Events
In May, the number of air conditioning production increased slightly. According to the data released online by the industry, the output of household air conditioning industry was about 16.58 million units in May 2022, an increase of 7.2% over the same period last year. Among them, domestic sales increased by 12.4% over the same period last year; Exports fell by 5.5% over the same period last year. Since March, air conditioning manufacturers have begun to prepare for the peak season and increase production scheduling to prepare goods for the channel. Therefore, the production scheduling data has increased slightly for three consecutive months.
Projector manufacturers have launched new products one after another. Fengmi’s latest v104k Ultra HD projector will be pre sold on May 19. At the same time, all major smart projection brands have also launched new products. New products are mainly divided into two categories: 1) high-end flagship models, comprehensively improve product parameters, and the average price exceeds 5500 yuan. 2) High cost performance and further expand the audience of intelligent projection. Fengmi and Jimi’s new products focus on cost performance, and the prices of both products are less than 4000 yuan.
Subsidies for production expansion of leading enterprises. Midea Wuhan Operation Center launched the double subsidy policy of “quality Midea, green Jingchu” in 2022 Midea Group Co.Ltd(000333) “replacement for repair + old for new”. With a total investment of 6 billion yuan, Gree intelligent manufacturing project is started in Ma’anshan. After all is completed, it can achieve an annual output value of more than 10 billion yuan.
Key investment points
Drivers are expected to improve marginally. Real estate: real estate easing released a positive signal. At the weekend, the central bank lowered the lower limit of the first house interest rate to LPR, floating down 20% (the previous value was LPR), and the signal supporting the demand of the housing market was positive. At the same time, all localities are still carrying out the house purchase policy of “implementing policies according to the city”, and the house purchase policy is loose, extending from the third and fourth tier cities to the second tier cities. Loose real estate will drive sales to gradually pick up, while large household appliances will benefit from the post real estate cycle. From the perspective of dependence on new houses, kitchen electricity is better than white electricity, but at the same time, the activity of second-hand houses driven by new house transactions is also beneficial to the renewal market of white electricity stock. Raw material side: raw materials account for a high proportion in the operating cost of household appliances, which is one of the main factors affecting the profitability of household appliance enterprises, with slight differences in subdivided industries. Among them, the operating costs of white electricity, black electricity and kitchen electricity accounted for 85%, 90% and 87% of the original materials respectively. Since May, the price of bulk raw materials has dropped year-on-year, and the inflection point of raw material price has been found. Superimposed with the recent increase of ex factory price of products, it is expected to form profit elasticity. Export side: the shipping capacity is tight and the global shipping price is still high. However, since February 2022, China’s export container freight rate composite index (CCIF) has continued to decline. It is expected that the export profit margin of export enterprises is expected to rise with the further decline of shipping costs in the later stage.
The short-term depreciation of RMB exchange rate is good for export-oriented household appliances. The Fed’s interest rate hike made the RMB exchange rate relatively devalued and thickened the performance of export-oriented household appliances. However, due to the adoption of hedging and other measures, leading enterprises are relatively limited by the impact of exchange. In addition, the export business of some enterprises is settled in RMB, which is also less affected by exchange. Overall, the depreciation of RMB has a greater impact on export-oriented small household appliance enterprises.
The leading enterprises in the main sub industries have strong anti risk ability. On the whole, in 2022q1, affected by factors such as repeated outbreaks and blocked logistics distribution, the revenue growth of the household appliance industry slowed down, + 6.5%. In the face of external pressure, home appliance listed companies have reflected strong business toughness and market competitiveness through strategies such as optimizing operation, adjusting price, diversification and high-end layout. White power: the revenue of 2021q4 and 2022q1 is + 13.8% and + 10.3%. The overall domestic and foreign sales shipments of white power have decreased in recent two quarters, but the white power leader has increased the overall revenue scale of white power through price increase and the rapid growth of multi online industry. The revenue of black TV 2021q4 and 2022q1 is – 8.4%, – 11.8%. The downward price of LCD panel promotes the price reduction of color TV, and the epidemic affects the logistics distribution. China’s TV consumption is weak, and the industry revenue has decreased. However, the trend of large screen promotes the rapid growth of laser TV and intelligent micro investment industry, and the head enterprises perform well. The revenue of kitchen electricity in 2021q4 and 2022q1 was + 15.3% and + 9.9%. Affected by the repeated epidemic and the reduction of real estate projects, the growth rate of the industry in 2022q1 slowed down month on month. However, the growth dividend of integrated stove industry is still, and the penetration rate continues to improve.
The profitability of the industry is gradually in the repair channel. The overall gross sales difference of the household appliance industry in 2021q4 and 2022q1 was – 1.4% and + 0.4% year-on-year. Home appliance enterprises have effectively responded to the cost pressure through strategic procurement, order price adjustment negotiation, high-end upgrading and other measures, and the decline of gross profit margin in the industry has gradually narrowed. Overall, the overall net profit margin of the household appliance industry in 2021q4 and 2022q1 was – 1.5% and + 0.2% year-on-year. In terms of sectors, the net interest rates of white electricity, black electricity and kitchen electricity in 2022q1 were + 0.3%, + 0.5% and – 1.2% year-on-year. Among them, the cost transfer ability of white power is strong, and black power benefits from the decline of panel price, and its profitability takes the lead in improving.
Investment suggestion: at present, consumption is still weak, and it is necessary to continuously track the emergence of economic fundamentals and industry inflection points. It is suggested to pay attention to two aspects: 1 Driving the large household appliance industry related to steady growth; 2. Gradually walk out of the emerging category industry that kills the negative cycle of valuation and performance.
Risk factors: 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.
