Loss of Over 1.1B: Can Integrated Stove Firms Withstand the Chill?
Significant decline in sales, sharp drop in revenue, and sudden fall in profits...
In the first half of 2024, integrated stove companies felt the chill, and the impact of this sudden cold snap was reflected in the financial reports of listed companies such as Marsman, Zhejiang Meida, Shuai Feng Electric, and Yitian Smart.
Wind data shows that in the first half of this year, the above-mentioned four listed companies all fell into a situation where both profits and revenue declined sharply.
Revenue and net profit attributable to the parent company decreased by a total of 1.134 billion yuan and 399 million yuan respectively compared to the same period last year.
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Why is this cold snap sweeping the integrated stove industry so fierce?
How long will it last?
How should the related companies resist?
The collective encounter of declining profits and revenue can be described as "each has its own troubles" in the situation of the four integrated stove listed companies in the first half of 2024, especially the second quarter.
From the perspective of revenue scale, as the youngest among the listed companies of integrated stoves, Shuai Feng Electric has been striving to catch up with the "big brothers" before it, but the chill of the market in the second quarter of this year caught the company off guard.
From April to June 2024, Shuai Feng Electric's revenue fell sharply by 58.44% year-on-year, the largest decline among the four listed companies of integrated stoves, and the revenue scale of 116 million yuan in a single quarter was only slightly better than the company's performance in the first quarter of 2020.
Coupled with the revenue that had already declined by more than 30% year-on-year in the first quarter of this year, Shuai Feng Electric's revenue data in the first half of 2024 was fixed at 233 million yuan, lower than the same period data before the company went public.
Similarly hit hard in revenue was once the "big brother" of integrated stoves, Zhejiang Meida.
In the second quarter of this year, the company's revenue fell by 57.09% year-on-year, second only to Shuai Feng Electric, setting the largest single-quarter decline since the second quarter of 2020.
In the first half of 2024, Zhejiang Meida's revenue shrank to 459 million yuan, already lower than the same period level in 2018.
Amid the industry's performance decline, the revenue data of Marsman, the most famous listed company in the integrated stove industry, was dazzling.
The company's revenue in the first half of this year fell by 31.90% year-on-year, the smallest decline among the four listed companies of integrated stoves.
However, looking at the net profit attributable to the parent company, Marsman's data fell by 69.82% year-on-year, a significant deviation compared to the revenue decline data, especially in the second quarter, Marsman's net profit attributable to the parent company fell by 95.23% year-on-year to less than 4.16 million yuan, ranking last among the four listed companies of integrated stoves, while the same period company's revenue decline was 42.97%, less than half of the net profit decline.
However, it still led with a revenue of 349 million yuan.
"In the first half of the year, the company spent more on 'three expenses' and did not significantly reduce related inputs because of poor performance."
Marsman's securities department staff told reporters from the "Public Securities Daily" that the company is currently taking cost-saving and efficiency-enhancing measures including "process optimization" and "R&D optimization" in combination with the market environment, but "the money that should be spent will continue to be spent."
Yitian Smart, which has been developing well in recent years, also performed poorly in net profit attributable to the parent company.
In the first six months of 2024, the company's net profit attributable to the parent company fell by 86.12% year-on-year to 17.61 million yuan, not only ending the "rapid progress" of the net profit attributable to the parent company data in the semi-annual report from 2020 to 2023, but also setting the lowest value since the company went public.
Looking at the quarters, Yitian Smart's net profit attributable to the parent company fell by 88.88% and 84.82% year-on-year in the first and second quarters respectively.
If the fourth quarter of 2023 is included, the data has declined by more than 84% year-on-year for three consecutive quarters.
In the view of Yang Yan, a researcher in the home appliance industry at Nanjing Securities, the profitability of listed companies of integrated stoves is more dependent on scale effects.
"Related companies have certain fixed cost expenditures.
If non-fixed costs also rise at the same time, the performance of net profit attributable to the parent company data will naturally be poor in the case of declining revenue scale."
Retail sales fell by 21.3% year-on-year.
Behind the poor performance of listed companies of integrated stoves is the decline in sales data of integrated stove products.
According to data from Aowei Yun Network, from January to August 2024, the retail volume of integrated stoves was 1.426 million units, a year-on-year decline of 18.7%; the retail sales volume was 12.39 billion yuan, a year-on-year decline of 21.3%.
Looking at the channels, as of September 15, 2024, in the online channel, the sales volume and sales volume of integrated stoves fell by 43.31% and 37.45% year-on-year respectively, with an average sales price of 6,871 yuan per unit, a year-on-year decline of 9.38%; in the offline channel, the sales volume and sales volume of integrated stoves fell by 10.71% and 11.18% year-on-year respectively, with an average sales price of 9,899 yuan per unit, a year-on-year increase of 0.88%.
Is the real sales situation of integrated stoves the same as the data shows?
With doubts, reporters visited many home and home appliance stores in Nanjing.
"Where is the integrated stove not selling?
It's selling!"
In front of the counter of the boss electric, the salesperson showed the reporter the delivery book in his hand, "On September 15, the integrated stove I just introduced to you was sold out in two days."
However, the reporter noticed that in the subsequent delivery records, the frequency of split-type stoves and range hood products was higher.
"Now it's not selling well, and the entire (integrated stove) industry's sales are declining."
In the exhibition halls of many integrated stove brands at JD Electronics, reporters heard similar complaints from many salespeople.
In another home store, the Zhejiang Meida store, the salesperson said, "It's hard to sell houses, and integrated stoves are not easy to install."
Reporters noticed that the four listed companies of integrated stoves all mentioned in the semi-annual report of 2024 that their performance was affected by the cycle of the real estate market.
In addition, the staff of Yitian Smart's securities department said in an interview with reporters that the sales of integrated stoves still face the three major problems of "low acceptance", "difficulty in changing from updraft to downdraft", and "higher prices compared to traditional kitchen 'three sets'".
"Consumers pay more attention to cost-effectiveness, the real estate dividend has receded, product innovation is insufficient, and the difficulty of renovation affects the replacement."
Li Zongkai, a senior research manager of the kitchen and bathroom business department of Aowei Yun Network, said that the pressure on the integrated stove industry is obvious, and it is related to the superimposed effect of the above four factors.
In the interview, reporters found that integrated stove products do have a serious phenomenon of homogenization, which is difficult to meet consumers' personalized needs in appearance and function.
The differences in appearance of integrated stove products from different manufacturers are minimal, and the overall style tends to be consistent, making it difficult to form a unique brand characteristic.
In addition, there are also many prerequisites for installing integrated stoves.
Reporters learned that in addition to the installation method of bare houses being the most convenient, whether it is newly purchased hardcover houses or old houses that need to be renovated, if you want to install integrated stoves, you need to perform additional operations such as "cutting the countertop", "adjusting the position of the smoke duct", and "moving the gas meter under the stove", otherwise it cannot be installed.
In addition to the installation issues, the follow-up maintenance and support of integrated stoves have also been criticized by many consumers.
Reporters noticed that on social platforms such as Xiaohongshu and Tiktok, many consumers complained about the integrated stove "expensive repair costs" and "having to be disassembled, which is very troublesome".
On the Black Cat complaint platform, the 1,495 complaints related to integrated stoves are also mostly concentrated on maintenance issues.
Facing the common problems of the industry, integrated stove companies obviously will not sit idly by.
In response to the problem of difficult maintenance of their products, salespeople from many integrated stove companies such as Marsman, Zhejiang Meida, and Yitian Smart all said that the current products have achieved modularization, "where it is broken, it is replaced, and there is no need for complete disassembly."
Regarding the problem of difficult installation, salespeople from related integrated stove companies said to reporters that the manufacturer will arrange for the master to provide door-to-door cutting of countertops, changing of flue services, etc., but there are different opinions on the charging issue.
Marsman's salesperson said that their master will go to the door to see which configurations need to be replaced, and then provide a form to the customer, and the customer can pay the corresponding fees as needed.
The salesperson of Yitian Smart said, "The countertop will definitely help to knock down, but it will be charged additionally."
In sharp contrast, the salesperson of Zhejiang Meida said that their supporting renovation services are not charged additionally, "We cut the countertop for free, and we can also take away the old parts for free."
"Whether it is to improve service quality or to create differentiated products and enhance product strength, it reflects the importance of integrated stove companies practicing 'internal skills'."
Yang Yan said that since the second half of last year, the home appliance industry has entered the inventory replenishment cycle, but the market demand has cooled, leading to the increased inventory being difficult to digest for a while.
"The survival of the fittest brought about by inventory reduction will promote integrated stove companies to continuously strengthen their own competitiveness.
With the further clearing of the industry, it may allow companies with competitive advantages to see an increase in market share."
Aowei Yun Network data shows that as of the end of August this year, the offline channel market share of Marsman and Yitian Smart has increased by 0.51 percentage points and 5.91 percentage points respectively, and these two companies are also known in the industry for their love of research and development.
Since mid-September, Yitian Smart has successively obtained authorization of two new type patents and submitted two trademark registration applications.
In the first half of 2024, the company invested 23.12 million yuan in research and development, which is 6.14 million yuan more than Zhejiang Meida, whose revenue is three times higher than its own.
Marsman has always been the king of research and development investment among listed companies of integrated stoves.
In the first six months of this year, the company's research and development expenses reached 52.56 million yuan, and since 2020, the company has invested more than 400 million yuan in research and development.It is worth mentioning that during the interview process, almost all listed companies of integrated stoves stated that they would not engage in price wars, but instead think about how to enhance their own voice.
The quality of channels is facing a test.
However, before the investment forms and performance is converted, the primary issue that each integrated stove company faces is still to survive the cold winter.
Observing from the contract liability data, this cold wave affecting the integrated stove industry seems to continue for a while.
In the first half of 2024, the contract liabilities of Zhejiang Meida, Huoxingren, and Shuai Feng Electric respectively declined by 31.25%, 34.79%, and 28.20% year-on-year.
The reporter called the above-mentioned three listed companies based on the observed data, Zhejiang Meida and Shuai Feng Electric did not give an answer, and the staff of the securities department of Huoxingren said: "Contract liabilities are related to advance payments."
"Advance payments are an indicator of a company's future business and usually reflect the company's future sales order situation."
Some practitioners in the integrated stove industry said to the reporter that the decline in advance payments may indicate that the company's future order volume has decreased.
Li Zongkai also holds a similar view, stating that contract liabilities reflect the company's order situation to a certain extent, and in turn reflect the market demand situation.
"The cooling of the integrated stove industry has reduced users' expectations for the future demand of the industry.
The integrated stove industry will still be under continuous pressure in the next two years."
Li Zongkai further stated that from the outside, the downturn in the real estate market has a great impact on the integrated stove industry; from the inside, after experiencing multi-form, multi-stage innovation, the integrated stove industry has entered a bottleneck period of product innovation in recent years.
At the same time as the decline in contract liabilities, the number of dealers is also changing.
Taking Shuai Feng Electric as an example, in the first six months of 2023, the company had 1,300 dealers and about 2,200 sales terminals, and in the first half of 2024, these two numbers changed to 1,100 and about 2,000 respectively.
At the same time, the number of first-level dealers of Zhejiang Meida decreased from more than 2,000 to more than 1,900.
Huoxingren did not disclose the change in dealers in the semi-annual report of 2024, but the aforementioned securities department staff said to the reporter that the company's cooperative merchants (medium and large dealers) decreased by a few in the first half of this year, but at the same time emphasized that "the number of distributors (small dealers) increased by a few dozen."
It is worth mentioning that compared with the above three listed companies of integrated stoves, the contract liabilities of Yitian Smart have increased by 73.60% compared with the same period last year.
Previously, Kaiyuan Securities and Guoxin Securities both pointed out in research reports that after the builder replaced the merchant, the number of dealers of Yitian Smart reached a new high.
"In the weak cycle of the industry, it is even more necessary to cultivate channel layout and use new channels such as platform e-commerce, content e-commerce, and social e-commerce for drainage."
In Yang Yan's view, facing the decline in demand for integrated stoves, the importance of channel construction is more reflected.
One point is particularly worth mentioning.
The reporter found during the visit that compared with other integrated stove companies, Laoban Electric, which started with kitchen electrical business, has richer offline channel resources.
In the first half of this year, the company's integrated stove business revenue declined by only 10.68% year-on-year, and by the end of August, its offline market share increased by 8.87% year-on-year.
The "old for new" national subsidy may become a performance catalyst.
In addition to seeking internal motivation, the "old for new" policies introduced by various places also make listed companies of integrated stoves feel warm in the cold wind.
In August this year, the general offices of the Ministry of Commerce and other four departments issued a notice on further doing a good job in the old for new work of home appliances, requiring various places to use central and local funds in a coordinated manner to provide old for new subsidies for individual consumers purchasing eight types of home appliances such as refrigerators, washing machines, TVs, air conditioners, computers, water heaters, household stoves, and range hoods with energy efficiency or water efficiency standards of grade two or above.
The reporter found that the implementation details of the old for new subsidy issued by various places subsequently included integrated stoves.
"Now there is policy support, we are more confident."
The staff of the securities department of Zhejiang Meida said to the reporter that before the old for new policy was introduced, the company also often launched similar activities internally, "the company has always attached great importance to the performance increase brought by the old for new."
"The company will consider taking advantage of the opportunity of home appliances 'old for new' to launch relevant products, and then enhance brand visibility."
In the view of the staff of the securities department of Yitian Smart, the introduction of relevant policies will have a positive impact on the entire integrated stove industry.
Regarding the role of the old for new policy in promoting performance improvement, the staff of the securities department of Huoxingren showed a cautious optimistic attitude.
"Some of our stores can already enjoy the 'old for new' discount, and dealers in various places are also applying for corresponding subsidies according to the specific details of the local area, but the final sales results may not be reflected so quickly."
In the view of the staff, although the old for new policy will have a certain role in promoting the performance growth of the integrated stove industry in the second half of the year, it is not a preferential policy aimed at a single category, "the initiative is still in the hands of consumers."
The old for new policy has three important meanings for the current integrated stove industry: first, by offering real discounts to stimulate the release of demand, it can alleviate to a certain extent the consumption contraction brought by integrated stoves as high-priced products; second, by stimulating demand to force companies to improve innovation capabilities and product quality to meet this part of demand, which is conducive to the positive development of the industry; third, the relevant policies fill the intermediate stage of the integrated stove industry where new additions have reached the top and replacements have not yet arrived, which is conducive to achieving transition and buffering.