The Zhitong Finance App learned that Guolian Securities released a research report saying that since the beginning of the year, the Home Appliance Index ranked 4th in the Tier 1 industry with a 15% increase; the White Electric Index ranked second in the secondary industry with a 29% increase. Admittedly, the market dividend style has contributed greatly, but from an industry perspective, after excluding base factors, although the demand side has not been very impressive since the beginning of the year, it is also generally a bit better than expected, and the steady performance of the leaders is supported. Domestic sales are resilient, policy-side or flexible under the support of renewal; in the short term, export sales are driven by the recovery in Europe and the US and the boom in emerging markets, or continue to surpass past performance, and there are plenty of highlights for the brand to go overseas. The focus is on recommending white electric faucets with excellent quality and steady operation, and actively pay attention to export chain investment opportunities.

The main views of Guolian Securities are as follows:

The two-year CAGR for home appliance exports over the past 24 years has surpassed the historical growth range

According to Guolian Securities, the 2024Q1 household appliance export volume/RMB value/dollar value were +24%/+12%, respectively. The apparent growth rate in the first 2 months continued the strong performance since August 2023. The March base was significantly higher, and the reading fell as scheduled, but the two-year CAGR growth rate, excluding base disturbances, further increased. Under the caliber of the previous two months, the export volume/RMB amount was about 8% year-on-year, rising to 12% in March, and continued to be better than the historical growth range in the middle single digits. Furthermore, at present, there is still a good increase in white power export schedules, and most export companies are also optimistic about the order situation; overall, exports from the home appliance industry are expected to continue to exceed expectations in the future.

In 2023, demand in Europe and the US was weak, but exports of major appliances reached a new high

Guolian Securities said that in the low base stage, it is more difficult to analyze trends based on apparent data. Looking at annual data, it will be more clear and more confident. In 2023, with demand for major household appliances falling in the European and American markets from a small to middle digit year on year, China's exports of about 1/3 of the household appliances reached a record high. Among them, exports of air conditioning and washing machines were +4% and +27%, respectively, compared with the previous high (2021). Although there were no new highs, there were only 40,000 units and 540,000 units less than the previous high. The gap was about 0.1% and 0.5% respectively, and the record highs were within easy reach; only Western-style small appliances were slow to recover.

Emerging markets are the main source of growth in home appliance exports in 2023

According to Guolian Securities, demand from Europe and the US is average, but the main reason for China's record high exports is the relatively good performance of emerging markets. This can be confirmed by the superior export performance of large appliances over small Western-style household appliances. Emerging market regions mainly correspond to Latin America, Middle East Africa and some emerging economies in South Asia/Southeast Asia; by category, air conditioning surged in Latin America and the Middle East, Europe recovered, and North America bottomed out; strong performance in refrigerators and freezers in Latin America and Africa, recovering, and exports from countries other than the US generally increased; washing machine exports generally rose, with volume averaging the 2022 decline, reaching a record high, and the share of television in Latin America increased markedly. Furthermore, supply chain substitution and transfer are also having an impact.

European and American recovery & emerging market boom continue or continue to strengthen exports

Guolian Securities said that the regional data for January-February '24 showed that the boom in emerging markets continued, and the export side exceeded expectations, or mainly from Europe and America, especially the United States. According to high-frequency data, retail sales of electronics in the US have returned to small single-digit growth since Q4 last year. The previous 6Q was a small single-digit decline, and this growth rate was also moderate in the 5-10 year dimension. At the same time, judging from the inventory sales ratio of household appliances, US inventories are still at the bottom of history and have not rebounded; in addition, the actual spending data for home appliances also began to accelerate from 2023H2; overall consumer confidence in Europe has also rebounded steadily. The trend improvement in demand under low inventories is expected to lead to high export elasticity.

Risk warning: Overseas demand falls short of expectations, raw material costs have risen, air conditioning inventories have accumulated significantly, and foreign investment has fluctuated greatly.