The Zhitong Finance App learned that Guolian Securities released a research report saying that trade-in consumer goods boosts demand for home improvement updates, smart homes bring industry growth, home furnishing industry valuations are expected to be repaired, and the trade-in household durable goods segment is expected to benefit.

In terms of individual stocks, the bank suggests focusing on: 1) Customized homes: traditional leading traditional home furnishings (603833.SH), Sophia (002572.SZ), Zhibang Home 603801.SH (), etc. with strong comprehensive alpha advantages and continuous integration; 2) Soft homes: Gujia Home (603816.SH), Mousse shares (001323.SZ), etc. with stronger consumer product attributes and a relatively low penetration rate; 3) Smart homes: suitable for smart home scenarios with stronger consumer product attributes and a relatively low penetration rate (002790.SZ) , Good Wife (603848.SH), and Wrigley Home (001322.SZ).

The views of Guolian Securities are as follows:

Industry events:

On March 13, 2024, the State Council issued the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in”. The plan proposes to promote equipment renewal and transformation in key industries, promote the exchange of consumer goods in home improvement through government support and corporate concessions, and actively cultivate new types of consumption such as smart homes; at the same time, strengthen the upgrading of product technical standards, accelerate the upgrading of consumer goods quality standards, and improve standard systems such as carbon labels.

Drive demand for home improvement updates and boost confidence in home consumption

Previously, negative real estate sentiment was compounded by weak domestic and international consumption environments, and valuations in the post-cycle real estate industry were relatively pessimistic. The sluggish growth of the new housing market and changes in decoration habits in recent years have led to a decline in the scale of refinement, and improvements in existing housing stock have become the main demand for home improvement. The plan proposes to use various methods such as government support and corporate concessions to support residents in carrying out partial renovation of old houses, kitchen and bathroom, etc., and to encourage places in a position to do so to coordinate the use of funds related to the modern trade circulation system arranged by the central financial administration to support the replacement of durable goods, which is expected to boost confidence in home furnishings and accelerate the release of demand for home decoration trade-in in old neighborhoods and urban villages.

Multi-channel layout meets consumer demand, and smart homes bring industry growth

Traditional store channels are gradually weakening, and the problems of fragmentation of home furnishing enterprise channels and difficulties in obtaining traffic need to be solved urgently. The plan proposes to promote home improvement model rooms into shopping malls, communities, and platforms, encourage enterprises to build online model rooms and provide affordable products and services, which will help home improvement companies to intercept traffic through multiple channels and meet diverse consumer needs. At the same time, the plan proposes to actively cultivate new types of consumption such as smart homes. Smart home products such as smart toilets are suitable for existing home bathroom renovation scenarios. Currently, the penetration rate is relatively low. Trade-in policy subsidies are expected to accelerate smart home replacement demand and bring new volume to the industry.

The upgrading of quality standards for consumer goods is expected to accelerate the pace of home renewal

The plan proposes to speed up the upgrading of consumer product quality standards, draw up a consumer goods quality and safety supervision catalogue, and strictly supervise quality and safety. At the same time, it is required to improve standard systems such as carbon labeling to give full play to the role of standard leadership, green certification, and high-end certification. The plan will help raise residents' awareness of the hazards of non-standard and overdue household products, shorten the household product renewal cycle, accelerate the pace of home renewal, and promote an increase in sales of green, high-end and high-quality household products, thus driving the further upgrading of the home furnishing industry chain.

Targets related to the industrial chain

Consumer goods trade-in boosts demand for home improvement updates. Smart homes bring industry growth, and the home furnishing industry's valuation is expected to be repaired. The trade-in durable home segment is expected to benefit: 1) Customized homes: traditional leaders with strong comprehensive alpha advantages and continuous organization, Sophia, Zhibang Home, Jiangshan Oupai and Hollywood; 2) Soft home: More consumer goods attributes, and continuous construction of all categories of Gujia Home, Musi Shares, Xilinmen and Minhua Holdings; 3) Smart Homes: Rialet, a smart home standard that fits the existing bathroom renovation scenario and has a relatively low penetration rate, is good Mrs and Wrigley Home.

Risk warning:

Consumer demand fell short of expectations; policy implementation fell short of expectations.