Industry core view:
In the short term, there are frequent favorable policies for the household industry: the policy briefing encourages the implementation of furniture and home decoration subsidies to the countryside, which may stimulate household consumption in rural areas in the future; At the same time, with the recent recovery of real estate policy and the reduction of reserve requirements by the central bank, the real estate supply and demand side and the downstream home industry are expected to be repaired. Previously affected by the real estate chain, the home sector rebounded to the bottom under the stimulation of multiple favorable policies. In the medium and long term, the concentration of the home furnishing industry is expected to further improve, and the leaders will benefit from: 1) end B: the concentration of real estate and the penetration rate of China’s hardbound houses are increasing. Under this background, home furnishing enterprises with strong product power and delivery ability are expected to obtain more end B orders; 2) End C: the proportion of stock house renovation in the home decoration market will gradually increase. In the future, leading home enterprises with multiple categories, multiple channels and strong brands are expected to win more market share. It is suggested to pay attention to the high-quality leading targets in the home industry.
Key investment points:
At the policy briefing, encourage the implementation of furniture and home decoration subsidies to the countryside, which may stimulate rural home decoration consumption in the future. On December 8, the State Council Information Office held a regular policy briefing of the State Council to introduce the relevant situation of the 14th five year plan to promote agricultural and rural modernization. Wu Xiao, director of the rural economy Department of the national development and Reform Commission, said to promote the upgrading of the consumption ladder of rural residents. Take multiple measures to increase farmers’ income, encourage qualified areas to carry out rural household appliance renewal, and implement furniture and home decoration subsidies and a new round of automobile to the countryside. We will promote the upgrading of durable consumer goods for rural residents. We expect that in the future, with the introduction of supporting policies and the implementation of furniture and home decoration subsidies to the countryside, home decoration consumption in rural areas is expected to be boosted.
The recovery of policy and the reduction of reserve requirements will usher in the repair of the real estate supply and demand end and the downstream household industry. On December 6, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the economic work in 2022. The meeting mentioned the need to promote the construction of affordable housing, support the commercial housing market to better meet the reasonable housing needs of buyers, and promote the healthy development and virtuous cycle of the real estate industry. On the same day, the central bank announced that it would cut the deposit reserve ratio of financial institutions by 0.5 percentage points on December 15, releasing about 1.2 trillion yuan of long-term funds. We believe that the current RRR reduction will help reduce the social comprehensive financing cost, alleviate the pressure of real estate on financial risks, play a positive role in repairing the liquidity of the real estate industry and stimulating the supply and demand side, and also drive the repair of the downstream real estate industry.
In the post cycle era of real estate, the concentration of the household industry is expected to further improve and the leading enterprises will benefit. We believe that in the post cycle era of real estate, the concentration of downstream household industry is expected to further improve, It is discussed from the following two aspects: (1) end B: in the post cycle era of real estate, the concentration of the real estate industry is improved. At the same time, under the policy promotion and market education, the penetration rate of fine decoration is improved. In the future, leading household enterprises with strong product power and delivery ability are expected to obtain more end B orders. (2) C end: the proportion of stock house renovation in the home decoration market is gradually increasing, and the leading household enterprises with multi categories, multi-channel and strong brands are expected to win more market share in the future. In conclusion, the improvement of industry concentration is still the main theme in the medium and long term, and the leading enterprises are expected to benefit from this process. It is suggested to pay attention to the high-quality leading objects in the household industry.
