to be listed on the Hong Kong stock market? First of all, it needs to be made clear that Midea's performance fundamentals are not impregnable.
As of the first half of 2023, the balance of foreign currency monetary items on Midea's account was 51.673 billion yuan, which was lower than the foreign currency monetary liabilities. The balance of the latter is 66.26 billion yuan, and how to make up for the difference of nearly 15 billion yuan between the two is a test for the United States. In order to avoid losses caused by exchange rate friction when RMB is converted to foreign exchange, it is an optional way for the United States to directly attract foreign capital by transferring to Hong Kong stocks.
Secondly, it should be noted that Midea's business has passed a period of rapid growth, and the growth rate will decline after entering the mature period.
Judging from the situation disclosed in the 2023 annual report, Midea's three expenses (management, sales, and R&D expenses) have increased to varying degrees, with R&D expenses increasing by 15.6% compared with last year to 14.6 billion yuan, management expenses increasing by 16.4% year-on-year to 13.5 billion yuan, and sales expenses increasing the most, with a growth rate of 21.5%, and finally spending 34.9 billion yuan.
In 2023, Midea's sales expenses and management expenses will increase more than the increase in operating income and net profit, and the increase in investment in related expenses will shrink, which also means that Midea has gradually entered its own business bottleneck period. For it, it is necessary to find the right opportunity to break the situation, and at the same time prepare more sufficient bullets, no matter whether Hong Kong stocks can give it affirmation, at least in exchange for part of the financing income.
Beauty began to turn
All of the above shows that investors and players are cautiously optimistic about the future home appliance market.
AVC pointed out that in 2023, affected by many factors, the annual growth rate of China's home appliance market will be only 2.9%, and the overall market will remain at a low level. In 2024, it is expected that it will be difficult to improve qualitatively, and Aowei Cloud Network believes that the home appliance market will still face great pressure on demand growth, and the year-on-year growth rate of retail sales will be less than 1 percentage point.
In order to seek long-term growth, home appliance companies have two choices, one is to go to the high-end, and the other is to achieve diversified business.
In terms of high-end lines, Midea does not have exclusive brands like Casarte like Haier, and the COLMO and Toshiba written in the financial report are both acquired.
Chen Yihua mentioned that various home appliance companies are developing in the direction of high-end, intelligent and green, and whether R&D and transformation can obtain benefits is uncertain.
"Dual-brand retail sales increased by more than 20% year-on-year, with COLMO's market share in the high-end segment increasing significantly. The rhetoric of only mentioning the growth rate without writing specific values also makes many investors feel that they are "not honest enough".
Of course, for investors, there is no need for shareholders to worry too much.
In terms of diversified business, Midea's rhythm has been very stable. From the perspective of business, ToC's smart home field, HVAC and consumer appliances have grown, recording revenue of 161.11 billion yuan and 134.69 billion yuan respectively, while the TOB business unit focuses on intelligent building technology, robotics and automation implementation, new energy and industrial technology, etc., with annual revenue growth rates ranging from 12% to 29%, accounting for more than 26% of the company's total revenue.
Judging from omni-channel data, the growth rate of Midea's air conditioning sales from January to February 2024 will be 58.2%, only lower than Xiaomi's 60.3%, and higher than Gree, Haier, Hisense and other opponents.
In addition, together with the annual report, there is also Midea's dividend plan. Midea wrote in the announcement that it plans to pay a high dividend of 3 yuan per share in 2023, and the overall dividend amount will reach 20.8 billion yuan, with a dividend rate of 62% and a dividend yield of 4.67%.
Calculating the cumulative dividends of Midea since its listing in 2013, the total has exceeded 107 billion yuan, financial commentator Xia Xia said, "Midea can be called a model for the stock market." ”
Xia Xia also further explained that the fundamental reason for Midea's financing in Hong Kong stocks may be to expand internationalization, Midea's global business accounts for a large proportion, and the shareholder structure is more international, which is conducive to subsequent development.
According to Midea's annual report, its overseas sales business now accounts for more than 40%, "When I reviewed Japan's loss for 30 years, I found that there is a class of stocks in Japan with good returns, and there are two important factors: good dividends + global overseas business - maybe it also has reference significance for us." ”
According to public information,Hisense's business is expanding to smart medical、Optical communication and other industries,Gree's business has covered robots、Photovoltaic and other emerging fields。
Midea's accumulation in intelligent manufacturing, logistics, and supply chain has given it room to expand its business territory, but after going global, there will be more and stronger players fighting with it for bayonets. As it said in its letter to shareholders, "Sail into the uncharted seas without a compass in your hand." "The only thing that supports beauty all the way forward is its internal strength and courage, and now is the time to test them.
Author | You Glass