Haier Electronics 4Q16 Retail Sales Improved
Equity Research January 6, 2017 Haier Electronics 4Q16 retail sales improved Company Update Maintain BUY What's new Ticker 01169.HK According to CMM data for January~November 2016: CICC investment rating BUY 1) Haier refrigerator retail sales +9% YoY, washing machine Last close HK$12.98 CICC target HK$16.20 +13% YoY, water heater +14% YoY; and, 2) air conditioner +15% YoY, an obvious turnaround compared to 1~3Q16. 52wk price range HK$14.78~10.73 Market cap (bn) HK$36 Daily value (mn) HK$32.32 Comments Shares outstanding (mn) 2,792 4Q16, Haier retail sales clearly improved: 1) Haier has very Free float (%) 100 good high-end products. After digesting technologies from Fisher Daily volume (mn sh) 2.59 & Paykel and Sanyo, Casarte has launched very competitive Business sector Home Appliances & Electronics products that gained market reorganization; and, 2) the consumption upgrade trend is obvious in Tier-1/-2 cities; 01169.HK HSCEI as seen by the large increases in its ASP in Beijing and Shanghai. 118 109 Haier’s weak points (sales & marketing) began to improve: 1) dual managed (by both Qingdao Haier & Haier 100 electronics) channel mode switched and channel efficiency 91 improved; 2) retail-based assessment of dealers, and specialty (%) Value Relative 82 stores, channel inventory turnover efficiency improved; 73 3) products no longer blindly emphasize high-end; since 2H16, Jan-2016 Apr-2016 Jul-2016 Oct-2016 Jan-2017 Casarte is no longer limited to products >Rmb10k (market space too small); the launch of ~Rmb5,000 products puts its products (Rmb mn) 2015A 2016E 2017E 2018E in the price range of Siemens products; 4) increased branding 62,826 62,843 68,173 73,135 through traditional media; and, 5) its product innovation gained Revenue the market’s attention thanks to a report by CCTV.
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