Haier Smart HomeThe change is determined.

Last Friday evening, Haier Smart Home andHaier electric applianceHaier Smart Home plans to privatize Haier Electric by issuing H shares plus cash, with a cash payment of HK $1.95 per Haier Smart Home's newly issued H shares for each planned share, according to a joint announcement.

Upon completion of the transaction, Haier Electric Appliance will become a wholly-owned subsidiary of Haier Smart Home and be delisted from the Hong Kong Stock Exchange, while Haier Smart Home will be listed and listed on the main board of the Hong Kong Stock Exchange, becoming the first listed company with "A+D+H" shares in China.

After the release of the privatization draft, by the close of August 5, Haier Smart Home's cumulative increase in just three trading days was close to 21.6%.

The capital markets have high expectations for this. As one of the three giants of White Power, Haier Smart Home's valuation gradually lags behind that of Midea and Midea in recent years.Gree. If the privatization is completed, the two listed companies in Haier's home appliance business will be merged into one, which will help to repair the valuation and further release Haier Smart Home's experience cloud strategic dividend.

Why is Haier Smart Home underestimated?

Since the listing of the Big three, the market capitalization has changed almost the same. But since 2016,MideaWith the market capitalization of Gree Electric Appliances rising, Haier Smart Home's valuation continues to be under pressure. Haier Smart Home's market capitalization has always hovered around 100 billion in recent years, lagging behind Midea and Gree.

In fact, Haier Smart Home has a global leading brand and R & D reserve in the upstream manufacturing end, while in the downstream channel retail side, the strategic layout such as unified warehouse allocation, data management and retail empowerment has been highly recognized by the market. But how much you recognize Haier Smart Home's brand and products, how much you wonder about its business results. It seems that all the strategies are quite right, but the profits failed to grow from beginning to end.

Guosheng Securities analysts Ju Xinghai and Ma Wangjie said in the research report that Haier Smart Home's net profit could not be effectively released because of the complex ownership structure and staggered business of the group system.

For a long time, Haier dual-platform business and governance model have the problem of "internal friction".

Before the privatization, Haier was a controlling subsidiary of Haier Smart Home, and Haier Smart Home and its wholly-owned subsidiaries together accounted for 45.68 per cent of Haier's issued shares. According to the first quarterly report in 2020, Haier Electric Appliance holds 19.13% of Haier Smart Home's shares. Haier Smart Home and Haier hold shares crisscross each other.

However, the management teams of Haier Smart Home and Haier Electric Appliances are relatively independent, the major business decision-making process needs to span two listed companies and two management teams, and each has its own assessment objectives and performance standards, and equity incentives are also carried out separately. it leads to the disunity of management interests, the overall operation procedure is more tedious, the communication efficiency is reduced and so on.

Can the strategic dividend be further released?

The way the two platforms operate also affects the landing effect of Haier Smart Home's experience cloud strategy to a certain extent.

According to Haier Smart Home's report in 2019, in order to lead the development trend of the industry "Electrical → net device → scene → Ecology" and to meet the personalized needs of users, Haier Smart Home created a smart family solution, from selling products to selling solutions, focusing on AI+IoT capacity building, created a smart home "ecological cloud", launched Haier Smart Home APP, and released a complete set of smart family solutions.

Haier Smart Home said in his 2019 annual report, "in 2019, the first intelligent scene interactive experience center was completed and operated, fully enabling smart scene solutions online and offline, promoting smart family ecological brand building, and realizing the transformation of scene instead of products and ecological coverage industry." It is reported that Haier Smart Home is currently actively promoting experience operation, getting in touch with more manufacturers, selling clothes hangers, washing products, food and other related products in the experience hall.

After the completion of this deal, it will be more beneficial for Haier Smart Home to promote the landing of Zhijia's experience cloud strategy and the coordination of global resources.

The whole category of Haier home appliance business plate will share a unified planning, research and development, marketing, service system and smart family life platform, and drive income growth through the cross-selling of all categories of smart home solutions. At present, the consumption of household appliances presents the development trend of household integration, integration, intelligence and scene. Haier Smart Home's multi-category layout has greatly enhanced its competitiveness. Through the internal deep integration of all-product integration and the reform of the digital business system of the whole industry chain, Haier Smart Home will improve the operational efficiency of the whole process.

In addition, over the years, Haier Smart Home has actively fought overseas, acquiring well-known overseas household appliance brands such as GEA, Fisher Parker and Sanyo Electric, with a resource network all over the world. It is not only to gain the development experience of household appliance brands, but also to obtain some core technologies, which lays the foundation for Haier Smart Home's technical collaboration.

Haier Smart Home believes that this transaction will help the company optimize the allocation of resources around the world, enlarge the platform value of the whole process, and drive revenue growth through overseas expansion of washing machines, water heaters and water purifiers. At present, Haier Smart Home's refrigerators, washing machines, water heaters and other categories have ranked first in the market share.

Will it be perfect after privatization?

Haier Smart Home has his own unique moat.

Haier Smart Home's strategy has always been forward-looking. It is the white power company with the most perfect brand layout among Chinese household electrical appliance enterprises. it is the first to enter the stage of brand matrix operation and has the advantage of first mover. The layout of unified warehouse allocation, information construction and C2B modelLeading industry. Manufacturing also has sufficient brand accumulation and technological advantages, especially the high-end brand Casati, which has been cultivated for many years, whose market share in high-end refrigerators and washing machines is as high as 40% and 75.5% respectively by 2019. Moreover, Haier Smart Home is also a pioneer in the global operation of Chinese household appliance enterprises.

So, how much is Haier Smart Home worth after the transaction is completed?

The analyst team of Ju Xinghai and Ma Wangjie of Guosheng Securities made a hypothesis that income growth will grow by an average of 10 per cent in the five years from 2020 to 2024, and the net interest rate will rise to about 7 per cent after 2024 due to the efficiency improvement of Haier Smart Home. According to 15 times PE, Haier Smart Home is valued at about 307.5 billion in 2024, which is nearly 100 per cent higher than the current market capitalization as a whole.

Of course, whether it is 307.5 billion yuan now or in 2024, it is on the low side compared with competitors Midea and Gree. But it also means that after the completion of privatization, Haier Smart Home's valuation has a lot of room for improvement. It should be noted that the privatization of Haier Smart Home is only the integration of the home appliance business plate. So after privatization, Haier Smart Home is still called "Haier Smart Home", not "Haier Group", which is why Haier Smart Home cannot be compared with Midea and Gree in market capitalization. After all, Haier Smart Home is only the home appliance business segment of Haier Group.

Therefore, after solving the platform interests and governance of the main industry of home appliances, the market is more looking forward to the change of Haier Smart Home.