Profit recovery + valuation decline, and the value of sector allocation increases
Market risk appetite decreased and the value of sector allocation increased. Since January 2022 (as of January 28), the home appliance index (Shenwan) has retreated by 4.6%, outperforming the CSI 300 index by 3.1pct, reflecting the characteristics of a good “safe haven”. Last week (2022.01.24-2022.01.28, the same below), the overall market fluctuated significantly. There are two main external factors: first, the hawkish statement after the interest rate meeting of the Federal Reserve made investors worried that the United States would face liquidity contraction after raising interest rates; second, the geopolitical crisis between the United States and Russia over Ukraine further escalated last week, resulting in a sharp decline in overseas markets; Internally, the profit growth of some sectors with high early valuation may be lower than expected. Under the background of the intersection of internal and external factors, the market risk appetite decreased significantly and ushered in a large overall retreat. Looking ahead, we believe that at the time point when the two sessions are approaching, the steady growth policy will be strengthened, the real estate policy may continue to be marginal loose, and the market retreat will bring opportunities for the layout on the left side of the real estate chain.
In terms of home appliance fundamentals, we selected 17 home appliance stocks as the research object. Their overall ROE (TTM) has been in a downward channel since the peak in the mid-18 years. The ROE (TTM) in the third quarterly report of 20 years was the lowest value of 17%, and then rebounded. As of 21, the ROE (TTM) in the third quarterly report of 21 years has rebounded to 21%, still 23% lower than the historical average (2014 first quarterly report – 2021 third quarterly report). Looking forward to 2022q1, the bad situation of the household appliance sector is gradually passivated + the valuation is low, and the time point of better configuration is approaching. (1) Negative passivation: raw material prices open a downward channel, the superposition base increases, and the upstream cost pressure decreases marginally in 2022. (2) Low valuation: the overall PE valuation of core household appliance stocks fell back to near the historical average relative to the market. (3) Rising allocation value: the experience of the past 16 years shows that Q4 to Q1 is a period with high winning rate. It is suggested to focus on three main lines: (1) traditional leaders benefiting from fundamental recovery, focusing on Gree Electric Appliances Inc.Of Zhuhai(000651) , Haier Smart Home Co.Ltd(600690) , Midea Group Co.Ltd(000333) , Hangzhou Robam Appliances Co.Ltd(002508) , Joyoung Co.Ltd(002242) , Zhejiang Supor Co.Ltd(002032) ; (2) Focus on Hisense Visual Technology Co.Ltd(600060) , equity reform catalysis + laser TV volume + products going abroad; (3) Emerging household appliances with high prosperity include Ecovacs Robotics Co.Ltd(603486) , Beijing Roborock Technology Co.Ltd(688169) , Chengdu Xgimi Technology Co.Ltd(688696) , Marssenger Kitchenware Co.Ltd(300894) .
Fundamentals: in December, real estate sales fluctuated at a low level, and home appliance retail was slightly weak
Real estate data: from January to December 2021, the sales area of commercial housing in China increased by 1.9% (compared with the same period of 19 years + 4.6%) compared with the same period of 2020, and the single month in December 2021 decreased by 15.6% compared with the same period of 2020. Although the policy level made more positive statements in the month, it still takes time for the confidence of the industry to recover. At present, real estate enterprises and buyers are generally in a wait-and-see state, resulting in the downturn of real estate sales and investment in the second half of 21 years. From January to December, the completed area of houses was + 11.2% year-on-year, of which + 0.8% year-on-year in December, and the completion was still tenacious.
Production and sales of household appliances: (1) air conditioners: in terms of delivery, 11.52 million household air conditioners (yoy-0.3%) were shipped in December, including 5.74 million domestic sales (yoy-4.5%). The rise in manufacturing costs led to higher terminal prices and flat retail demand; In December, the export of air conditioners was 5.78 million units (YoY + 5.3%), with a marginal increase in growth, or due to the increase in demand in Europe and the United States in the black fifth and Christmas seasons. Retail end: in December, the volume / volume of air-conditioning omni-channel retail sales was – 26% / – 19% year-on-year, and – 37% / – 20% respectively compared with the same period in 2019, mainly due to weak real estate sales and other factors. In terms of price, the average price of the industry has been positive year-on-year since 20q4, and the online / offline price maintained growth in December, with a year-on-year increase of + 7% / + 8% respectively; (2) Chef electricity: in December, the retail volume / volume of range hood in all channels was + 4% / + 8% year-on-year, which was – 4% / + 10% compared with the same period in 19 years, and the prosperity was repaired; (3) Refrigerators & washing machines: the volume / volume of refrigerators in December was – 9% / – 0.3% compared with the same period of 2020, and – 5% / + 5% compared with the same period of 19 years. The retail volume / volume of washing machines in December was – 23% / – 13% compared with the same period of 19 years, and – 24% / – 12% compared with the same period of 19 years. (4) Clean appliances: in December, the online retail volume / volume of clean appliances was – 4% / + 12% year-on-year, and the offline retail volume / volume was – 9% / + 16% year-on-year. The increase of the base led to a slowdown year-on-year.
Risk analysis: real estate sales are less than expected; The cost of raw materials has risen sharply; The local currency appreciated sharply.
