Haier Smart Home : 1Q 2021 Report

Haier Smart Home Co., Ltd.*

海 爾 智 家 股 份 有 限 公 司

(a joint stock company incorporated in the People's Republic of China with limited liability)

2021 FIRST QUARTER REPORT

The financial data of the Company for the first quarter of 2021 have been prepared in accordance with the China Accounting Standards for Business Enterprises and are unaudited. Net profit attributable to owners of the parent company and equity attributable to owners of the parent company in the consolidated financial statements are not different from those financial data prepared under the International Financial Reporting Standards.

1. IMPORTANT NOTICE
2. 1. The Board of Directors, the Board of Supervisors, directors, supervisors and senior management of the Company hereby assure that the content set out in the quarterly report is true, accurate and complete, and free from any false record, misleading representation or material omission, and are individually and collectively responsible for the content set out therein.
   2. All Directors of the Company attended the Board meeting for considering the quarterly report.
   3. Liang Haishan (legal representative of the Company), Gong Wei (chief financial officer of the Company) and Ying Ke (the person in charge of accounting department) hereby certify that the financial statements set out in the quarterly report are true, accurate and complete.
   4. The first quarterly report of the Company has not been audited.

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1. COMPANY PROFILE 2.1 Key financial data

Unit and Currency: RMB

			Increase/decrease at
			the end of the
			reporting period
	At the end of the	At the end	compared with the
	reporting period	of last year	end of last year (%)
Total assets	205,542,336,997.99	203,459,495,879.65	1.02
Equity attributable to owners
of the parent company	75,000,476,951.99	66,816,422,614.55	12.25
	At the beginning of	At the beginning of
	the year to the end	last year to the end
	of the reporting	of the reporting
	period	period of last year	Yoy change (%)
Net cash flows from operating
activities	2,863,386,935.66	-5,787,626,102.33	149.47
	At the beginning of	At the beginning of
	the year to the end	last year to the end
	of the reporting	of the reporting
	period	period of last year	Yoy change (%)
Operating revenue	54,773,701,753.64	43,141,448,203.28	26.96
Net profits attributable to
owners of the parent
company	3,053,933,589.63	1,070,333,404.45	185.33
Net profits after deduction of
non-recurring profit or loss
attributable to owners of the
parent company	2,823,027,182.06	943,123,999.14	199.33
Weighted average return on net			Increased by 2.16
assets (%)	4.38	2.22	percentage points
Basic earnings per share
(RMB per share)	0.333	0.163	104.29
Diluted earnings per share
(RMB per share)	0.326	0.163	100.00

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Non-recurring profit or loss items and amount √  Applicable □ Not Applicable

Unit and Currency: RMB
	Amount for the
Items	current period
Profit or loss from disposal of non-current assets	-11,607,188.24
Government grants included in current profit or loss,
except that closely related to the normal operating
business, complied with requirements of the national
policies, continued to be granted with the amount and
quantity determined under certain standards	184,949,066.19
Profit and loss of changes in fair value arising from
holding of trading financial assets, derivative financial
assets, trading financial liabilities and derivative financial
liabilities, as well as investment gain realized from
disposal of trading financial assets, derivative financial
assets, trading financial liabilities, derivative financial
liabilities and other debt investments, except for valid
straddle business relevant to normal business of the
company	89,043,055.23
Other non-operating income and expenses except the
aforementioned items	14,038,712.23
Impact on Minority interests (after tax)	-3,920,027.41
Effect of income tax	-41,597,210.43
Total	230,906,407.57

Note:

During the reporting period, the Company accelerated the implementation of IoT-enabled smart home strategy, focused on the building of high-end, scenario and ecosystem brands, continued to expand its advantages in high-end packages and smart home scenario-based solutions, global synergies and the Smart Home experiential cloud platform. The Company further drove forward the whole process of digital transformation, thereby laying a solid foundation for sustainable and healthy development.

The revenue, net profit and net profit attributable to owners of the Parent Company in the first quarter of 2021 for the Company increased by 27.0%, 130.4% and 185.3% year-on-year; and increased by 12.9%, 14.7% and 42%, respectively, as compared with the first quarter of 2019. The increase is mainly attributed to smart package sales, Casarte's high-end brand strategy and the implementation of digital transformation as well as the persistence on the strategy of creating high-end brands and localized operations overseas. Meanwhile, as the first quarter of 2020 was deeply impacted by COVID-19, both the revenue and profit growth of the first quarter of 2021 comparing the first quarter of 2020 represented higher rates than the growth rate of comparing with the first quarter of 2019.

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As the logistics business and the COSMO business of the Company were deconsolidated respectively on July 2019 and at the end of September 2020, if the revenue contribution of COSMO and logistics not being included in the first quarter of 2019 and 2020 respectively, the revenue in the first quarter of 2021 increased by 38.2% as compared with the first quarter of 2020 last year and increased by 24.4% as compared with the same period of 2019.

Performance of Key Indicators

1. Revenue

The sales revenue in the first quarter of the Company was RMB54.8 billion, representing an increase of 27.0% year-on-year, of which, revenue from China increased by 29.5% year-on-year. After excluding the deconsolidation impacts of the COSMO business, the revenue increased by 55.7% year-on-year. Revenue from overseas increased by 24.6% year-on-year.

1. Domestic Market

During the period, the Company insisted on the reform from high-end brands to scenario-based and ecosystem brands, so that users would pay for premiums not only on products but also on experience. It sped up the upgrading of sales model with digital tools, and also digitalized the platforms for sales person, after-sale service personnel and supply chain management to further improve operational efficiency. The market shares of all businesses improved continuously. The sales revenue from the Casarte brand increased by 80% with the proportion of revenue further increased in all categories.

In which:

1. Household Food Solution (the Food Network)
   Refrigerator: According to CMM's report, by retail revenues our shares of online and offline refrigerator market was 38.5% and 40.8% respectively in the first quarter of 2021, representing increases of 2.5 and 1.4 percentage points, in which Haier and Casarte ranked first and second in the industry in terms of retail revenue, further consolidating the leading position in the refrigerator industry. Casarte had a market share of 13.2%, increasing by 3.2 percentage points as compared to the same period last year, and its market share for high-end products priced RMB15,000 or above reached 43%.

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During the period, the refrigerator industry led the ultimate healthy-oriented and freshness preservation trend in the industry. It introduced the MSA Pro oxygen control and preservation plan, and help vegetables to achieve a 200% increase in water-preservation rate and an improvement of 12% in the vitamin C preservation rate comparing with normal refrigerators. It released the free built-in industrial standards 2.0, and the heat dissipation space between refrigerators and cabinets was reduced from 2cm to zero through front heat dissipation technology at the bottom, which solved the problem of excessive large gap between refrigerators and cabinets in the traditional heat dissipation. The Company introduced the raw gemstone series, using panels with the quality of natural gemstone to cater to the users' appetite to natural and modern aesthetics. The online sales revenue of the Casarte brand doubled.

Kitchen appliances: According to CMM's report, by retail revenue, our share in kitchen appliances market share reached 6.8% in the first quarter of 2021, representing an increase of 0.9 percentage point. Casarte's retail revenue market share was up by 1.3 percentage points with an increase of 108%.

During the period, the Company achieved breakthrough in the high-end market by actively expanding the Casarte's product portfolio and upgrading the end user experience in scenario-based consumption. It launched the Ideal Home series, bringing an increase of over 200% in revenue of Casarte kitchen appliances. In further, the Company accelerated in the construction of township stores and promoted the integration of online and offline channels. Meanwhile, it realized the growth in property developer channels through the multi-brand matrix of Casarte, GEA and FPA. It also swiftly promoted the household local renovation solutions by showcasing the enriched "Three-Winged Bird" smart kitchen scenarios.

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