The high-growth field of small household appliances has become a hot track in the household appliance industry in recent years. Data show that my country's small household appliance industry will maintain a growth rate of around 6%-7% in the future, and the market size is expected to be close to 600 billion yuan in 2026. In the huge market opportunities, rising stars such as Delmar also frequently attract the attention of investors.
From brand design, to e-commerce agent operation, to the establishment of its own brand, Delmar has seized the trend of the times and achieved long-term development. From 2020 to 2022, the company's average annual compound growth rate will reach 21.83%. Recently, Delmar also released its first semi-annual report since its listing, and both revenue and net profit have achieved growth. Boosted by the positive news, on the day the financial report was released, Delmar’s stock price rose by more than 4%. In addition, in the last 90 days, a total of 8 institutions have given ratings to Delmar, 5 with buy ratings, and 3 with overweight ratings.
However, as market demand becomes more rational, competition in the small household appliance industry continues to intensify. In this situation, if Delmar wants to continue to maintain high growth, how will it go in the future?
Authorized brands continue to make efforts, and Delmar develops steadily
According to Delmar's semi-annual report, in the first half of this year, the company's revenue was 1.555 billion yuan, a year-on-year increase of 2.6%, net profit was 67.4708 million yuan, a year-on-year increase of 10.79%, and non-net profit was 63.2621 million yuan, a year-on-year increase of 13.59%.
At the same time that Delmar achieved this performance, the market share of small household appliances has reached 39%, surpassing small kitchen appliances for the first time. According to AVC’s omni-channel data from January to June 2023, the overall retail sales of small kitchen appliances decreased by 8.5% year-on-year, and online retail sales decreased by 8.2% year-on-year. Under this background, among the leading enterprises with a large proportion of small kitchen appliances, Joyoung’s revenue was 4.318 billion yuan, a year-on-year decrease of 8.34%, and its net profit was 247 million yuan, a year-on-year decrease of 28.66%; Supor’s revenue was 9.983 billion yuan, A year-on-year decrease of 3.31%, net profit of 881 million yuan, a year-on-year decrease of 5.6%.
In contrast, Delmar's performance is relatively good. In addition to benefiting from the expansion of the small household appliance market in which it is located, what else has it done right? From the perspective of business structure, the dual-drive model of the company's own + authorized brands provides a greater support for performance growth.
According to the semi-annual report data, Delmar’s own brand mainly focuses on small household appliances in the home environment, with a revenue of 720 million yuan, accounting for 46.3%, a year-on-year increase of 1.97% from the first half of the year; Philips authorized brands mainly focus on water health and personal care health Small household appliances, with a revenue of 820 million yuan, accounting for 52.7%, of which the water health business increased by 14.44% year-on-year, and the personal care and health business increased by 5.51% year-on-year, both of which were greater than the company’s revenue growth rate. It can be seen from this that Philips authorized brands It is still the main force of Delmar's performance growth.
In connection with the market environment, authorized brands have escorted the development of Delmar to a certain extent. According to data from Tianyancha, there are currently nearly 1.322 million small home appliance-related companies in my country, of which nearly 70% were established within five years. In this context, if latecomers want to form a strong brand and have strong market influence, they will undoubtedly need a large amount of long-term capital investment, and there is a risk of failure. With the help of major international brands, you can use their influence to quickly open up the market, and it will also help the company's own brand in the later stage of commercial landing. In addition, through close cooperation, enterprises also have the opportunity to learn from the internal management methods of big brands to achieve a substantial improvement in operational capabilities.
But this does not mean that Delmar relies solely on Philips to gain momentum, and its own strength should not be underestimated, especially in Internet operations. At present, Delmar conducts business mainly through online sales and supplemented by offline sales. Although the financial report does not specifically disclose online sales, it can be seen from the previous performance that its online channels are strong. The data shows that from 2020 to 2022, the company's online sales revenue will be 1.372 billion yuan, 1.507 billion yuan, and 1.79 billion yuan respectively, accounting for 61.68%, 49.68%, and 54.23% of the main business income.
Specifically, from the early days of Tmall and JD.com's traditional e-commerce, to new e-commerce channels such as Pinduoduo and Xiaohongshu, and then to live broadcast e-commerce, Delmar accurately followed the development trend of China's e-commerce and the pulse of the industry, so as to realize early Layout early harvest. According to the research report of CITIC Construction Investment Securities, in the first quarter of 2023, the sales volume of vacuum cleaners under the Delmar brand will basically rank top 6 on the Jingdong platform, TOP 10 on the Tmall platform, and TOP 4 on the Douyin platform. In addition, public information shows that Philips brand water purifiers will rank 4th to 9th in the sales ranking of Jingdong platform in each month of 2022, and Philips brand desktop drinking machines will rank 2nd to 4th in the sales ranking of Tmall platform in the same period , and the sparkling water machine ranked 1-3.
However, it is worth noting that with the explosive development of e-commerce in recent years, almost all home appliance brands have increased their online investment, and the online competition in the home appliance industry is very fierce. A year-on-year increase of 23%, of which, promotion expenses accounted for nearly 60% of sales expenses, a year-on-year increase of 12.64%, mainly from social e-commerce such as Douyin and off-site channel operations. Xiaoxiong Electric has also vigorously expanded its Douyin live broadcast channel. In the second quarter of this year, the sales expense ratio increased by 4.6 percentage points year-on-year to 22.3%. At the same time, the diversification of market demand has become more and more obvious.
In this situation, Delmar wants to strengthen its control over online channels and meet market demand to the greatest extent. It also needs to make efforts from the product side, and strengthening independent research and development has become an important direction for its future.
Strengthening independent research and development, Delmar is gradually consolidating its high-growth path
At present, the phenomenon of product homogeneity competition in the small household appliance industry is relatively prominent. Taking vacuum cleaners as an example, the new vacuum cleaners released by brands such as Timco, Midea, Haier, Chaimi, Puppy, and Roomi have a motor power of about 100,000 rpm and a filtration system efficiency of about 99%. The brush heads are similar. There are differences in shape design. It can be said that it is difficult to make differentiation, which is a common problem faced by small household appliance companies in product development.
At the same time, subtle changes have also taken place in the consumer market. With the rise of Generation Z, the requirements for younger, more diversified and intelligent small household appliances have become increasingly prominent. Based on this, if small home appliance companies want to break out of the tight encirclement, they undoubtedly need to launch more attractive products through continuous R&D and innovation in order to fully meet market demand.
For Delmar, strengthening product research and development has another meaning. In fact, relying more on big brands to expand the market, enterprises are in a passive state to a certain extent, and the operation fluctuations of big brands will also implicate the development of enterprises themselves. In the semi-annual report, Delmar also made it clear that if the company's trademark license is withdrawn within the authorization period, it will have a certain impact on the performance of the company's related businesses. Therefore, in order to maintain a high growth momentum, it is also necessary to strengthen self-production and self-research while relying on authorized brands to conquer cities and territories.
Although there will be a large cost investment in the early stage of self-production and self-research, in the long run, with the increase of scale effect and the efficiency improvement brought about by process transformation, enterprises may be able to balance the cost pressure. Therefore, strengthening self-research has also become the consensus of current industry companies. For example, Xiaoxiong Electric has established a three-level R&D system in recent years, with 10 R&D teams and nearly 300 R&D personnel to deal with complex product lines.
Delmar's semi-annual report also shows that the company attaches great importance to the multi-brand development strategy, and continues to learn and integrate in research and development, and continues to promote self-production and self-research. According to the financial report, Delmar's R&D investment in the first half of the year increased by 6.63% year-on-year, accounting for 4.5% of revenue, maintaining a relatively high level in the industry. In addition, the company recently terminated its cooperation with the Vantage brand and gradually reduced investment in non-core categories.
However, it can be foreseen from the current layout of enterprises in the industry that the competition around technology will become more intense. At the same time, increasing investment in self-research also requires private brands to have a certain market influence in order to achieve complementary effects. So, in terms of self-developed brands, what competitiveness does Delmar have to support its continuous development?
In fact, in terms of supply chain construction, Delmar has formed efficient self-owned production capacity and high-quality external supplier resources. Even if the trademark authorization does not continue, the company can apply relevant sales channels, marketing, production capacity, R&D capabilities and other resources to the corresponding products of its own brand, thereby enhancing the influence of its own brand.
In addition, one of the main reasons why small household appliances are favored by the market is because of their outstanding cost performance advantages. The competitiveness of Delmar is also mainly reflected in the extreme cost performance of its own brand.
Taking floor washing machines as an example, as of April 2023, Delmar will be the leader in the price range of online floor washing machines below 999 yuan, and its sales share of online floor washing machines will be as high as 49% in 2022. In the price range of 1000-1499 yuan, the sales share of Deerma floor washing machines is second only to Midea, and higher than that of Bisheng, Timke and Supor.
It is also worth mentioning that the home environment cleaning track of Delmar's self-developed product layout is still in the early stage of penetration. Statistics show that the current penetration rate of clean appliances in my country is close to 40%, while the penetration rate of clean appliances in most overseas countries has exceeded 80%. The vast market space also gives Delmar a bigger "stage" to flex its muscles.
On the whole, Delmar relies on its unique channel advantages and continuously strengthens research and development, which is expected to further increase the market share of its own brand. Leveraging Philips to enhance its strength and voice is an indispensable part of strengthening its own brand. ring. Under the dual brand-driven strategy, Delmar's performance may reach a new level.
Author: Perfect Lee
Source: Songuo Finance