Profit recovery + valuation decline, and the value of sector allocation increases
China’s epidemic situation has improved, and local governments have increased subsidies for household appliances. As of April 22, the home appliance index (Shenwan) fell 1.47% this month, outperforming the Wande all a index by 6.6pcts. Since the outbreak of the new round of epidemic in March, 2999 confirmed cases of covid-19 pneumonia and 26318 asymptomatic infections have been added in China from 0:00 to 24:00 on April 13, 2022, which is the phased high point of the current round of epidemic; Recently, the epidemic has been gradually controlled. From 0:00 to 24:00 on April 23, 31 provinces and Xinjiang production and Construction Corps reported 1566 new locally confirmed cases and 20230 asymptomatic infections. At the same time, the state is successively introducing measures including home appliance subsidies and stabilizing the supply chain to promote the resumption of work and production in an orderly manner in batches and by categories. 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). The profit outlook of 2q2 + home appliance sector is gradually on the low side, and the valuation of 2q2 + 202 is gradually on the low side. (1) Profit recovery: the steady growth policy continued to work, and the demand side of household appliances gradually stabilized; In terms of cost, the rising trend of raw material prices has slowed down, the superposition base has increased, and the upstream cost pressure has decreased marginally in 22 years. (2) Low valuation: the overall PE valuation of core household appliance stocks is slightly higher than the historical average relative to the market. It is suggested to focus on three main lines: (1) traditional leaders benefiting from fundamental recovery, focusing on Haier Smart Home Co.Ltd(600690) , Midea Group Co.Ltd(000333) , Gree Electric Appliances Inc.Of Zhuhai(000651) , Hangzhou Robam Appliances Co.Ltd(002508) , 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) , Chengdu Xgimi Technology Co.Ltd(688696) .
Fundamentals: the steady growth policy continues to work, and white electricity retail has warmed up
Real estate data: from January to March, the sales area of new houses was – 13.8% year-on-year, and real estate sales continued to fluctuate at a low level. From January to March 2022, the sales area of commercial housing decreased by 13.8% compared with the same period in 2021. At present, there are many positive statements of policies, but it still takes time for the confidence of the industry to recover. 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 forward to the future, real estate sales and investment may continue to bottom out, and under the policy tone of “steady growth” this year, a wider range of easing policies is expected to come. From January to March 2022, the new construction area of houses decreased by 17.5% year-on-year, and the new construction of houses decreased significantly; The construction area of houses in the same period was + 1.0% year-on-year; The completed area of the house was – 11.5% year-on-year.
Production and sales of household appliances: (1) air conditioners: in terms of delivery, 16.67 million household air conditioners (YoY + 4.9%) were shipped in March, of which 8.29 million were sold domestically (YoY + 3.1%). Due to the sustained force of the steady growth policy, the domestic sales of air conditioners further warmed up; In March, 8.38 million air conditioners (YoY + 6.7%) were exported, and the absolute volume remained high. Retail end: in March, the volume / volume of air-conditioning omni-channel retail sales was – 28.2% / – 20.4% year-on-year, and – 47.8% / – 47.4% respectively compared with the same period in 2019. It was affected by the epidemic counterattack, nationwide logistics obstruction, real estate market downturn and market pessimism. In terms of price, online / offline prices maintained growth in March, with a year-on-year increase of + 7% / + 15% respectively; (2) Chef’s electricity: in March, the omni-channel retail volume / volume of range hood was – 21% / – 14% year-on-year, and – 43% / – 34% year-on-year; (3) Refrigerators & washing machines: the volume / volume of refrigerators in March was – 9.4% / – 8.3% year-on-year, compared with – 9% / – 0.3% in the same period of 19 years. The retail volume / volume of washing machines in March was – 16.2% / – 16.0% year-on-year, compared with – 22.8% / – 22.7% in the same period of 19 years. (4) Cleaning appliances: in March, the sales volume / volume of cleaning appliances in all channels was – 22.8% / – 11.3% year-on-year, the online retail volume / volume was – 22.5% / – 12.7% year-on-year, the offline retail volume / volume was – 25.8% / – 3.9% year-on-year, and the volume / volume of all channels was + 1.8% / + 21.2% year-on-year.
Risk warning: real estate sales are not as expected; The cost of raw materials has risen sharply; The local currency appreciated sharply.
