"10 out of 10 Chinese families use Bull." Recently, Bull Group (603195.SH) disclosed its performance for the first half of the year. According to the announcement, the operating income for the first half of the year was 8.386 billion yuan, a year-on-year increase of 10.45%; the net profit was 2.239 billion yuan, a year-on-year increase of 22.88%. Looking solely at the second quarter, the net profit was 1.3 billion yuan, a year-on-year increase of 20.5%.

What is most commendable is that Bull's performance has always been outstanding. From 2017 to 2023, Bull's operating income grew from 7.24 billion yuan to 15.696 billion yuan, and its net profit increased from 1.285 billion yuan to 3.87 billion yuan. Even in 2020, Bull Group maintained positive growth.

Since its listing, Bull Group has distributed a cumulative dividend of 9.67 billion yuan, which is 2.7 times the amount of financing. Clearly, compared to home appliance giants like Midea and Gree, Bull Group is more outstanding in terms of growth and profitability.

Some may wonder why Bull has not been affected by the downturn in the real estate market. The reason is that Bull is more than just sockets!

Bull Group's main business can be divided into three parts: electrical connections, intelligent electrical engineering lighting, and new energy. In the first half of this year, the proportion of intelligent electrical engineering products in the company's revenue exceeded 50% for the first time, becoming the biggest driver of the company's performance growth. In addition, the new energy business revenue was 289 million yuan, a year-on-year increase of 120.22%, becoming a new growth point for the company.

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Let's talk about the intelligent electrical engineering business first.

In the first half of this year, this business segment achieved a revenue of 4.211 billion yuan, a year-on-year increase of 11.69%. Why was it able to achieve double-digit growth against the backdrop of a downturn in the real estate market? The core lies in differentiated product competition, rather than homogenized internal competition.For instance, in the realm of wall switch products, Bull has introduced innovative items such as invisible sockets and flush floor outlets; in LED lighting products, Bull has developed a unique spectrum for children under the Bull brand, along with several trendy decorative lights; and in the category of unmounted lighting, the newly launched TO4 series and P06 Hill Spotlight products are主打highly cost-effective.

In a nutshell, it's all about product innovation driven by innovation, stimulating consumers' replacement needs!

Now, let's talk about the new energy business.

Many people might not have noticed that Bull, known for selling sockets, has actually laid out a new energy charging pile and energy storage business. In addition to home charging piles, there are also fast-charging liquid-cooled charging piles. Moreover, focusing on the European market for home energy storage and the domestic market for commercial and industrial energy storage, the company is currently accelerating channel expansion.

Put simply, if smart electrical work and electrical connection products have a certain business connection, then the new energy business is part of Bull's diversified business expansion.

Unlike other companies that set a strategic loss period, Bull Group's gross and net profit margins have not declined due to the expansion of new businesses. In 2023, Bull's "new energy business" gross profit margin was 34.15%; in the first half of this year, although the specific figures have not been disclosed, the company's overall gross and net profit margins were 42.94% and 26.68%, respectively, which have actually increased instead of decreasing.

Why can Bull succeed in every field it enters?

All of this is attributed to the brand advantage that Bull has built!

As we all know, sockets began to popularize in the 1980s and 1990s, and Bull was established in 1995, without a first-mover advantage. The secret to Bull Group's rise lies in its willingness to invest in product quality, launching sockets that are virtually indestructible, which has made it famous.

Bull has proven with its success a point of view that, for consumers, compared to cheap low-quality products, everyone prefers high-quality products, even if they are more expensive. In terms of market share, Bull's share in the power strip sector is as high as 60%.Of course, having product advantages alone is not enough, after all, the socket industry is not one with high technological barriers. The key lies in building a brand barrier.

Bull, the company, has adopted a very effective strategy by helping terminal stores, especially those in rural areas, to replace their signs. As of the end of June this year, including hardware, lighting, and digital channels, the number of Bull's terminal channels has exceeded 1.1 million. Therefore, the combination of product and channel, along with brand advantage, gives Bull a good reputation when it comes to laying out new businesses, thus achieving rapid product introduction.

However, from the perspective of the capital market, Bull also has a significant "drawback."

The actual controllers of Bull Group are brothers Ruan Liping and Ruan Xueping, who together hold 84% of the shares. It is not an exaggeration to say that Bull Group is a family business. Although the two actual controllers of the company have not reduced their shares, a situation where one party dominates means there are many governance risks.

Especially, once they start to reduce their holdings, the impact on the stock price will be tremendous.