ROBAM Electric Appliances has become the king of gross profit in kitchen appliances, with range hoods being the most profitable

PS: Provide some ideas for falsification and indirect verification.

Comparison of decoration attributes: price of air conditioners and refrigerators, gross profit and range hood comparison

This has been partly analyzed above.

Category comparison: price and gross profit comparison of products with similar consumption scenarios such as smoke, stove and fire extinguisher

Overseas comparison: overseas range hood price and gross profit comparison

Interested investors can continue to expand along the above ideas.

3. High-end positioning of “Boss”

The last factor for achieving high profitability, which I think is the most important factor, is the high-end positioning of the company’s own brand.

I won’t spend too much time on brand positioning. Previously, Dong-E-E-Jiao’s “Price Raising King that Beats Moutai: Future Target is 6,000 Yuan per Jin!” and the articles in the moat series have already made in-depth analyses.

Let’s take a look at some data to verify ROBAM Electric’s strength and position in its high-end brand positioning.

From the perspective of gross profit margin and net profit margin, the third largest company in the kitchen appliance industry, Vatti Group, although also has a good profit level, is still far behind the leading company, ROBAM Electric Appliances.

Even though in recent years, after changes in management, Vatti has made significant improvements in its operating level, and the average product price and the company's profitability have increased significantly, but its gross profit margin is still 7 percentage points lower than that of its boss, and its net profit margin is about 10 percentage points lower.

On the surface, the reason for the large difference in profit levels is actually the difference in the average prices of the products shared above. The average price of ROBAM products is about 4,400 yuan, and although VATTI is ahead of the industry average, its average price is only 3,500 yuan, a difference of 900 yuan.

But the more fundamental reason is actually the gap in brand strength between the two companies. Robam has already occupied a considerable portion of consumers' high-end minds in the kitchen appliance industry, while Vatti obviously has not.

Many people mistakenly believe that the stronger a company is, the more market share and product premium it can obtain. But the truth is far from that simple. When we judge the strength of a company in a broad sense, we analyze and consider it from all aspects. But for a brand, we should limit our vision to the consumer dimension (it is still a mental problem).

Take ROBAM and Midea for example. In terms of overall strength, Midea is far ahead of ROBAM. However, in the field of kitchen appliances, consumers believe that ROBAM is a good brand, which represents range hoods, high-end quality, and strong suction, while Midea is at most a well-known brand, which consumers will choose only when they do not have a clear brand recognition.

Therefore, even though Midea has entered the kitchen appliance industry for so many years, it can only be the "eternal fourth" (what's funny is that every year there are still investors who worry that these "powerful rivals" of Midea will snatch their market share).

Summarize

In summary, ROBAM Electric's high profitability mainly stems from the relatively good competitive landscape in the range hood industry (both leading companies are positioned at the high end and have no intention of engaging in price wars) and the price comparison effect under the decoration attributes of the range hood industry (product price sensitivity is relatively low).

Whether ROBAM Electric Appliances can continue to maintain this high level of profitability in the future, in addition to continuing to observe the sustainability of the above two logics, we also need to track whether ROBAM Electric Appliances can firmly establish its high-end positioning.