Household appliance industry review report: optimistic about the performance of household appliances in this round of easing cycle

Overview:

Since December 2021, the central bank has continuously reduced reserve requirements and interest rates. Under the background of steady growth, judge that a new round of easing cycle has started.

After five easing cycles, the excess return of household appliances comes from cost performance and subsidy policies; In this round of easing cycle, the cost performance conditions of household appliances are outstanding, and they have the conditions to run out of excess returns.

In terms of style, in the five cycles, steady growth has its own winners and losers. The current situation is more similar to that of 2011-2012, and we are optimistic about robust targets.

Historical replay:

Since 2007, there have been five rounds of easing cycles, and the household appliance sector has achieved excess returns compared with CSI 300 in the 2008-2009 and 2011-2012 cycles. We believe that the 2008-2009 cycle is due to the fundamental improvement brought by the consumption stimulus policy, and the 2011-2012 cycle is due to the price performance of the sector.

Current cycle:

Compared with the five cycles in history, we believe that the current home appliance sector has the highest cost performance, the consumption stimulus policy may provide marginal catalysis, and home appliances have the conditions to run out of excess returns.

Style backtracking:

From 2008 to 2009, benefiting from the catalysis of fundamentals, the sector generally rose, and the leader had no excess return. The 2011-2012 cycle benefited from the price performance ratio of the sector, and the undervalued leaders outperformed relatively. The situation of household appliance sector in this cycle is close to 2011-2012, and the underestimated leader is expected to win.

Investment suggestions:

Focus on three main lines: ① find stability. Recommended: Haier Smart Home Co.Ltd(600690) , Midea Group Co.Ltd(000333) ; ② Looking for growth. Recommendations: Ecovacs Robotics Co.Ltd(603486) , Beijing Roborock Technology Co.Ltd(688169) , Chengdu Xgimi Technology Co.Ltd(688696) , Appotronics Corporation Limited(688007) , Zhejiang Entive Smart Kitchen Appliance Co.Ltd(300911) , Marssenger Kitchenware Co.Ltd(300894) ; ③ Find flexibility. Ningbo Dechang Electrical Machinery Made Co.Ltd(605555) is recommended. It is recommended to pay attention to Zhejiang Dun'An Artificial Environment Co.Ltd(002011) , Hisense Home Appliances Group Co.Ltd(000921) .

Risk tip: the easing policy was less than expected, the price of raw materials rose sharply, and consumer demand fell more than expected.

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