Qingdao Haier (600690): The pricing power of high-end strategic accumulation is increasing
Guide to this report: Continuous product innovation, high-end brands breaking through overlapping channels, and upgrading and expansion will bring Haier’s pricing power to increase.As industry demand improves in 2019, Haier’s pricing power advantages will become more apparent.Proposed increase.  Investment points: Maintain profit forecast, maintain target price and increase holdings.The market believes that Haier’s performance improvement space is limited. We believe that continuous product innovation and high-end brands breaking through overlapping channels to upgrade will expand Haier’s pricing power.As the industry’s demand improves in 2019, Haier’s high-end will take it to the next level.The company expects EPS 1 for 2019-2021.37/1.62/1.93 yuan, referring to comparable companies in the industry, giving the company 17 times PE in 2019, corresponding to a target price of 23.37 yuan.  Continuous product innovation helps Haier to grasp the pricing power of high-end appliances.Haier’s global brand layout is basically complete. Global high-quality resource integration brings product innovation to lead the industry and continuously enhance its competitive advantage.In 2019, Haier took the lead in launching multiple series of smart complete sets of products, forming a resonance with the rise of the new generation of consumer groups (after 80-90) and the rise of home improvement channels.  Haier’s market share of high-end home appliances is the first indicator for Chinese home appliance companies to achieve global competitiveness.Haier is the first domestic-funded domestic appliance company to surpass foreign high-end brands and land on the high-end brand matrix.At present, the company has formed a three-dimensional brand layout of 南宁桑拿 ultra-high-end Fisher & Paykel, high-end Casa Di and GEA.With multiple brands and system advantages, Haier’s pricing power has been continuously enhanced, and the profit improvement space will continue to expand.  Distributors’ profitability, channel upgrades and offline experience improvements have entered a positive cycle.The gradual growth of channels started in 2016 has significantly improved the profitability of Haier dealers, driving rapid growth of its own channels.In 2019, with more and more significant renovations and refined decoration trends, high-end smart complete sets of solutions have allowed Haier to seize the home improvement channel and expand the engineering channel.  Catalysts: industry demand is warming, consumption upgrades are restarting, and the “old for new” policy is in place.  Risk Warning: The domestic economy and consumption growth are accelerating, and the economies of North America and other overseas regions are weakening.