White is a bit "cold" looking for new engines

Recently, with the successive publication of financial reports in the third quarter, domestic white-electric companies have experienced a slight chill.

The financial report shows that after the extraordinary growth of the previous two years, the white electricity industry has obviously slowed down the pace: compared with the first half of the year, the growth rate of operating income and profit of the major white-power companies has dropped significantly. The diminishing effect of policies, the increase of unknown factors affecting the development of the industry at home and abroad, and the intensified market competition, the household appliance industry may have to learn to subside before the next round of explosive growth. However, the winter is still far away.

The earnings report is a bit cold

According to the financial report, Midea’s operating income in the third quarter was 19.841 billion yuan, a year-on-year increase of 9.41%, which was a far cry from the increase of more than 60% in the first half of the year; Gree Electric Appliances’ growth in the third quarter was 24.5%, less than half the increase in the first half; Among the giants, Qingdao Haier had the best performance. Third-quarter profit increased by 31.69% year-on-year, exceeding the 1.69% and 18.79% of the above two, but operating income growth also started to slow down. ST Kelon and Meiling Electric's operating income and profits fell sharply in the third quarter. When white companies have become accustomed to hyper-growth, the earnings report is a bit “cold”.

However, the industry has been foreseeing this. In August, Wang Jinliang, Vice President of China Refrigeration Appliance Group's China Business Division, warned during the “China Air-conditioning Industry Summit” that the air-conditioning industry may be “clear to cloudy with light rain” or it may enter a stage of low growth. A prophecy.

According to the monitoring data of China Yikang, in the third quarter of this year, among the three categories of ice-washing products, only washing machines performed well, and retail sales and retail sales both showed positive growth. Refrigerator retail volume decreased by 0.4% year-on-year, retail sales only slightly increased by 0.9% year-on-year; air-conditioning retail sales and retail sales both fell year-on-year, down 14.8% and 2.5% respectively.

Analyst Yang Zhigang of Guodu Securities’ home appliance industry analyzed the “China Electronics News” reporter that since the beginning of this year, the operating costs of raw materials, labor, and other operating costs in the domestic white-metal industry have continued to rise. In particular, the impact of cost-based inflation on the industry is very clear. Meiling Electric stated that its performance in the third quarter of 2011 was down, and inflation and rising prices of production factors led to the increase in product costs and expenses. The extension of real estate purchase restrictions to second- and third-tier cities is no different from white-power companies.

At the same time, the state support policy began to gradually withdraw: the energy-saving benefit subsidies expired in June, the policy of home appliances to the countryside withdraw from the end of this month, "start", home appliances replacement at the end of the year. The negative effects are also manifested at the same time. It is the air-conditioners that enjoy the most policy care, and the third quarter is usually the peak season for air-conditioning sales.

Cai Ying, Assistant Director of the Information Resource Development Department of the National Information Center, told the “China Electronics News” reporter that the tightening of the external environment is also “advancing”. He believes that due to the prevalence of inflation, rising unemployment in emerging market countries and developed countries; Japan's post-disaster reconstruction, and some political instability in the country, which have weakened consumer demand.

Winter has not arrived yet

"This round of adjustment may last one or two years." Wang Jinliang told the "China Electronics News" reporter. Peng Yi, director of research and marketing at Zhongkang Market, is much more optimistic: “The fourth quarter will begin to recover.” In his view, the white market has not encountered a “winter”.

An analyst who did not want to be named stated that despite the policy changes, the financial subsidies obtained by Midea’s electrical appliances have been significantly reduced, but from the perspective of the changes in gross margins, the positive effects of its “guarantee for profits” strategy began to show. For Gree, since air conditioning is still the largest sub-sector in the white-electricity sector, it will continue to be one of the biggest beneficiaries even though market demand will slow down.

The reporter saw from the financial report that the sales margins of Midea’s electrical appliances in the first quarter, second quarter, and third quarter of this year were 14.74%, 16.98%, and 17.78%, respectively, and those of Gree Electric Appliances were 16.45%, 15.51%, and 17.35%, respectively. Both showed steady growth.

In this regard, Yang Zhigang believes that the performance of white electricity companies can not escape the constraints of the macro environment. When the rigidity of raw materials and manpower costs rises, companies cannot transfer all the increased costs and expenses to the downstream and consumers, they must show that the income growth rate is not Cost growth, net profit growth is lower than income growth. In his opinion, the US and Gree's ability to achieve a slight increase in gross profit margin has been a very good performance.

"The recent drop in raw material prices is expected to further improve white-chip companies' profitability in the fourth quarter," he told reporters.

The third-quarter financial report was “dismal” relative to the previous quarter, and it is not unrelated to the expectation that withdrawal of the policy dividend will prompt consumers to consume in advance. According to Zhang Yanbin, Dean of the China Academy of Owe Research, many consumers have advanced their consumption in order to catch up with the last train of policies.

However, the first two years of ultra-high growth are difficult to reproduce. Hong Shibin, deputy director of the China Household Electrical Appliances Marketing Committee, predicts that the market growth of the white power industry in the next year will certainly be lower than this year, and some important categories may even show negative growth.

Looking for a new engine

After entering the smooth growth path, white power companies will have to face a difficult problem: Where is the next growth engine? This is related to who can grasp market opportunities.

"The white electricity industry chain is short, and the product is very mature." Peng Yu believes that white electricity is unlikely to appear as a revolutionary product of the iPhone to subvert the market, the future can only hope to release the consumption power of different levels of the market. According to data from Zhong Yekang, the total domestic household appliance market reached 905.5 billion yuan in the first three quarters of 2011, of which sales growth in the tertiary and tertiary markets was nearly three times higher than that of the primary and secondary markets.

Cai Ying cited air-conditioning as an example. In 2011, the year-over-year sales of air conditioners in the third-tier cities increased by 37.50%, and the sales growth in the fourth-tier cities reached 70.88%, far higher than the year-on-year growth of primary and secondary cities. The driving force for the growth of the industry in the tertiary and tertiary markets has become increasingly prominent.

Many companies have realized this. In the first half of 2011, Haier's franchise has expanded to 789 new outlets at the county level and 2,984 new outlets at the township level, with a sales network coverage rate of 94%. Midea's air-conditioning products are tailor-made for the rural market and are provided with special functions such as low-voltage operation and rat-proof boards in accordance with the national home appliance bidding document for rural areas. Earlier, Wang Jinliang, who claimed that “there are three or four market players in the world”, said that more than half of the sales growth of inverter air conditioners in the United States came from the third and fourth-tier markets.

Jiang Feng, chairman of the China Household Electrical Appliances Association, emphasized that there is still much room for improvement in the popularity of rural household appliances in China, especially inverter air conditioners. With the gradual narrowing of the price gap between fixed-frequency and variable-frequency air conditioners, the acceptance of inverter air conditioners in the rural market has increased significantly. "By 2015, China's inverter air conditioners account for 50% of the total, and will increase to 80% by 2020," she said. However, at present, the proportion in China is only 30%, and rural areas are even lower.