On the afternoon of May 20, Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) ( Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) , SZ) held the 2021 annual general meeting of shareholders as scheduled at its headquarters in Shunde, Foshan. In the past 2021, Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) achieved an operating revenue of 14.91 billion yuan, a year-on-year increase of 13.05%; The net profit attributable to the shareholders of the listed company was 792 million yuan, a year-on-year decrease of 29.15% compared with 2020. The company once explained in the annual report that the decline of the company’s profits was mainly affected by the rapid appreciation of the RMB against the US dollar in the early stage of last year and the sharp rise in the price of bulk raw materials.
Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) is the leading exporter of small household appliances in China. On the afternoon of May 20, the reporter of the daily economic news attended the annual general meeting of shareholders of Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) as a shareholder and communicated with Chen Jingshan, the Secretary of the company after the meeting. Chen Jingshan told reporters that the company judged that for small household appliances, the overseas market demand will return this year, but the income is expected to remain stable; At the same time, there are still growth expectations in the Chinese market.
He also said that although the global economic growth is expected to be under pressure in 2022, there is great uncertainty about the improvement of business quality of Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) this year.
Overseas sales are stable and China has growth expectations
It is understood that Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) is mainly engaged in the export sales of western kitchen appliances. According to the annual report, last year, the foreign sales revenue of Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) accounted for nearly 78% of the total revenue, and the sales in China accounted for 22% Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) ‘s export business is mainly carried out in OEM / ODM mode. In 2021, the revenue of Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) odm / OEM accounted for nearly 85%, and the sales revenue of private brands accounted for 15%P align = “center” Image Source: Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) annual report screenshot
From the perspective of the division of labor in the international small household appliance industry chain, overseas brands are mainly responsible for the sales service of brand channels, while the product realization process, such as R & D, design and manufacturing, is mainly completed by relevant Chinese enterprises.
In terms of regions, the sales scale of Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) foreign countries and China increased year-on-year last year, of which the foreign sales revenue increased by 14.24% year-on-year and the Chinese revenue increased by 9.03%.
In 2022, the international environment in China has changed more than expected. The military conflict between Russia and Ukraine has led to the rise of international energy prices, the price of bulk raw materials is still high and volatile, the covid-19 epidemic in China has spread, and the consumption boom has been affected to a certain extent Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) 2022 first quarter financial report shows that in the first quarter, the company’s foreign revenue still increased by about 17% year-on-year, but the year-on-year growth of China’s revenue narrowed to 3%.
According to the summary data of Aowei cloud network (AVC), the retail sales of household appliances in China in the first quarter of 2022 was 144.4 billion yuan, a year-on-year decrease of 10.3%, of which the rarity of the online market decreased by 6.7%, the epidemic restrained the release of demand and increased market uncertainty. Among them, the retail sales of small kitchen appliances (13 categories such as rice cookers) decreased by 13.4% year-on-year, and the retail sales decreased by 11.1%.
Midea Group Co.Ltd(000333) chairman and president Fang Hongbo also said at an internal telephone conference in the United States that the next three years are expected to be a cold winter for the home appliance industry. So, for small household appliances, what is the market situation at home and abroad this year?
Chen Jingshan told the daily economic news that the overseas market demand for small household appliances will return in volume this year, but the income is expected to be stable. He believes that with the outbreak of the global epidemic in 2020, China’s small household appliance enterprises have achieved sustained high growth in overseas markets in the past two years by virtue of their supply chain advantages. But in fact, this is not normal, and the market will eventually return. “But the return is not expected to be a sharp decline in sales.”
Although the general environment of the industry is not friendly, for Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) , Chen Jingshan believes that the company has adjusted the price of products for several rounds since last year. Therefore, from the perspective of sales, the company’s overseas revenue will grow steadily in the first half of the year at least, and the annual export sales are expected to remain stable. For China, the Shanghai epidemic may affect the growth rhythm of the Chinese market, but the company judges that the Chinese market also has growth expectations for the whole year. “Since April, the sales growth rate of Mofei brand has been slowly rising.”
The improvement of the company’s operating quality this year is highly certain
The reporter noted that Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) mentioned in the 2021 financial report that the soaring cost of raw materials last year has become one of the important factors affecting the company’s net profit performance. The raw materials of small household appliances include PP, ABS and other plastic materials; Stainless steel, aluminum sector and other hardware materials.
Under the multiple pressures of rising raw material costs, fluctuation of RMB exchange rate and rising shipping costs, the overall gross profit margin of Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) in 2021 fell year-on-year. The gross profit margin of China’s sales decreased by 5.26 percentage points and that of foreign sales decreased by 5.7 percentage points.
However, by the first quarter of 2022, the revenue and net profit of Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) had returned to the state of double growth, with the revenue increasing by 13.46% and the net profit increasing by 4.6% year-on-year.
In the afternoon of May 20, Chen Jingshan said during the exchange with the reporter of the daily economic news that the recent devaluation of the RMB and the price increase measures of the company in the early stage will make the improvement of the company’s operation quality more certain this year. “The gross profit margin will rise and the operation quality will be gradually improved.”
It is understood that Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) currently operating brands mainly include donlim, Morphy Richards, gevilan, etc. Among them, Dongling is an independent brand, which is mainly sold in China; Mofei is the company’s sole agent of overseas brands, positioning in the high-end; Ge Lan, a brand of beauty care appliances, is still in its infancy. Last year, the main revenue of Dongling China was about 240 million yuan; Mofei’s revenue exceeded 1.6 billion yuan.
Chen Jingshan said that in the future, the company will continue to expand to the field of home care appliances and personal care and beauty appliances on the basis of western kitchen small appliances (such as electric coffee pots). He believes that different from standardized household appliances such as household appliances, small household appliances belong to highly differentiated products, with personalized consumer needs and fragmented factory orders. Next, Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) will still open the market through category richness. “We realized long ago that small household appliances must be decentralized in the future, which is a change brought about by the younger consumers.” “Category richness is Xinbao’s specialty and meets the current consumer demand.” Chen Jingshan said.
