Recently, Hisense released the 2020 semi annual report. According to the data of the annual report, in the first half of the year, the company realized an operating revenue of 21.09 billion yuan, a year-on-year increase of about 11%, and a net profit attributable to the parent company of 500 million yuan, a year-on-year decrease of about 48%.
According to the public data, the proportion of Hisense’s home appliance business has changed from 2015 to 2019: in 2015, the ice washing business accounted for 53% of the main business, and the air conditioning business accounted for 41.21%; however, by 2019, the air conditioning business had accounted for 47.87% of the main business, while the ice washing business had changed to 47.16%. According to the preliminary analysis, the net profit of Hisense appliances declined seriously in the first half of the year due to the biggest impact of Xinguan epidemic prevention and control on the air conditioning market.
Is the air conditioning road of Hisense appliances easy to go?
According to the detailed data of the report, in the first half of 2020, the domestic sales of Hisense home appliances air conditioners are still under pressure, and the export recovery is fast. Although the main business income of air conditioning business in the first half of the year reached 11.208 billion yuan, with a year-on-year growth of 25.72%, the revenue of household air-conditioning business in the first quarter of 2020 was 5.6 billion yuan, with a year-on-year decrease of 37%. Although the second quarter recovered, it is still expected to have a double-digit decline year-on-year.
As a comprehensive white power giant, Hisense’s business focus has gradually shifted to air conditioning in recent years. Last year, Hisense appliances increased its stake in Hisense Hitachi and consolidated the financial performance of Hisense Hitachi into the company’s financial statements. This year, Hisense home appliances has released several new air conditioning products, aiming to seize the market through the “healthy trend” in the home appliance market. In addition, the company quoted the statistical data of Aiken air conditioning refrigeration network in the annual report of 2019, saying that the market share of three brands of multi split central air conditioning of “Hisense”, “Hitachi” and “York” has risen to the first in the industry in 2019.
However, according to zhongyikang’s statistical data, in 2019, the total market share of the accumulated offline retail sales of the two brands of household air conditioners, Hisense and Kelon, ranks fourth only in the industry, and the total market share of online accumulated retail sales only ranks fifth in the industry.
It is worth noting that China’s air conditioning market has no longer maintained the high growth trend in previous years. According to grapefruit, according to the data of the national home appliance industry information center, the scale of the domestic air conditioning market in 2019 is 191.2 billion yuan, down 3.4% year on year, which is the first drop in China’s air conditioning market after three consecutive years of growth. To this year, the average price of air conditioning market is still not optimistic. Hit by the epidemic, the retail sales of air conditioning market in the first quarter of 2020 will drop by more than half, which will also lead to greater survival pressure of air-conditioning enterprises.
In this market situation, the leading enterprises in the industry are obviously sought after by the market due to their advantages in channels, brands and technologies, which leads to more prominent Matthew effect in the whole industry, and the gap between Midea, Gree and Haier and Hisense is further widened. It is reported that Gree’s performance forecast for the first half of the year shows that although the company’s performance has been cut back, it can still achieve a profit of 6.3-7.2 billion yuan; Haier’s first half report shows that the company’s gross profit is 6.866 billion yuan, the profit attributable to shareholders of the company is 1.335 billion yuan, and the adjusted operating profit is 1.216 billion yuan; and the net profit of Midea Group in the first quarter is 4.81 billion yuan.
The chairman sells the stock revenue to be questioned the moisture is much
On September 27, 2019, according to the announcement of Hisense appliances, the chairman and President of the company, Tang Yeguo, plans to sell a total of no more than 207900 A shares, accounting for about 0.015% of the total issued share capital, by means of centralized transaction bidding. Although there were many media inquiries, Hisense’s reply was consistent with the announcement that “the chairman’s sale of shares is for personal capital needs”.
Subsequently, Hisense appliance’s share price fell for five consecutive times, and its share price once reached a new low of nearly eight months.
At the same time, Hisense’s revenue growth in the past three years has also been questioned, which is not the credit of its main business. According to some industry insiders, from 2017 to 2019, the revenue scale was 33.48 billion yuan, 36.02 billion yuan and 37.45 billion yuan respectively, with a year-on-year growth rate of 25%, 7.5% and 3.98%; the net profit attributable to the parent was 2.018 billion yuan, 1.377 billion yuan and 1.794 billion yuan respectively, with a year-on-year increase of 85%, a decrease of 31% and an increase of 30%. However, the reason for the significant increase of net profit in 2017 is that it disposed of the equity of Foshan Baohong property and obtained 862 million yuan of income, accounting for about 43% of its parent net profit; in 2019, it consolidated Hisense Hitachi, an important asset with 49.2% of its holding. After the consolidation in September of that year, Hisense Hitachi brought in 3.156 billion yuan of revenue and 183 million yuan of net profit, Its revenue is actually down 5% year on year.
In addition, if we look at the profit structure of Hisense appliances in recent years, we can find that other income (government subsidies, etc.) and net investment income account for a large proportion of the company’s net profit. From 2017 to 2019, Hisense’s other income was 125 million yuan, 300 million yuan and 278 million yuan respectively, accounting for 6%, 21% and 15% of the parent net profit. Over the same period, the net investment income was 1.583 billion yuan, 829 million yuan and 1.122 billion yuan, accounting for 78%, 60% and 63% of the net profit attributable to the parent company, respectively. Overall, in the past three years, about 80% of the net profit attributable to the parent company did not come from the main business.
What is worrisome is that Hisense Hitachi, which brings a lot of revenue for Hisense appliances, has actually experienced a slowdown in growth. From 2017 to 2019, Hisense Hitachi’s revenue growth rates were 44%, 17% and 9.5% respectively, and the growth rate of net profit decreased from 28% in 2017 to 19% in 2019. The ice washing business, which used to be the focus of Hisense appliance, has been in a low growth range. According to data analysis, the compound growth rate of the company’s ice washing business in the past four years is 8.7%, which has experienced a cycle of negative growth, medium growth and low-speed growth. In recent five years, the gross profit rate of this business decreased first and then increased. The company’s notes payable and accounts payable in 2019 are as high as 12.878 billion yuan.
According to the data, in the first half of 2020, the market share of the accumulated offline retail sales of fresh air cabinet air conditioner ranked the second in the industry, and the market share of the accumulated offline retail sales of the company’s fresh air hanging unit air conditioner ranked the third in the industry; the business income of the central air conditioner achieved double-digit growth year on year. However, in the face of the more severe home appliance market environment in the second half of the year, can Hisense appliance really shorten the gap between Hisense appliances and the white power giant by relying solely on the new air conditioner new air conditioner and the declining growth rate of Hisense Hitachi in the central air conditioning market?
Editor in charge: Tzh