The Zhitong Finance App learned that China Galaxy Securities released a research report saying that the boom in the home appliance industry is recovering as scheduled, and that the future sector is still expected to be driven by favorable factors such as optimization of real estate policies, the release of trade-in demand, and continued inventory replenishment through overseas channels. Looking ahead to the second quarter, with the hot summer season and big promotions approaching, the good performance of the export side is expected to continue under the low base effect, and the sector's performance is still supported. It is recommended to focus on three main investment lines: first, white electric faucets with strong comprehensive strength, recommend Midea Group (000333.SZ) and Haier Smart Home (600690.SH); second, recommend Boss Electric (002508.SZ) and Vantage (002035.SZ) for kitchen appliances that are expected to benefit from marginal improvements in real estate; and third, clean appliances, which are expected to benefit from a recovery in overseas business, recommend Stone Technology (688169.SH).
The main views of China Galaxy Securities are as follows:
Benefiting from the growth of the real estate completion side, the release of consumer demand, and the gradual improvement of exports, the home appliance sector's revenue growth is good
In 2023, the home appliance industry (SW) achieved revenue of 1487.559 billion yuan, an increase of 6.53% over the previous year, and revenue growth in all sub-sectors other than lighting was positive. On a quarterly basis, 23Q4 and 24Q1 achieved operating income of 3641.87 billion yuan and 369.834 billion yuan, up 8.10% and 8.02% year-on-year. Under a low base, sector revenue continued to grow well. China Galaxy Securities said that looking ahead to the second quarter, as favorable factors such as hot summer air conditioning season approaches, festival promotions+trade-in driving demand release, and continued inventory replenishment through overseas channels resonate, the home appliance sector is expected to continue to grow well, supported by the recovery of the white power industry.
Cost dividends, demand improvement and structural optimization resonate, and industry profitability continues to improve
In 2023, the home appliance industry achieved a cumulative net profit of 111,391 billion yuan, an increase of 13.68% over the previous year, and the growth rate was significantly superior to revenue. On a quarterly basis, 2023Q4 and 2024Q1 achieved net profit of 24.3.53 billion yuan and 26.159 billion yuan respectively, up 19.93% and 10.63% year-on-year respectively. In 2023, the gross margin of the home appliance sector was 25.97%, up 1.83 PCT year on year. Among them, the overall gross margin of the 2023Q4/2024Q1 home appliance industry was 27.71%/25.15%, up 1.46/1.20PCT year on year. The gross margin of the sector increased year on year for 8 consecutive quarters.
Hot weather drives air conditioning sales, and ice washing exports continue to be strong, providing strong support for the overall performance of the home appliance industry
In 2023, the white power industry achieved revenue of 978.664 billion yuan, an increase of 8.80% over the previous year. In terms of profit, the white power industry achieved net profit of 83.984 billion yuan in 2023, an increase of 17.94% over the previous year. On a quarterly basis, 23Q4 and 24Q1 revenue were 2293.31 billion yuan and 249.150 billion yuan respectively, up 11.64% and 9.37% year on year; net profit due to mother was 19.2.47 billion yuan and 19.853 billion yuan, up 28.13% and 16.13% year on year. Against the favorable backdrop of economic recovery, the white power industry's structural advantages and cost dividends were released, and performance growth was better than revenue.
Public funds are increasing their allocation of home appliances, and the white electronics sector is the most popular
Benefiting from economic recovery and improved performance, investment sentiment in the home appliance sector picked up markedly. China Galaxy Securities pointed out that since entering 2024, the home appliance sector has gradually strengthened, and the allocation of public funds to the home appliance sector has followed the trend. By the end of the first quarter of 2024, the market value of heavily held individual stocks in the home appliance sector accounted for 3.56% of public fund holdings, an increase of 0.90 PCT over 2023Q4, and rebounded for five consecutive quarters. Looking at the sub-sector, the allocation of public funds to the home appliance industry was mainly concentrated in the white electronics sector. By the end of the first quarter of 2024, the white power distribution ratio had increased 0.69 PCT to 2.51% month-on-month. White electric faucets were still the focus of allocation. The number of shares held by Midea Group, Haier Smart Home, and Gree Electric increased 33.55%, 17.27%, and 42.00% month-on-month.
Risk warning: risk of changes in raw material prices; risk of demand improvement falling short of expectations; risk of increased competition in the industry.