Investigated by Invesco Great Wall and other institutions Wanhe Electric (002543)

On September 10, 6 institutions including Invesco Great Wall and other star institutions conducted research on the company.

Dongguan Securities, Guohua Life Insurance, Invesco Great Wall and other research contents are as follows:

1. From the interim report, we can see that the company has deployed online new retail through the official mall, and the number of partners in the official mall has increased by one. There are more than 1,000 people, with a total of more than 24,000 people. In addition, it is written that the company's live broadcast base has built 9 live broadcast rooms. Want to know the sales proportion and growth rate of the company's online channels in the first half of this year?

In the first half of 2021, the sales of online channels increased by approximately 41% year-on-year, accounting for approximately 19% of the main business.

2. The company wrote in the interim report that the company signed a strategic cooperation agreement with Alibaba Cloud and Dingding, relying on Alibaba to realize the digital transformation of marketing and supply chain, and promote the development of more than 8,000 B-sides and more than 15,000 sales outlets across the country. Digitization, I would like to ask what kind of cooperation this is, and how this kind of digital transformation will empower our company's business? In other words, what benefits did the cooperation with Ali bring to our company?

At present, the company is actively promoting digital transformation, among which the vanguard is the marketing side. The company’s cooperation with Alibaba mainly recognizes Alibaba’s “Five New Strategies” and “China-Taiwan Strategy”. We will use Alibaba Cloud as the digital infrastructure and DingTalk as the connection window. At the same time, we will cooperate with Alibaba Cloud’s important strategic partner, Yunxi. Establish a company-level digital system to realize the interconnection of everything inside and outside and the reconstruction of the value chain. Specifically, there are the following 4 benefits: First, realize 5 online based on DingTalk, namely organization online, communication online, collaboration online, business online, and ecological online. We have also drawn a new marketing organization into this base, and promoted all-staff online between internal personnel and external partners (including our shopping guides, installation masters, etc.), to build an ecosystem and a community of shared destiny, and enhance collaboration Efficiency; Second, through the digital marketing center, realize the integrated operation of FBBC's omni-channels, and realize the unified management and control of warehousing to reduce channel inventory through warehousing one inventory; third, integrate online and offline traffic, and connect new ones Digital traffic,And through accurate delivery and operation, improve operating efficiency; fourth, open up production, orders, inventory, warehousing, logistics and services and other links, reconstruct the business model, and greatly improve management efficiency.

3. What is the impact of the increase in raw material prices in the first half of the year on the company? I saw that the company's Q2 single-quarter gross profit margin dropped by nearly 10 percentage points year-on-year, but the net profit margin increased by nearly 6 percentage points. How? Because of the expense side, I saw that the sales expense only dropped by 8%.

The company implements dynamic management of fluctuating sales prices and gross profit margins. When the price fluctuation rate of raw materials exceeds 3%, the sales price of the factory will be dynamically adjusted. Therefore, the company can perform a good real-time, real-time, and accurate adjustment to the fluctuation of raw materials. Dynamic control. Beginning in April 2021, offline channels have been reformed, integrating the original sales area personnel and dealer personnel under 10 sales platforms, and implementing a new business model of partnership. The company implements transfer price sales on 10 sales platforms, and the transfer price is about 15% lower than the original CIF sales, so the gross profit margin in the Q2 quarter fell by nearly 10% year-on-year. Within the transfer price, the company's sales margin, expense ratio, and profit management can be consistent with the budget requirements. Under the new model, the factory delegates the use of market resources and decision-making power to the sales platform, allowing people who can hear the gunfire on the front line to make quick decisions, allowing each sales platform to focus on retail promotion, distribution promotion, and return to the market The fundamentals of mobile marketing work have formed a rapid response system for the market.

4. From the company’s financial report, we can see that the net income from changes in fair value has increased by nearly 100 million. This contribution to net profit is quite large. The report says that it is Qianhai Want to know more about the gains from changes in fair value brought by equity investment funds?

The company's other non-current financial assets are investments held in Qianhai Equity Investment Fund (Limited Partnership). As of June 30, 2021, the actual investment cost of this investment was 1,500,000,000.00 yuan, the accumulated dividends offset the investment cost was 72,447,655.76 yuan, the cumulative fair value change was 584,782,971.76 yuan, and the ending fair value was 2,012,335,316.00 yuan.

5. When the company's revenue increased by 35% in the first half of the year, the reason for the 34% drop in sales expenses? Will the decline in marketing expenses have an adverse impact on our domestic brand building and subsequent growth?

is mainly the company's offline channel to promote channel changes,Implementing 10 sales platforms across the country, the company sells the sales platforms by means of transfer prices, and at the same time delegates the use of market expenses and decision-making power to the sales platforms, allowing the front-line people to make quick decisions. The company's actual resources put into the market have not decreased. Under the new model of the sales platform, operators and operators will form a unity of interests, and resources will be reduced through rapid decision-making and precise control of investment in market resources. The loss of resources and improve the efficiency of resource use.

6. Looking forward to the second half of the year, what is our judgment on the trend of raw materials and our own gross profit margin?

Looking forward to the second half of 2021, combined with the impact of macro-environment and material market policies, the company will continue to promote cost reduction work, such as the reduction of labor and manufacturing costs brought about by scale growth, and the improvement of some core new product structures and processes. In addition, in the second half of the year, the company will focus on launching a variety of differentiated mid-to-high-end fuel-heated new products, which are expected to have a positive pull effect on the sales structure and price level; in addition, the company will start to push forward the line in April 2021. The reform of the next business model has achieved initial results. It is fully user-oriented and market-oriented, focusing on terminal dynamic sales and structural improvement, and forming a hedge against the adverse impact of high costs on gross profit margin.

7. From the interim report, we can see that the export situation in the first half of the year was very good. Revenue increased by 48%, which was the main driving force for the high revenue growth in the first half of the year. Is one piece mainly affected by the negative impact of raw materials and the appreciation of the renminbi? Can the situation of increasing export revenue but not increasing profit be alleviated in the future?

The company's export products are mainly OEM products for foreign customers. The product's gross profit is low. Coupled with the impact of raw material price fluctuations and exchange rate fluctuations, it has a greater impact on the company's export business profits. The company currently uses foreign exchange hedging business and other means to partially hedge the impact of exchange rate fluctuations, and hedge the impact of some raw materials by improving its own production efficiency. At the same time, it develops strategic orders, reduces low or no profit orders, and gradually Change the export product structure and many other aspects to improve the situation that the export business increases revenue but does not increase profits.

8. Where is the main export area of ​​the company? Are there any statistics by region? This year, North America continues to impose tariffs on us. How will it affect us? Is there any situation where customers ask us for a price reduction due to the levy of tariffs?

The company exports mainly to Europe and America,The company adopts the FOB model for export, and currently customers basically bear the tariffs themselves.

9. The company's main product category is mainly gas water heater business, but in the past few years, we have seen Midea and Haier, two comprehensive home appliance companies, relying on their channels, brands and cost-effective advantages in our areas of advantage. ——The market share of gas water heaters continues to increase, and the gap with us is constantly narrowing. In the future, how will our company highlight its own advantages and characteristics in brand marketing and avoid being invaded by integrated home appliance leaders?

In marketing, the channel will be specialized, deep, and thorough, and deepen the channel advantages of professional brands. The company vigorously develops front-end home improvement channels (such as Quanyou Furniture, etc.) to target consumers through front-end sales; at the same time, under the platform sales model in 2021, the sales area will be used as a unit for existing KA, stores, specialty stores, and Gas companies, building materials cabinets, supermarkets and department stores, etc. carry out a comprehensive inventory to identify blank opportunities and formulate coverage requirements. In terms of the development of Internet sinking channels, it quickly integrated sales with platform channels such as JD Stores and Suning Cloud. In terms of technology, the development of product technology follows the "central integration" (for example, the heat source machine that will be launched in the future is a heat and heating integrated machine that integrates domestic hot water and bathroom functions to solve the problem of water and heat source in the whole house in a one-stop manner), " "Miniaturization" (product volume miniaturization, the launch of a technology platform with a small volume and a large flow rate for combustion, not only meets the needs of a whole-house hot water center, but also miniaturization is more suitable for the current installation needs of various scenarios), "intelligence "(Wanhe’s original "Little Dot" intelligent control bath controller solves the problem of the separation of heating equipment and inconvenient operation, and it also creates a future bathroom intelligent control center), "healthy" (Baifu series pioneer The cross-border integration of water heaters and water purification equipment of the “heat and purification two-in-one” has opened up the development trend of water heaters to healthy appliances. In addition, the products are in the “gas energy saving/low emission technology” and “multi-energy water system linkage”. "Technology" is currently in a leading position in the industry. In terms of products, with the help of leading professional capabilities in the field of gas water heaters, the company constantly breaks through the technological boundaries to create ultimate products that meet different users and different water use scenarios. Extending from the ultimate single product, breaking through the product boundary, creating a "smart bathroom space" and a "whole house water system solution". As a result, the company has formed a professional capability focusing on gas water heaters, from "heating single product" to "hot water system equipment" to "whole house water system overall solution".

10. The company recently announced that table tennis player Sun Yingsha is the company’s brand ambassador. I would like to ask what kind of consideration the choice is based on?

Sun Yingsha's body is full of youthfulness and old-fashionedness, innocence and stubbornness. The coexistence of the two is not contradictory, courageous and fearless, and "shaqi vines and vines". The company chose Sun Yingsha as its brand ambassador because instead of having the same belief and hard work, the company is also confident and has a promising future.