On the evening of April 29, Haier Zhijia released its first quarter 2021 financial report. During the reporting period, Haier Zhijia achieved revenue of 54.8 billion yuan, a year-on-year increase of 27%. During the same period, Haier Zhijia’s net cash flow from operating activities was 2.86 billion, a year-on-year increase of 149%.
Revenue exceeded expectations and cash flow continued to improve. Haier Zhijia's profit also achieved high growth.
According to the financial report, the net profit of Haier Zhijia in the first quarter of 2021 was 3.05 billion yuan, an increase of 185.3% year-on-year, and an increase of 42% compared to the first quarter of 2019.
In this regard, industry insiders have analyzed that Haier Zhijia has entered a period of dividends in performance. So what secrets are hidden behind the high net profit of Haier Zhijia?
Rates continue to improve, and online digital upgrades accelerate
The first tip to lift the profit veil is the improvement of rates. According to the financial report, Haier Zhijia’s rate in the first quarter continues the trend of rate optimization in 2020: the overall rate is optimized by 1.3 percentage points year-on-year, of which the sales expense rate is 14.3%, which is an optimization of 0.7 percentage points year-on-year; the management expense rate is 3 .9%, an improvement of 0.6% year-on-year.
If you look back in time, you will find that Haier Zhijia is like a giant walking on a downhill road with higher and faster paces. The survey found that the improvement of Haier's smart home rate is inseparable from online digital marketing and terminal information construction. Information shows that Haier Zhijia has built six online platforms to upgrade its business model from offline to online. Under effective control of expenditures, the overall expense ratio has been optimized.
According to data from the third-party platform Ovi Cloud, the main categories of Haier Smart Home in the first quarter not only achieved a high increase in online retail sales, but also ushered in an increase in market share. Take Haier Zhijia clothes dryer as an example. Based on the 9.38% market share in the first quarter of last year, the market share this year has surged 11.54% year-on-year to 20.92%. Combined with the overall growth of the industry, in the first quarter of 2021, the online retail sales of Haier Zhijia clothes dryers no longer increased by a few percent, but more than a few times. In the same way, combined with the above data, assuming that the retail sales base of online refrigerators in the first quarter of 2020 is 100, the retail sales of Haier Zhijia in the same period is 34.15, and the retail sales of Haier Zhijia online refrigerators in the first quarter of 2021 are about 68.27 (100x1.72x39. 69%), a year-on-year increase of up to 100%.
In the same period, the data of Zhongyikang also came to a similar conclusion. In the first quarter, Haier Zhijia's online retail share of various categories increased steadily, far ahead of the industry's growth rate.
Benefiting from the online digital upgrade, the proportion of Haier Smart Home's online retail sales will continue to increase in the future, which provides the possibility for continuous optimization of tariff rates.
At the same time, Haier Zhijia's overseas market performed amazingly and its operating profit increased significantly.
Specifically, during the reporting period, Haier Zhijia’s overseas revenue increased by 24.6% year-on-year. What's more worth mentioning is that overseas operating profit increased by 135% year-on-year, and overseas operating profit margin also increased by 2 percentage points to 4.6%.
On the one hand, relying on high-end products such as antibacterial, health, and intelligence to lead the industry, Haier Zhijia’s overseas high-end product revenue increased by more than 40%. On the other hand, through strategic cooperation and omni-channel integration, Haier Zhijia has accelerated its online transformation. As of the end of March, Haier Zhijia’s social media fans have increased to 12 million, and new production and sales networks have also been established in Egypt, Romania, Turkey and other places.
In addition, the gross profit margin of Haier Zhijia during the reporting period was 28.5%. Industry insiders said bluntly, “In the context of the sharp increase in the cost of raw materials, it is very difficult for Haier Zhijia’s gross profit to rise against the trend.”
On the whole, online digital upgrades have pushed costs down, allowing Haier Zhijia's product rates to be continuously optimized. Coupled with the hot sales of (high-end) products at home and abroad, the increase and decrease of the two have jointly pushed up the profit level of Haier Smart Home.
Ecological changes in the scene, long-tail value appears
If rate optimization, high-end products, and online transformation are regarded as profit improvement lines, then the ecological scene is a giant network organized by Haier Zhijia.
In September 2020, Haier Zhijia released the world's first scene brand Triwing Bird. Relying on its differentiated advantages such as integrated exhibition and sales, immersive experience, and one-stop maintenance service, Triwing Bird will shoulder the responsibility from the moment it is created. It is the important task of improving the efficiency of customer acquisition and the value of customer orders.
From the perspective of customer acquisition energy efficiency, with the advantages of offline experience, Triwing Bird gathers offline traffic, improves user retention in the scene, and promotes the conversion of offline and online users.
In terms of increasing the customer unit price, Triwing Bird seems to have more "experiences."
First of all, with an immersive and comfortable experience, high-end products are more acceptable to users, which in turn generates high profits.
Take Sanwing Haier Zhijia Beijing Experience Center 001 as an example. Although the average price of Casarte refrigerators, air conditioners, and washing machines is two or three times that of the industry, it has attracted a large number of users to buy. According to the quarterly report, Casarte’s revenue increased by 80% year-on-year. In terms of specific categories, the retail sales share of Casarte refrigerator reached 13.2%, an increase of 3.2 percentage points year-on-year, and the share of high-end refrigerators above 15,000 yuan reached 43%.
Secondly, under the scene-oriented service of Triwing Bird, various smart home appliances/home products are launched as a set, which not only reduces the cost of single product sales, but also exerts long-tail benefits and increases the value of customer orders. According to previous data, the per capita unit price of San Wing Bird Haier Zhijia Shanghai Experience Center 001 is as high as 220,000 yuan. Looking at the whole year of 2020, the three-winged bird scenario program effectively drove the sales of complete sets of products to increase by 41% year-on-year, of which the sales of high-end smart complete sets increased by 63.2% year-on-year.
The more gratifying change is that Triwing Bird no longer focuses solely on the home appliance scene, but based on the needs of users for clothing, food, housing, and transportation, expanding to the integrated family home scene.
Taking the three-winged bird food networking scene ecology as an example, through the Internet of Things technology, the standardization of cooking & dishes, and the digitization of cooking procedures, the Internet of Food delivered the "retail 15,000 sets, 120,000 dishes" New Year's Eve dinner package during the Spring Festival.
It starts with home appliances and ends with the family. Haier Zhijia, who rides on Triwing Bird, has not only increased product profits, but also found a new way to expand the home appliance industry.
A scene-oriented change that leads the industry kicked off.
Concluding remarks
From an industry perspective, home appliances are picking up faster in the first quarter.
According to the latest data from the Ministry of Industry and Information Technology, from January to March, the operating income of the domestic household appliance industry was 378.94 billion yuan, a year-on-year increase of 51.9%; the total profit was 20.12 billion yuan, a year-on-year increase of 76.5%.
For Haier Zhijia, the high profits mainly benefited from smart package sales, high-end brand strategy, digital transformation, and improvement in operating rates.
In the long run, with the continuous progress of cost reduction and efficiency improvement, high-endization and the release of the globalization strategy, Haier Zhijia, which has entered the new ecological scene of the scene, will enter a new stage of development.
Faced with changes in profits, sensitive capital markets are also deploying early. In the first quarter of 2021, the number of funds held by Haier Zhijia in the first quarter of 2021 increased by 57 compared to the fourth quarter of 2020.
After the profit exploded, the market value of Haier Zhijia also naturally became the next tipping point.