Author/Yimou
Source/Mantis Finance (ID: TanglangFin)
On December 9, Haier Electric issued an announcement stating that the special shareholders meeting passed the privatization proposal with 99.99% of the votes. Prior to September 1, Haier Zhijia shareholders meeting had passed the resolution with a high of 99%.
Here is a detail-the shareholders of the two major listed companies all passed the resolution with high votes.
Not only that, with the privatization progressing on schedule and the establishment of a double inflection point for business governance, recently 15 institutions including Citibank, Essence Securities, Guosheng Securities, and Zhongtai Securities have all given positive ratings such as “buy” and believe that Haier Zhijia Profitability will continue to improve and performance will be even better.
(Data source: wind financial terminal)
In fact, since the market rumors about the privatization of Haier Appliance on December 12, 2019, Haier Appliance’s cumulative increase has reached 77%, while the Hang Seng Index has increased by only 0.71% during the same period; Haier Zhijia’s cumulative increase has reached 56%, and the Shanghai Composite Index has increased by 15%.
This shows that both shareholders and the capital market are very satisfied with this privatization plan, and they are full of confidence in Haier Zhijia, which will be listed on the "A+D+H" three places on December 23!
In the short term, the three major benefits will promote Haier Zhijia into battle
From the current point of view, the privatization of Haier Zhijia has released three benefits:
First, after the merger, business synergy will be closer, and the home appliance business segment will form a whole.
Due to historical reasons, Haier's dual-platform business relationship is complicated. Among them, Haier Electric is responsible for domestic washing machine, water heater, water purifier manufacturing and domestic sales channel distribution business, and the rest of the refrigerator, air conditioner, kitchen appliances and overseas home appliances are owned by Haier Zhijia.
This has resulted in the restraint of the consistency of the operations of the two companies. The sales channels at home and abroad are scattered, and it is often necessary to rely on each other to solve sales and management problems. It seems that they are separated, but in fact they are everywhere.
After the merger, the two will no longer have interests involved, and the management conflicts caused by the interlocking of products and channels will be fundamentally resolved, greatly optimizing operational efficiency and the response cycle of the whole process, and further deepening the synergy between domestic and overseas businesses.
After years of overseas deployment, Haier Zhijia has established a firm foothold in various regions, and each region has achieved high income growth year by year. In 2019, Haier Zhijia’s overseas operating profit margin was 3.4%. According to Mantis Finance's calculations, after the completion of privatization, it is expected that its overseas business operating profit margin is expected to be in line with the domestic business operating profit margin in the long term.
Second, financial coordination is more consistent and investor understanding is simpler .
In the past, Haier’s home appliance business was listed in A-shares and H-shares. The different financial statement calibers and complicated consolidation scopes virtually increased the difficulty for investors to understand its value and lowered the company’s valuation. .
In terms of finance, Haier Electric has accumulated a large amount of cash flow, and Haier Zhijia has to accelerate expansion of cash flow, which makes profit margins low.
After the merger, it will not only be easier for investors to increase their valuation expectations for the company, but also greatly improve the company’s financial efficiency. Based on Wind’s consensus forecast, after the completion of this privatization, Haier Zhijia will reduce profit leakage and increase in 2019 The net profit attributable to the parent company was 2.23 billion yuan (excluding the impact of logistics distribution on Haier Electric's net profit), an increase of 27.1% over the pre-privatization period. According to Mantis Finance, the performance of Haier Zhijia in this area in 2020 will be more optimistic and it is worth looking forward to.
Third, the shareholding goals are clear and consistent, and corporate governance is improved.
In the past, due to the scattered and complex shareholder structure, the leadership teams of the two listed company platforms were relatively independent, and the two would pursue their respective performance, causing serious mismatches of interests, overlapping expenses, and related transactions.
With the unification of the platform, Haier Smart Home can better manage and dispatch, so that the interests of employees are highly consistent with the interests of the company. At the same time, it can also solve many related transaction problems, reduce friction costs between businesses, and reduce operating expenses.
In response to the channel reform that the market is generally concerned about, with this integration transaction, Haier Smart Home will fully integrate KA and its own channels. At the same time, it will vigorously promote the digital transformation of channels, improve the efficiency of marketing expenses, promote unified warehouse allocation, and improve terminal sales. Efficiency, and feed back to improve manufacturing efficiency. As a result, it is expected to directly bring about the improvement of Haier Smart Home's sales expenses and management expense ratio. According to Mantis Finance, it is expected to return to the level of 2018 in the short term, with a total decrease of about 1.5%, and is expected to reach the industry's best level in the long term.
In the long run, the scene and ecology will accelerate, releasing new growth momentum!
Of course, in addition to the short-term benefits, the long-term effects of this wave of privatization are also very meaningful.
On the one hand, it accelerates the advancement of Haier Smart Home's scenario strategy, and is more conducive to realizing the global leadership of the scenario brand.
At present, only the home furnishing industry as a whole can present the evolution of “electrical appliances → network appliances → scenes → ecology”. In the era when experience is king, Haier Smart Home is actively pursuing the ecological brand strategy of IoT smart home.
As companies with strong brand manufacturing capabilities, Haier Zhijia and Haier Appliances have achieved single-product leadership in their respective categories, including Casarte, which occupies the high-end market.
After the privatization and integration, it can deepen the integration of a full set of products to create smart home solutions, which is conducive to the integration of various product lines, enhances user experience, solves worries about the scene brand "Triwing Bird" launched by Haier Zhijia, and accelerates scene customization , Experience customization, and take advantage of industry changes to achieve global leadership in scene brands.
On the other hand, the integration of the two companies can deeply integrate various business formats and accelerate the global implementation of ecological brands.
From the perspective of Haier Zhijia's long-term strategy, "covering industries with ecology" requires sublimation of its own development model from the data dimension, and provides users with customized services throughout the life cycle.
After privatization, it not only guarantees the integrity and diversification of smart home solutions, it helps to finally realize the joint construction and sharing of all categories of Haier Smart Home Experience Cloud Platform, but also further deepens online and offline integration to provide users with a full life cycle The best experience of customized services.
At the same time, Haier Zhijia can also use this to absorb more sub-business types and integrate it into the main body of the company. While creating the scene brand "Tri-Wing Bird", it also makes Haier Zhijia an ecological brand and further open up commercial growth. space.
Conclusion
Since the beginning of this year, SMIC, Alibaba, NetEase, JD.com and other companies have all started the steps of listing in the two places. Based on past experience, A+D+H is more conducive to improving stock liquidity and injecting more into Haier Smart Home may.
In terms of long-term returns, Haier Zhijia’s management structure, business lines, and product layout will also be gradually clarified and optimized. Existing shareholders of the two major platforms are expected to benefit in the long run.
Therefore, Haier Zhijia listed in the three places will also usher in more possibilities.
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