Home Appliance Industry Mid-term Strategy: Multiple Favorable Factors Superimposed, Fundamentals Reversed

At present, the fundamental pressure on the home appliance industry is gradually weakening, China's domestic demand is gradually recovering, the price of raw materials has begun to decline, and the industry's profitability is expected to improve. In addition, China's domestic demand for high-end and high-quality home appliances continues to increase, and the epidemic has accelerated consumption upgrades. The resulting high-end consumption investment opportunities are worthy of attention.

At the beginning of 2022, the prices of bulk raw materials are still at a high level. In order to ease the cost pressure, home appliance manufacturers continue their price increase strategy. According to data from Aowei Cloud, in May 2022, the average offline retail prices of air conditioners, refrigerators, and washing machines YoY+10%, + 17%, +10%.

At present, the prices of the main raw materials required for the production of household appliances such as copper, aluminum, and plastics have begun to decline gradually.

According to the estimation of Essence Securities, the cost indexes of air conditioners, refrigerators, and washing machines in 2022Q2 are YoY-3%/-2%/-4% respectively, and the cost pressure has begun to ease. Essence Securities inferred that the scissor's difference in the increase in the price and cost of home appliances will promote a significant increase in the profitability of the industry.

According to industry online data, in April 2022, Chinese companies' export volume of air conditioners and refrigerators will decline slightly, and the export volume of washing machines will drop by more than 20%. The decline in export orders for home appliances was mainly due to:

①Southeast Asia is actively promoting the resumption of work and production and diverting domestic and foreign trade orders.
②The epidemic has repeatedly occurred in many cities in China, and raw materials, logistics, and factory production have been blocked, and the supply chain has been affected.
③European and American countries have high inflation, and consumer demand for home appliances has declined.

①Chinese home appliances have obvious price advantages.
②The epidemic has boosted the transfer of overseas home appliance consumption to online channels. Compared with developing overseas offline channels, Chinese home appliance companies have more advantages in developing overseas online channels.