Haier's market value soared by nearly a trillion

Author: Huang Yu

Editor: Zhou Zhiyu

Haier, which has always been low-key among the three giants of home appliances, has now become the darling of the market.

As of May 10th, Haier Smart Home's stock price has risen by nearly 50% this year, far exceeding the approximately 30% increase of its old rivals Midea and Gree. Haier's market value has also surged by nearly a trillion, just a step away from its historical high. It is no longer the one lagging behind among the "three giants of white goods".

As the three giants of the white goods industry, Midea, Gree, and Haier are often compared whenever their financial reports are released.

In the past few years, Midea has maintained its position as the revenue leader, while Haier and Gree have been catching up with each other. In terms of market value, Haier has long been at the bottom among the three giants.

However, starting from 2021, under the impact of external factors such as the pandemic, the market landscape of the three giants of white goods has changed. The revenue gap between Haier and Gree has widened, and Haier's market value has surpassed Gree's.

In terms of revenue, Haier's old rival Gree has fallen behind significantly. Data shows that in 2023, Midea and Haier achieved revenues of 373.7 billion yuan and 261.428 billion yuan respectively, while Gree only had 205 billion yuan.

By April 29th this year, the three giants of white goods successively released their first quarter reports for 2024. Midea achieved revenue of 106.5 billion yuan, Haier Smart Home achieved revenue of 68.98 billion yuan, and Gree Electric Appliances achieved revenue of 36.596 billion yuan, with year-on-year growth rates of 10%, 6%, and 2.53% respectively. Net profits attributable to shareholders were 9 billion yuan, 4.77 billion yuan, and 4.675 billion yuan, with year-on-year growth rates of 12%, 20.2%, and 13.77% respectively.

In the challenging market environment in recent years, Haier's performance has been remarkable, with more obvious growth potential. Looking at the performance of the past three years' first quarters, Haier Smart Home's compound annual growth rate of net profit attributable to shareholders is approximately 16%, significantly higher than Midea's 12% and Gree's 8%.

Performance directly reflects on the stock price. Haier's better-than-expected performance growth has been recognized by investors. Its stock price has risen by 49% this year, with a total market value increase of nearly a trillion to 296.2 billion yuan. It has successfully secured the second position in the white goods market value.

Veteran observer of the home appliance industry, Liu Buchen, pointed out to Wall Street News that in the past few years, in terms of compound growth rates of revenue and net profit, Haier has outperformed the other two companies. In addition, the stock prices of Gree and Midea have already surged in the past few years, while Haier's stock price increase now indicates a rotation in the industry.

Liu Buchen further analyzed that there are three reasons driving Haier's performance growth. Firstly, its global layout has reached the harvest period. Haier Smart Home has been tirelessly promoting internationalization for many years, and now it is finally time to reap the rewards. Secondly, the effect of high-end transformation is also good, providing the company with increasing premium capabilities. Thirdly, Haier Smart Home has actively promoted internal digital transformation in recent years, reducing costs and increasing efficiency within the company, which is beneficial for enhancing profitability Haier Smart Home's stock price has been influenced by multiple factors, in addition to its own performance drivers, it is also boosted by the favorable policy of domestic appliances trade-in and the potential interest rate cut by the Federal Reserve which may stimulate demand in the U.S. market.

According to Wall Street News, Haier launched a trade-in program last year, and in 2023, the sales contribution brought by the trade-in program in Haier's China region amounted to 54.8 billion yuan, accounting for approximately 30% of total sales.

In order to seize the market opportunity of the new round of "trade-in" activities, Haier, like other home appliance companies, has also introduced a "trade-in" plan. Among them, Haier has allocated 1 billion yuan for special trade-in subsidies.

In addition, Haier's overseas business development has gained favor from many investors.

Although there is still a considerable gap in scale compared to Midea at present, Haier is the most globalized among the three major white goods manufacturers.

In terms of revenue contribution, in 2023, Haier Smart Home's overseas market revenue was 136.4 billion yuan, a year-on-year increase of 7.6%, accounting for 52% of total revenue. Midea Group's overseas revenue accounted for only 40.56%, while Gree's was less than 10%.

According to Euromonitor International data, in 2023, Haier's market share in the global major household appliance market (retail volume) in key regions is as follows: ranked first in retail volume in the Asian market with a market share of 26%; ranked second in the Americas with a market share of 15.8%; ranked first in Australia and New Zealand with a market share of 14.6%; ranked fourth in Europe with a market share of 8.8%.

Against the backdrop of China's domestic appliance market entering the stock stage, exploring overseas markets has become an important direction for major home appliance companies to break through growth bottlenecks.

Haier Group's founder Zhang Ruimin started promoting Haier's globalization strategy early on, opening up the market with independent brands and overseas acquisitions, giving Haier a first-mover advantage.

In the future, the overseas market will be a new battlefield for the three major home appliance giants. For Haier, the road ahead is not all smooth sailing. How to deal with more intense overseas competition, how to improve the relatively low profit margins, and how to explore the second growth curve are all challenges that it needs to face.

The test of Haier's management wisdom has just begun