Household appliance industry weekly: why do we think we can be optimistic about household appliances at the current time

Key investment points

22q1 resumption: 1) Fundamentals: the demand is generally flat, and the epidemic situation in March has a phased impact.

From the perspective of industry demand, the overall sales volume of white power from January to February was stable, and Haier's share increased significantly; Share concentration under kitchen wire; Brand growth differentiation of kitchen small electricity in February; Among the cleaning appliances, the number of floor sweepers decreased and increased, the share of stones climbed rapidly, and the number of floor washers maintained a high increase. 2) From the perspective of external environment: the external disturbance in the first quarter was large, but the probability of continued deterioration was small. The international environment is turbulent, the price of raw materials in 22q1 continues to rise, and the shipping price remains high. The market is worried about the loss of profits in the household appliance sector, and the net outflow of funds from the north is accelerated.

We believe that the share price of household appliances has fully reflected the pessimistic expectations in the early stage, and the valuations of individual stocks are at the bottom level of stages, with limited downward space. In the first quarter, the Shenwan home appliance index fell 18.88%, ranking the fifth in all industries (the CSI 300 index fell 13.44% in the same period). Traditional undervalued stable varieties performed relatively well, while emerging varieties and stocks under fundamental pressure decreased significantly. At present, the valuation of home appliance sector is at the historical low level since 2012. At present, the downward space of sector valuation is limited, and the overall safety margin is high. The household appliance industry has entered the configuration stage.

22q2 Outlook: after the epidemic situation is alleviated, the demand recovers intensively, and Q2 ushers in the turning point of sector profit; Loose real estate policy continued to boost sentiment in the sector. Under the disturbance of the epidemic, since March, the passenger flow under multi ground lines has shrunk and the online logistics has been blocked. Some demands of the household appliance industry have been pushed back, and the subsequent centralized release of demand for household appliances with higher rigid demand and categories with stronger functional attributes is more obvious. According to neutral judgment, the current round of epidemic situation may be gradually alleviated in mid and late April. Combined with the arrival of peak season, we may usher in a wave of demand boost, and 618 small household appliances and clean appliances will greatly promote the centralized release of demand. Although the price of raw materials remains high, there is no need to be overly pessimistic. The profit elasticity of household appliances in the second quarter is expected to be released. On the one hand, the low profit base effect of 21q2 is expected to gradually appear. In addition to individual targets in the boom track, the overall performance growth and gross profit base of Chinese household appliance enterprises in 21q2 are low, and the profit elasticity of 22q2 is sufficient. On the other hand, the price increase of 22q1 is also expected to support the profit of 22q2. The price increase of emerging categories such as integrated stove, floor sweeper and floor washer is most obvious due to product iteration; White electricity and kitchen electricity continued the trend of price increase in the early stage, and the average offline price increased more than online.

22q2 investment strategy: focus on the first quarter report and "618" market. 1) Layout the target of steady growth in the first quarterly report. Disturbed by the cost and epidemic situation, it is expected that the internal performance of 22q1 household appliance sector is significantly differentiated. At present, the market expectation for the performance of the household appliance sector is relatively low, and the performance of the relevant subject matter is not lower than the expected share price, that is, there is positive feedback. We believe that the differentiation of revenue growth and profit performance of first-line and second-line companies may increase in the counter cyclical stage. It is suggested to lay out the targets with relatively solid fundamentals in the first quarter, and recommend Haier Smart Home Co.Ltd(600690) , Midea Group Co.Ltd(000333) , Zhejiang Supor Co.Ltd(002032) , Chengdu Xgimi Technology Co.Ltd(688696) . 2) Pay attention to the "618" and China Daily News market, and layout elastic targets.

In 2021, some growth track leaders ushered in a round of repair market before and after the big promotion node. It is suggested to grasp the promotion node and pay attention to the big promotion sales performance of the leading brands of growth track. Such as Beijing Roborock Technology Co.Ltd(688169) , Chengdu Xgimi Technology Co.Ltd(688696) , Hisense Visual Technology Co.Ltd(600060) , Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) , etc. 3) Lay out the main line of steady growth and allocate post cyclical targets benefiting from loose real estate policies, such as Hangzhou Robam Appliances Co.Ltd(002508) , Zhejiang Entive Smart Kitchen Appliance Co.Ltd(300911) , Haier Smart Home Co.Ltd(600690) , Midea Group Co.Ltd(000333) , etc.

Risk tips: the spread of the epidemic exceeded expectations, the price of raw materials rose sharply, and the industry demand was weak

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