The Zhitong Finance App learned that Tianfeng Securities released a research report saying that the emphasis on policies mentions “trade-in” to facilitate the release of demand for home appliance stock renewal. Compared with the previous round of the trade-in policy, the current domestic home appliance market has a larger stock, and there is room for renewal demand. With subsequent national and local capital investment, demand for industry upgrading is expected to be better released. At the same time, the increase in the concentration of the domestic home appliance industry is expected to enable leading enterprises to fully benefit from favorable policies and seize greater growth. The bank believes that at a time when growth and stock coexist in the domestic home appliance industry, along with the implementation of this round of home appliance trade-in policies, it is expected to bring greater demand and potential for upgrading.
Investment suggestions: Recommended targets 1) Major appliances: such as Midea Group (000333.SZ), Hisense (000921.SZ), Gree Electric (000651.SZ), etc.; 2) Small household appliances: such as Stone Technology (688169.SH), Xinbao (002705.SZ), Lake Electric (603355.SH), etc.; 3) Other household appliances: such as Dun An Environment (002011.SZ), Dechang (605555.SH), Bull Group (), etc. 603195.SH
Tianfeng Securities's views are as follows:
The “Year of Consumption Promotion” has arrived, and the Central Committee on Finance and Economics emphasizes trade-in home appliances
On the afternoon of February 23, the Central Committee on Finance and Economics emphasized the trade-in of traditional consumer goods such as home appliances, demonstrating the importance attached to promoting domestic demand and optimizing the consumption environment throughout the year. Compared with the previous round of trade-in policies, the current domestic home appliance market has a larger stock, and there is room for renewal demand. With subsequent national and local capital investment, demand for industry upgrading is expected to be better released. At the same time, the increase in the concentration of the domestic home appliance industry is expected to enable leading enterprises to fully benefit from favorable policies and seize greater growth.
Review of the last round of household appliance stimulus policies
Which categories and companies benefit? On the category side, the three major policies all cover five types of products: air conditioners, refrigerators, washing machines, color TVs, and computers. The scope of subsidies for home appliances to the countryside, energy saving and welfare benefits also includes water heaters, some small household appliances, and spare parts. On the enterprise side, the first batch of companies that won the bid for home appliances in the countryside included Haier, Meiling Electric, Sichuan Changhong, Hisense Electric, Shenzhen Kangjia, etc.; the second batch of products and companies was expanded. The color TV winning companies included 9 companies including Hisense, Kangjia, Changhong, Skyworth, and Haier. The washing machine category included 36 companies including Panasonic, Midea, and Meiling, and 40 enterprises that won the bid for refrigerators; 19 enterprises won the bid for freezers; the third batch added four categories of motorcycles, computers, water heaters, and air conditioners. Ten new companies, including Chigo, and Oaks, have been selected for the list.
Trade-in subsidy: In the first phase, each air conditioner/refrigerator/washing machine/TV was subsidized to 350/300/250/400 yuan, respectively. After the second phase added a dismantling subsidy, the subsidy for each unit increased to 350/320/255/415 yuan respectively. Combined with the average retail price of domestic household appliances in Zhongyikang in 2011, the upper limit of the trade-in subsidy amount accounts for about 10% to 13% of the unit sales price of the product.
Financial expenditure and benefit estimates of the three major policies: The total expenditure subsidy amount for the three major household appliances policies from 2009 to 2012 was about 156.2 billion yuan. During the 5.5 years covered by the policy, the average annual fiscal expenditure was about 28.4 billion yuan, accounting for about 5% of the size of the home appliance industry at the time. During this period, the market size of the home appliance industry increased by an average of 46 billion yuan per year, driving ratio of about 1. 6:1.
The home appliance industry coexists with growth and stock, and has both the demand and potential for modernization
The bank believes that at a time when growth and stock coexist in the domestic home appliance industry, along with the implementation of this round of home appliance trade-in policies, it is expected to bring greater demand and potential for upgrading: 1) The domestic ownership base will increase, and the potential for renewal is greater. 2) Demand for the renewal of home appliances sold during the previous round of the three major policies has yet to be released. 3) Changes in the industry pattern, and a higher concentration of leaders may benefit better from favorable policies. 4) Major leading home appliance companies have plans for trade-in. If subsequent financial subsidies are combined, it is expected that discounts will be further increased, which will help to better stimulate consumer demand for renewal.
Estimate the driving effect of this trade-in policy: Combined with the bank's estimate of 7.9/5.5/52/650 million units of domestic aircraft/ice/washing/color products in 2023, it is assumed that the policy will last for about 3 years. 1) Assuming that the implementation of the policy can drive 5% user updates in the stock market, the subsequent domestic air conditioning/refrigerator/washer/color TV market will increase the renewal demand by about 1310/922/872/10.91 million units per year, accounting for 13%/21%/21%/29% of domestic air conditioning/refrigerators/washing machines/color TV sales in 2023.
2) Assuming that the implementation of the policy can drive 10% user updates in the stock market, the subsequent domestic air conditioning/refrigerator/washing machine/color TV market will increase the renewal demand by about 2620/1844/1744/21.81 million units per year, accounting for 26%/42%/42%/57% of domestic air conditioning/refrigerator/washing machine/color TV sales in 2023.
Risk warning: The level of sentiment in the real estate market has declined; risk of exchange rate fluctuations; risk of fluctuations in raw material prices; sales of new products fall short of expectations.