This week's research focus: Why are you optimistic about the configuration of large household appliances at the current time?
1) from the perspective of cost: it is expected that cost mitigation will be transmitted to white electricity category at the earliest
Looking back at the sales of large household appliances in the market in 21 years, we can see that the sales volume of household appliances decreased slightly year-on-year, and the rise in the price of raw materials promoted the gradual rise of the average retail price. We expect that in 22 years, the price of household power will maintain year-on-year growth and continue to make a positive contribution to the income generation of white power enterprises. Midea and other enterprises that have passed on the downward pressure of gross profit margin through price increase may benefit from the scissors gap formed by the increase of terminal price + the downward cost.
From the time point of cost mitigation, we analyze the cost of different household appliances and the price changes of various raw materials. We believe that due to the early stabilization of copper price, hardware and stainless steel are still rising due to the dual control of energy consumption in the third quarter, and air conditioners and refrigerators with high correlation with copper price may be relieved first. Therefore, at the current time point when the cost of raw materials has dropped, it is more suitable to configure white electricity products with earlier cost mitigation transmission.
From the point of inflection, by fitting and analyzing the profitability of core household appliance enterprises with the price of main raw materials, we find that the change of upstream raw material cost is often about 1-2 quarters ahead of the change of profit level of household appliance enterprises. The current round of raw material index has had a phased inflection point since 21q2. Therefore, we judge that the gross sales difference of household appliance enterprises is expected to form an upward inflection point in 21q4. As of 21q3, Gree's gross sales difference and net profit margin among the first impacted white power enterprises have increased. It is expected that under the downward trend of raw material costs, white power enterprises will get rid of the downward pressure of gross profit margin as soon as possible, forming a positive trend in leading industries.
In terms of external demand, the CPI of large household appliances increased by 2.4% month on month and 5.5% year-on-year in November 21, indicating that the prosperity of household appliance terminals in the European and American markets is improving. With the downward cost, Midea, Haier and other enterprises with large export volume are expected to benefit from the growth scissors difference between CPI and PPI, resulting in continuous optimization of profits. In October of 21, the growth rate of sales of existing houses + new houses in the United States formed an inflection point, and the rapid removal of housing inventory was also good for the further release of overseas power demand in 22 years.
2) from top to bottom: see the allocation time point from the chain of "finance → real estate → household appliance valuation"
Looking back on the evolution of China's credit cycle in the past 21 years, the public operation was moderate in the first half of the year, the social finance showed a year-on-year decline, the credit environment became tighter, the macro environment has warmed up since July, and the market's long confidence has been gradually boosted. Lagging behind the change of credit cycle, China's housing sales in 2021 showed a strong trend in the front and weak trend in the back. We expect that, on the one hand, the recovery of real estate in early 22 will lead to the release of new demand for kitchen electricity; On the other hand, the warming of policies such as consumption stimulus policy and hair dryer will give birth to the demand for renewal of stock houses and accelerate the sales of white electricity. Compared with the trend of PE and credit cycle of large household appliance enterprises since 2010, the chain of "finance → real estate → household power valuation" is supported. It is expected that this round of credit expansion in the financial market will drive the gradual release of household power demand in 22h1. According to the decisive role of the credit cycle on real estate sales and the correlation between real estate and household power sales, the valuation elasticity of the home appliance sector in 22 years will depend on the expansion of China's credit cycle.
3) from the perspective of valuation, the PE of white electricity plate is relatively low, and the valuation elasticity is considerable
From the perspective of the company, taking all trading days from 20 years to now as the window period, as of January 7, 22, the average number of disposals by PE of white power / kitchen power / kitchen small power / clean electrical appliance enterprises was 24.9% / 51.8% / 30.3% / 43.4% respectively. Therefore, the valuation of white power standard was relatively low compared with other household appliance sectors. At present, the three subjects with the lowest valuation quantile are Ecovacs Robotics Co.Ltd(603486) (5.5%), Gree Electric Appliances Inc.Of Zhuhai(000651) (7.9%), Joyoung Co.Ltd(002242) (11.9%). The valuation quantile of Gree Electric Appliances Inc.Of Zhuhai(000651) is the lowest among the three white. From the perspective of the plate, compared with Baijiu, snack foods and other consumer goods, and last year's boom in the market, the white power sector is at a low valuation. Although the valuation of the white power sector has rebounded from the bottom at the end of 21, its valuation still has a large rebound space.
Investment suggestions: at the current time point, it is recommended to pay attention to 1) the configuration of real estate chain targets, core related targets: recommended [ Midea Group Co.Ltd(000333) ], [ Haier Smart Home Co.Ltd(600690) ], [ Hangzhou Robam Appliances Co.Ltd(002508) ], [ Zhejiang Entive Smart Kitchen Appliance Co.Ltd(300911) ], recommended to pay attention to [ Zhejiang Sanfer Electric Co.Ltd(605336) ], and added [ Gree Electric Appliances Inc.Of Zhuhai(000651) ]; 2) In terms of non real estate chain, we continue to recommend [ Jinhua Chunguang Technology Co.Ltd(603657) ] and [ Kingclean Electric Co.Ltd(603355) ].
Risk tips: the epidemic situation is expanding, and the real estate market, exchange rate, raw material price fluctuation risk, etc.
