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Affected by multiple factors, Haier Smart Home’s operating profit still increased by 15.8% in 2023

  Whether it is overseas local brand creation, global high-end brand creation or smart home construction, they all require continuous investment over many years. The impact on the company’s short-term profits is obvious, but this is a cost that companies must pay for long-term development. In a sense, whether you are willing to invest in the future is a question of whether immediate interests or long-term interests are more important, and where you prefer to put the future.

On the evening of March 27, Haier Smart Home (SH600690) took the lead in releasing its 2023 annual report. The financial report shows that in 2023, Haier Smart Home achieved revenue of 261.428 billion yuan, a year-on-year increase of 7.33%; operating profit of 16.921 billion yuan, a year-on-year increase of 15.8%; net profit attributable to the parent company was 16.597 billion yuan, a year-on-year increase of 12.81%, and profit growth continued. Exceeding the revenue growth rate; the net cash flow generated from operating activities was 25.262 billion yuan, a year-on-year increase of 24.71%, and the quality of operations continued to improve.

Affected by the solid performance, on the first day after the release of the financial report, Haier Smart Home A shares and H shares jointly became the leading stocks driving the rise of the sector. As of the noon break on March 28, Haier Smart Home’s A shares rose 6.31%, with the highest intraday increase of 6.81% reaching 25.40 yuan; H shares rose 7.78%, with the highest intraday increase of 7.78% reaching 24.25 yuan. The increase was the highest in the industry.

  Six highlights

In summary, Haier Smart Home’s 2023 annual report has six major highlights:

  Point 1: Haier has achieved growth in all categories.Among them, the high-end market share of air conditioners ranks first, with operating profit margin increasing by 1.4 percentage points. It is considered by the outside world to have great growth potential and good growth momentum.

  Point 2: Casarte has been ranked No. 1 in the high-end market for eight consecutive years.

  Point 3: Overseas high-end brand creation continues to lead in multiple regions.

  Point 4: Digital transformation enables continuous optimization of rates.In 2023, the rate will be further optimized by 0.23pct.

  Point 5: The retail sales of Sanyiniao stores increased by 84% year-on-year.

Point 6: The shareholder dividend ratio continues to increase. In 2023, Haier Smart Home’s dividend ratio is planned to be increased from 36% in the past to 45%, and the shareholder dividend ratio for the next three years (2024-2026) will be announced. The shareholder dividend ratio in 2025 and 2026 will not be less than 50%.

In summary, in 2023, Haier Smart Home will ensure long-term, stable and predictable development of its business operations by continuing to promote global independent brand creation, high-end brand creation and accelerating the implementation of smart homes.

The current and long-term future after financial report data

Every financial reporting season, after Haier Smart Home releases its financial report, everyone will think of the other two companies. On the same night, Midea Group also released its 2023 annual report. The financial report shows that Midea Group’s revenue will increase by 8.1% in 2023, and its profit will increase by 14.1%. Gree Electric has not yet released its 2023 annual report.

Next, we will look at the characteristics of the annual reports of these two companies from the two dimensions of “current and long-term”. Let’s look at a table first.

Revenue and profit growth rate table from 2021 to 2023

Let’s look at the current 2023 annual report first. To understand the 2023 annual report, you need to compare it with the 2022 annual report for the same period. Haier Smart Home’s revenue growth rate in 2022 is 7.22%, and its revenue growth rate in 2023 is 7.33%; its profit growth rate in 2022 is 12.48%, and its profit growth rate in 2023 is 12.81%.From these two sets of data, we can see that Haier Smart Home’s business will continue to grow steadily under a high base in 2022.

Looking at Midea Group again, the revenue growth rate in 2022 is 0.68%, and the revenue growth rate in 2023 is 8.1%; the profit growth rate in 2022 is 3.43%, and the profit growth rate in 2023 is 14.1%.From these two sets of data, we can see that Midea Group’s business will resume high growth in 2022 on a low base.

Then let’s look at the “long term”. Let’s first look at the compound growth data of revenue and profit over the past three years.

Judging from the data of the past three years, Haier Smart Home’s revenue compound growth rate was 7.1%, and Midea Group’s was 4.3%; Haier Smart Home’s profit compound growth rate was 12.7%, and Midea Group’s was 8.6% during the same period.

From a three-year perspective, Haier Smart Home’s business performance has been very stable.

In fact, the growth rate of Haier Smart Home is also affected by some external factors:

First of all, Haier Smart Home is the most globalized company in China’s home appliance industry, with more than half of its revenue coming from overseas. However, demand for home appliances will slow down in Europe and the United States in 2023, which is bound to have an impact on Haier Smart Home’s revenue that year.

Secondly, the Federal Reserve will raise interest rates four times in a row in 2023, which will also have an impact on Haier Smart Home, which has a higher weight in overseas markets, and will have an impact on Haier Smart Home paying more interest.

Thirdly, Haier Smart Home insists on creating independent brands overseas. This investment is basically not available in its peers, or is much smaller. It is foreseeable that Haier Smart Home will continue to invest in the next few years, even if it has an impact on profits. , in his view, this is a tuition fee that any company with a global vision must pay. If you don’t pay, you will have no future.

  Whether you are willing to invest in the future or not is essentially a question of which is more important, “immediate benefits” or “long-term benefits.” It is a question of where you place the future.

To give an example: In 2023 alone, Haier Smart Home has deployed an Egyptian ecological park and put into operation a kitchen appliance factory in Pakistan. Similar investments have not occurred among peer companies.

Every coin has two sides. Looking at it from another perspective, Haier Smart Home still achieved a growth of 7.62% overseas despite the weakening market and the unfavorable background of US dollar interest rate hikes. This also reflects the resilience of Haier Smart Home’s globalization strategy.

In addition, the El Niño phenomenon in 2023 will boost the hot sales of air conditioners to a certain extent, which is a bonus for companies with a relatively high proportion of air conditioning business. Total data from AVC shows that in 2023, retail sales in China’s home appliance market will increase by 3.6% year-on-year, while retail sales in the air-conditioning industry will increase by 7.5% year-on-year, which is significantly higher than the average growth rate of the home appliance industry.

In 2023, Haier Smart Home’s air-conditioning business will increase both revenue and profits, with profit margins increasing by 1.4 percentage points. However, compared with Midea Group, whose main business is air conditioning, there is still a certain gap in its performance growth: According to the 2023 annual report released by Midea Group, its HVAC business revenue was 161.1 billion yuan, accounting for 43% of total revenue. above.

  Haier Smart Home has high potential

Haier Smart Home is an enterprise with a complete competitiveness structure. The boards of multiple competitiveness factors are relatively long, so some people say that “Haier Smart Home is a company with high potential.” This is the basis.

To give two representative examples: Today, Casarte has become a globally recognized high-end brand. It is a template that peer companies must learn from when promoting high-end brands. High-end transformation is not something that any company can achieve, but Haier Smart Home has done so. arrive.

Then there is Tri-winged Bird, which is still the only scene brand in the world. Today, when all home appliance companies “speak of scenes”, looking up, Haier Smart Home has long stood at the commanding heights of scene ecology.

But I think this is still not the most critical thing. What is the most critical thing? It was Haier Smart Home that foresaw the inevitable arrival of the era of globalization more than 30 years ago and implemented its layout early. On this basis, it successfully shaped the image of Haier’s high-end brand. This not only clears the way for Haier Smart Home to become a respected international and global enterprise, but also injects unlimited momentum into the sustainable development of the enterprise.

Today, Haier Smart Home is the Chinese home appliance company with the greatest influence in overseas markets, the best brand image, and the highest market share. This is a strategic advantage and the future that every Chinese home appliance company with the dream of going overseas desires.

The above is based on the basic market of Haier Smart Home.

If you look at the possible impact of short-term factors on Haier Smart Home in the future, there are two sides of the coin: four U.S. dollar interest rate hikes in 2023 will have an adverse impact on Haier Smart Home; however, Goldman Sachs Group’s prediction on March 19 is that in 2024 the U.S. There may be three interest rate cuts, which is undoubtedly a good thing for Haier Smart Home.

At the same time, Haier Smart Home has insisted on deepening digital transformation in recent years, and it can be said that it has stepped on the drumbeat of high-efficiency growth. Through continuous deepening of digital transformation, Haier Smart Home’s expense ratio is expected to continue to be optimized in the next few years.

Digital transformation has a significant effect on improving corporate operating efficiency, and Midea Group has done a good job in this regard. For Haier Smart Home, it has continued to focus on digital transformation in the past two years, and the effects of rate optimization will continue to show.

In short, it is not rigorous to draw any general conclusions based on the data of one time and one place. The correct way to observe a company should be from the perspective of analyzing the competitiveness structure of the company. Precisely, the distinctive feature of Haier Smart Home’s corporate competitiveness structure is completeness – this is also the commonality of all respected companies in the world. Such a competitiveness structure is reflected at the operational level, which means that the future of the company is highly certain and will not happen. Ups and downs. Why do many people say that the future of Haier Smart Home is foreseeable? The basis is here.

In fact, the management of Haier Smart Home is also full of confidence in the future. When releasing the 2023 annual report, it released the latest dividend plan. In 2023, Haier Smart Home plans to increase the dividend ratio from the original 36% to 45%, and formulates a three-year plan for the next three years. In the annual (2024-2026) shareholder return plan, the dividend ratio in 2025 and 2026 will not be less than 50%, which is also a reflection of confidence.

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