According to Guolian Securities, sales in the small home appliance industry in Q1 are expected to remain flat year on year, with a marked improvement over the 23Q4 boom, and the pace of improvement has accelerated since March; among them, the decline in traditional e-commerce has narrowed significantly, which is the main driver of the month-on-month improvement.
The Zhitong Finance App learned that Guolian Securities released a research report saying that the improvement in traditional e-commerce channel sentiment for small kitchen appliances in Q1 in '24 drove the domestic sales business of small household appliance companies to improve, and the performance exceeded pessimistic market expectations. On the export side, the pre-effect of overseas orders has driven the export sales business to achieve excellent growth, and leading players have increased their share, and order performance is even better. The current order schedule further guarantees Q2 business performance. Domestic sales have clearly been repaired month-on-month, and the export OEM business has grown rapidly. The results of small kitchen appliances companies in the first quarter are guaranteed, and the inflection point in operation is worth paying attention to.
Related targets: It is recommended to actively pay attention to Xinbao Co., Ltd. (002705.SZ), a leading OEM with excellent growth in export sales and a steady recovery in domestic sales; and the emerging small electric faucet Little Bear Electric (002959.SZ), which has clear signals for domestic sales repair, while rapid growth in overseas and offline business provides incremental growth.
The main views of Guolian Securities are as follows:
The improvement in traditional e-commerce sales is better than the pessimistic expectations of the market
According to Guolian Securities, sales in the small home appliance industry in Q1 are expected to remain flat year on year, with a marked improvement over the 23Q4 boom, and the pace of improvement has accelerated since March; among them, the decline in traditional e-commerce has narrowed significantly, which is the main driver of the month-on-month improvement; Douyin continues to grow well; and offline channels such as KA and regional chains are still under pressure. In terms of volume and price, although competition is still fierce since the beginning of the year, the average price decline in the industry has narrowed; it is expected to be related to a recovery in demand and a lower base during the same period. At the category level, the month-on-month improvement of frying machines was outstanding. Soy milk machines continued the improvements since last year, while low-permeability categories such as electric steamers and coffee machines continued to grow in high quality. Looking ahead, the industry is expected to maintain a steady trend throughout the year, with an overall recovery from the downward trend in 2023.
Domestic sales of the brand are now at an inflection point, and the pattern is showing a concentrated trend
Domestic sales of all small home appliance brands showed an inflection point in the first quarter. In Q1, Midea's traditional e-commerce sales were +13%/-2%/+0%/+3%/+2%, respectively. Among them, Midea's small home appliances were in the improvement phase, leading the growth rate. It began an adjustment period of more than a year since 2022, and re-entered the upward channel in the second half of last year. In Q1, the traditional e-commerce sales share of Midea, Supor, Joyang/Mofei reached 25.2%/24.1%/7.1%/1.8%, respectively, +3.7/+0.3/+0.2/+0.1pct; the pattern showed a trend of concentration towards the head. Among them, Midea's share recovered rapidly and has basically returned to the level of 2021 before the adjustment; Joyang's share is still recovering; Supor/Winnive/Mofei's share has continued to rise in the past two years.
The growth rate of export orders is outstanding, and the leading OEM business is growing at a high rate
Customs data shows that in January-February, cumulative export sales of small electric appliances, electric appliances, and vacuum cleaners were +21%/+25%, respectively, and sales volume +25%/+41%/+37%, respectively; driven by factors such as steady improvement in overseas demand and pre-order replenishment due to anticipated changes in freight and tariffs, etc., the export boom was excellent.
The order performance of leading foundry companies was even more prominent. The schedule for some orders is expected to reach the end of Q2. Mainly due to the advantages of leading companies in terms of production capacity, delivery level, and cost, their share continues to increase. Due to exchange rate fluctuations, the average price of dollar-caliber orders of various categories has declined, and the average price of RMB is not expected to be under much pressure. Furthermore, considering the economies of scale brought about by order volume, the profit of the foundry business is expected to improve year-on-year.
Risk warning: risk of changes in overseas trade policies; risk of large fluctuations in raw material prices.