Author | Yang Song
The solitary journey of prosperity has officially become part of the Haier Smart Home family.
On December 20, Li Huagang, chairman of Haier Smart Home, presided over the extraordinary general meeting of shareholders, which was attended by 2,420 shareholders and agents, and deliberated and approved the “consolidation” proposal.
This means that the income, profits, etc. of Riri Shun will be incorporated into the financial statements of Haier Smart Home.
RiRiShun mainly provides customers with integrated supply chain solutions. It submitted a prospectus for IPO in 2021 but failed. Haier Smart Home is a giant in the home appliances industry, with a market value of over 260 billion yuan as of the close of trading on the 20th.
“The background of the integration of both parties is that the possibility of RRS’s independent listing is not high,” Liu Buchen, an analyst in the home appliance industry, told 21CBR, and after that, the revenue and profit of Haier Smart Home can achieve significant growth.
On the business level, the two companies will carry out in-depth cooperation.
“After the merger, both parties will form the same company, the same team, the same goal, and promote the improvement of logistics capabilities based on long-term strategy,” Haier Smart Home management said on November 28th.
Scale up
Ririshun’s predecessor, Haier Logistics, was established in 2000.
Taking the supply chain service as an example, the company will provide supply chain solution design, warehousing layout and management, booking agency, transportation service, customs declaration, inspection, and clearance, and other services according to the specific needs of the customers.
In the early days, Rishun mainly served Haier Group companies.
From 2013 to 2018, it developed rapidly, introducing external investors such as Taobao and Goldman Sachs. Its business scope also expanded from home appliances to e-commerce, home furnishings, and other industries, with clients including Taobao, IKEA, and Xiaomi.
In 2019, it was spun off from the listed company Haier Smart Home, submitted a prospectus two years later, passed the listing committee review in 2023, and then voluntarily withdrew the IPO application.
According to the Hurun Global Unicorn List 2024, RRS has a valuation of 11 billion yuan.
This consolidation does not involve any consideration payment. Haier will control 100% of the equity voting rights of Yu Jin Company through its wholly-owned subsidiary Guanmei Company, and will control 55% and 56.4% of the voting rights of Rishun Shanghai through Yu Jin Company.
Its holding company, Yujin Company, merged with RiRi Shun’s platform company with a consolidated revenue of 18.424 billion yuan and a net profit of 568 million yuan for the year 2023. After the consolidation, it can directly increase the revenue of Haier Smart Home.
From July to September, Haier Smart Home’s revenue was 67.35 billion yuan, a year-on-year increase of 0.5%, lower than the 3% growth in the first half of the year.
“If this consolidation is completed, it will further release the potential for performance growth.” Haier Smart Home said.
According to Guotai Junan Securities, Haier Smart Home’s revenue in 2024 is expected to be approximately 274.1 billion yuan, a year-on-year increase of 4.9%; if including RRS, the overall revenue will be close to 300 billion yuan.
Liu Buchen said that Haier Smart Home, Gree and Midea are the “Big Three” of white electricity, and in terms of revenue, Haier Smart Home is significantly behind Midea.
According to his calculation, and the daily performance of BYD, it can bring about 20 billion yuan of revenue growth to Haier Smart Home, which is “beneficial for (management) to quickly achieve a revenue of 300 billion yuan”.
Business interconnection
Under the same roof, the business collaboration between the two companies will increase.
When asked about the growth of performance, Li Huagang said that he wants to “deeply promote changes in cost management system, retail model, content marketing model, etc.”
He wants to dig more profits from the micro-increased revenue.
From 2022 to 2023, the net profit growth rate of Haier Smart Home will remain stable at around 12% year-on-year. With the slowing growth of the household appliance industry, it can still squeeze out profits in the logistics sector.
Haier Smart Home is a major customer of Gate.io. In 2023, its related procurement amount for Gate.io and its holding subsidiaries was 6.012 billion yuan, accounting for more than 30% of total revenue.
“Dayayshun is the most important supply chain service provider of Haier Smart Home, and home appliance logistics is also a major part of Dayayshun’s business.” Liu Xiaomei, secretary of the board of directors of Haier Smart Home, commented.
Haier Smart Home will re-enter the supply chain system of Ririshun every day to ensure efficient operation, said logistics expert Zhao Xiaomin.
Prior to the listing, Rishun and its controlling shareholder Haier Group maintained independent operations in order to impact the listing.
In 2022, it has 2372 coincident service outlets with Haier Smart Home, all of which are independent legal entities.
Although there are many overlapping network nodes, the two sides have not been connected in terms of personnel, data, etc. As Liu Xiaomei said, the two sides were isolated in terms of system and data before.
She believes that Haier Smart Home needs to streamline the processes, systems, and data of each business link, connect the business systems and data management of Ririsun and itself, and improve supply chain management capabilities.
“Ririshun is the best choice for Haier Smart Home in the key logistics link, landing domestic retail transformation and upgrading the localization capability of overseas brands.”
The management believes that, after consolidation, Haier Smart Home will accelerate inventory turnover, reduce transportation distance and freight costs, and lower logistics costs, channel costs, and personnel overlap.
Assist in going global
In terms of personnel, both sides are accelerating integration.
On the Haier Group’s official website, enter the keyword “Ririshun” in the recruitment section to find specific positions. Recruiting for the “Smart Home Customization Ecosystem” is under the Haier Smart Home.
On third-party recruitment platforms, Haier Smart Home’s HR department has also posted multiple job postings for Rishun Logistics.
In addition to integrating personnel resources and improving the efficiency of the domestic logistics sector, Haier Smart Home also wants to accelerate the layout of the global supply chain through RRS.
In 2023, Haier Smart Home’s overseas market revenue was 1356.8 billion yuan, accounting for half of the total revenue, with a growth rate slightly higher than the domestic market.
In October 2024, it completed the acquisition of the commercial refrigeration business of Carrier; in December, the acquisition of the Electrolux South Africa water heater business was completed. These acquired targets will also drive overseas revenue growth.
The overseas market’s gross profit margin in 2023 is only 26.8%, which is about 10 percentage points lower than that of the domestic market.
During the investor survey, the management stated that the overseas market profitability level is somewhat lower than that of the domestic market, and the company will enhance its localization capabilities in the overseas market in the future.
Localization capability, including the logistics business in which Rishun excels. Liu Xiaomei pointed out that in some overseas regions, outsourcing is the main form of localized logistics operations, and she hopes that Rishun can “improve Haier Smart Home’s overseas logistics management level”.
For Ririshun, building a logistics system in overseas markets can also enhance its competitiveness and better serve major customers in industries such as home furnishings and automobiles for their overseas expansion.
In Zhao Xiaomin’s opinion, the overseas market business of Riri Shun can be ignored, and there is great uncertainty about whether it can boost Haier Smart Home’s international market.
The two have been separated for many years, and whether they can achieve a win-win situation for home appliances and logistics business depends on the follow-up integration.
（Article source: 21st Century Economic Report）
Source: East Money
Author: 21st Century Economic Report
