Kitchen & cleaning appliances benefit from US tariff exemption. As of March 25, the home appliance index (Shenwan) fell 13.7% this month, underperforming the Wande all a index by 5.7pcts. This week, the office of the U.S. trade representative announced a new exemption from the additional tariffs on 352 imports from China from October 12, 2021 to December 31, 2022 (the taxed categories from October 12, 2021 to the present will be refunded). According to the exemption list, the exempted household appliances are mainly small household appliances, such as floor sweepers, vacuum cleaners, air purifiers, air fryers, etc. Looking forward to the future, overseas demand is expected to return to the growth trend, and tariff exemption will reduce the cost of relevant listed companies and improve their profitability; China’s steady growth policy will continue to work, and there is no need to be overly pessimistic about the changes in the future prosperity of the industry.
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) Pay attention to 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: the steady growth policy continues to work, and white electricity retail has warmed up
Real estate data: from January to February, the sales area of new houses was – 9.6% year-on-year, and real estate sales continued to fluctuate at a low level. From January to February 2022, the sales area of commercial housing decreased by 9.6% compared with the same period in 2021. Specifically, the first and second tier cities fell significantly year-on-year, while the sales of commercial housing in the third and fourth tier cities are gradually stabilizing. Although the current policy level has made more positive statements, it still takes time for the confidence of the industry to recover. At present, real estate enterprises and home 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. Looking to the future, we believe that real estate sales and investment may continue to bottom out, and under the main tone of this year’s “steady growth” policy, a wider range of easing policies is expected to come.
Production and sales of household appliances: (1) air conditioners: in terms of delivery, 9.69 million household air conditioners (YoY + 10.6%) were shipped in February, of which 3.84 million were sold domestically (YoY + 4.1%). Due to the disturbance of the Spring Festival holiday and the continuous force of the steady growth policy, the domestic sales of air conditioners became positive year-on-year; In February, 5.85 million air conditioners (YoY + 15.3%) were exported, which increased significantly year-on-year, and the absolute volume remained high. Retail sales of air conditioners increased by + 25% year-on-year and + 2% year-on-year, respectively. 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 February, with a year-on-year increase of + 15% / + 12% respectively; (2) Chef electricity: in February, the omni-channel retail volume / volume of range hood was + 17% / + 42% year-on-year, and + 4% / + 20% year-on-year; (3) Refrigerators & washing machines: the volume / volume of refrigerators in February was – 13% / – 17% year-on-year, up + 9% / + 5% year-on-year; the retail volume / volume of washing machines in February was + 4% / + 8% year-on-year, up + 8% / + 13% year-on-year. (4) Clean appliances: in February, the sales volume / volume of all channels of clean appliances were – 17% / – 7% year-on-year, the online retail volume / volume were – 17% / – 7% year-on-year, the offline retail volume / volume was – 19% / – 9% year-on-year, and the volume / volume of all channels was + 17% / + 41% 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.
