Core ideas of this week
The price fluctuation of raw materials is mainly driven by short-term factors. We should pay attention to the business toughness of household appliance enterprises. Affected by the conflict situation between Russia and Ukraine, the price of raw materials has fluctuated significantly recently, especially the aluminum price. The spot settlement price of LME aluminum soared by 14.77% last week and fell rapidly by 9.84% this week. However, the year to date increase is still 23.3%, ahead of copper (year to date: + 5.0%) and plastics (year to date: + 4.2%) The price index of other raw materials such as steel (YTD: + 4.7%) has aroused market investors’ concerns about the profitability of household appliance enterprises. Therefore, we compared the changes of raw material price index between 21q1-q2 and 22q1 with the performance of home appliance industry:
First, from the perspective of the causes of the price rise, the sharp rise during 21q1 was mainly due to the supply chain obstruction caused by the epidemic, resulting in the mismatch between supply and demand. After Q2, with the improvement of the epidemic and the recovery of the supply chain, the price of bulk raw materials basically remained at a high level; The current round of rapid price rise is mainly due to the short-term catalysis of the conflict between Russia and Ukraine. As a major energy country, Russia’s total exports of oil, natural gas, aluminum and nickel account for 12%, 21%, 26% and 49% of the global total. The market is worried that European and American countries will increase economic sanctions against Russia and affect the export supply of these raw materials. At present, we are unable to predict the time point and mode of conflict resolution between Russia and Ukraine. We need to keep tracking the situation between Russia and Ukraine and the price trend of bulk raw materials.
Secondly, from the perspective of price increase range, compared with 21q1, in this round of main raw materials, except aluminum, the price increase of copper, plastic and steel is far less than that in the same period of 21q1, only reaching about 50% of that in the same period of 21q1.
Finally, returning to the performance of household appliance enterprises, we select the four main sub industries of white electricity, black electricity, small household appliances and kitchen electricity in Shenwan’s secondary classification. By comparing the gross profit margin and net profit margin, we find that in 21q1, the gross / net profit rates of white electricity, black electricity, small household appliances and kitchen electricity are + 0.2pct / + 1.5pct, + 0.5pct / + 1.2pct, – 0.9pct / + 0.1pct, – 0.7pct / + 2.3pct respectively, The gross profit margin was flat or decreased slightly, and the net profit margin increased instead of decreasing, and the profitability remained stable. By 21q2, the gross / net profit margins of white electricity, black electricity, small household appliances and kitchen electricity were – 0.6pct / – 0.2pct, -0.4pct / – 0.2pct, -4.0pct / – 4.0pct and – 1.2pct / + 0.4pct respectively. Compared with 21q1, the cost pressure of 21q2 household appliance enterprises was more significant. The gross profit margins of the four sub industries generally declined, but the net profit margin performance was all better than the gross profit margin. Among them, the net profit margin of kitchen electricity sector continued to increase, Showing strong business resilience.
From the perspective of supply chain optimization, the cost reduction space and measures of the household appliance industry are sufficient and need to be explored. According to procurement and supply chain management, the cost reduction of the supply chain is divided into three steps: negotiation price reduction, process optimization and design optimization. Among them, negotiation price reduction is the easiest, but the impact on the product cost is the least, about 10% of the product cost; Process optimization, regardless of the production process and transaction process, is relatively difficult, affecting about 20% of the product cost; The design optimization is the most difficult. It needs the cross functional cooperation of different departments such as marketing, R & D and supply chain, which can affect 70% of the product cost. From the perspective of the current measures taken by household appliance enterprises to deal with bulk price increases, they mainly include the transmission of terminal retail price increases, promoting new and expensive products, optimizing product sales structure and increasing online sales. The first two are sales strategy optimization, which does not involve supply chain optimization, while the latter mainly involves process optimization in the three steps. If combined with the above-mentioned profit performance of 21q1-q2 household appliance enterprises, There is still a large cost reduction space to be excavated in the design optimization stage of the three steps. We note that Xinbao, Xiaoxiong and other emerging small household appliance enterprises have established R & D teams composed of R & D, marketing, industrial design and other personnel in R & D and design, and the performance of small household appliance enterprises may be expected to improve.
Plate view
White electricity sector: the main support for white electricity repair comes from: 1) the pressure on the high base caused by the epidemic is gradually weakened, 2) the price rise trend of bulk commodities is alleviated, 3) the rise of shipping prices is stopped and stabilized, and 4) the trend of high-end consumption is gradually becoming. However, it is still plagued by long-term factors: 1) macroeconomic downturn; 2) Weakening of real estate pull, etc. In contrast, in the short term, the supporting factors have a direct and effective impact on the operating results of white power enterprises, and the short-term profitability of white power leaders can be repaired. In the medium and long term, China’s white power market has gradually transformed into a stock competitive market dominated by renewal demand. Under this background, we are more optimistic about the deep barriers built by white power leaders in terms of brand, channel, R & D, management and other underlying basic capabilities. We believe that in the continuous innovation category of white power, we can rely on accumulated advantages to achieve the strength of the strong. At the same time, the white power leader with excellent product power, mature supply chain and rich experience in overseas operation has the opportunity to improve the penetration of overseas market, and the overseas market space is broad.
Kitchen electricity sector: the overall demand of kitchen electricity sector is relatively weak, but the performance of sub sectors is differentiated. It is suggested to pay attention to the integrated stove sub sector with low penetration and high growth. We believe that the penetration rate of integrated stoves at this stage is still low, while the existing stock housing market is large and has sufficient penetration space. At the same time, after the early consumer education of integrated stoves (especially, after the four leading enterprises took the lead in listing in 2020, Pinxuan strengthened to further improve the popularity of integrated stoves), the vigorous development in recent two years has promoted some leading enterprises to complete the accumulation from one to ten. With the construction of channels and the increasing improvement of product categories, and referring to the development track of traditional kitchen electric faucets, the leapfrog development of integrated stoves from 10 to 100 can be expected.
Cleaning appliances: under the industry characteristics of low stock and demand determined by supply, the frequent emergence of new products plays a great role in promoting the penetration of floor sweepers and floor washers Beijing Roborock Technology Co.Ltd(688169) launched the new self-cleaning floor sweeper U10 with mop and floor washer G10, Ecovacs Robotics Co.Ltd(603486) launched the new floor sweeper X1 with self-cleaning + self collecting + self drying, and Yunjing’s second-generation new floor sweeper J2 with self-cleaning + self changing + self drying. These new products have significantly improved product performance or industrial design compared with the past, which is in line with the current consumption upgrading trend, It is expected to further stimulate terminal sales. At the same time, the rapid and large-scale volume of floor washing machine has also attracted the rapid follow-up of Midea, lake, Jiuyang, Zhejiang Supor Co.Ltd(002032) and other enterprises. More enterprises will launch relevant products in the first half of 22 years, and the high outlook and certainty of floor washing machine and other emerging cleaning electrical appliances are strong.
Investment advice
It is suggested to pay attention to the white power leaders Midea Group Co.Ltd(000333) , Haier Smart Home Co.Ltd(600690) , Gree Electric Appliances Inc.Of Zhuhai(000651) , which continue to optimize the competition pattern and whose profitability is expected to be repaired in the second half of the year. It is suggested to pay attention to the integrated stove leader Zhejiang Entive Smart Kitchen Appliance Co.Ltd(300911) , which comprehensively promotes the improvement of multidimensional organizational capabilities such as products, brands, channels and management, the traditional kitchen electric faucet Hangzhou Robam Appliances Co.Ltd(002508) , which is expected to launch new integrated stove products in the first half of the year, and the integrated stove leader Marssenger Kitchenware Co.Ltd(300894) , which continuously optimizes the product structure and steadily expands multiple channels.
It is suggested to pay attention to the sweeping Siasun Robot&Automation Co.Ltd(300024) leader Ecovacs Robotics Co.Ltd(603486) with outstanding comprehensive advantages and building the second growth pole with the help of intelligent life appliances, as well as the sweeping Siasun Robot&Automation Co.Ltd(300024) leader Beijing Roborock Technology Co.Ltd(688169) , which has deep technical barriers and rapid expansion of overseas channels.
Risk tips
Macroeconomic growth is less than expected, resulting in the decline of residents’ purchasing power; The severe regulation of real estate has a negative impact on the demand for downstream household appliances; The epidemic has repeatedly affected the resumption of production and work.
