Home appliance industry upgrade highlights three types of investment targets

Recently, the "12th Five-Year Plan for the Development of China's Household Appliance Industry" (hereinafter referred to as the "Planning Proposal") was officially released by the China Household Electrical Appliances Association. The planning proposal points out that by the end of the “Twelfth Five-Year Plan” period, China’s home appliance industry will have an aggregate output value of 1.5 trillion yuan, an average annual growth rate of 9.2%, and an export value of 60 billion US dollars, accounting for 35% of the global export market. Following the realization of the first global production scale, it has become the world’s largest sales volume.

Analysts pointed out that due to factors such as urban and rural consumption escalation, rising urbanization level, and market demand brought about by the rapid development of emerging economies, China's household electrical appliance industry still faces development opportunities during the “12th Five-Year Plan” period.

Innovative energy-saving planning key words

According to the requirements of the "Planning Proposal," "technical innovation" and "energy conservation and environmental protection" will become the key words for the upgrading of the home appliance industry, and the average energy efficiency of home appliances should be increased by an average of 15%.

The "Planning Proposal" proposes that during the "12th Five-Year Plan" period, large appliances should focus on the development of high value-added high-end home appliances. For example, the air conditioner focuses on the development of highly efficient energy-saving air conditioners, etc. The proportion of inverter air conditioners has been increased from less than 15% to 50%. And will actively promote the application of new technologies in key parts and components, key parts and components companies to become the world's leading suppliers, through the upgrading of parts and components to promote the upgrading of home appliances.

It is expected that during the “Twelfth Five-Year Plan” period, household appliances will become the mainstream of urban demand. It is estimated that about 50.5 million refrigerators, 62 million washing machines and 120 million air conditioners will exceed the service life, and an average of 10 million refrigerators will be updated every year. There are 12.5 million washing machines and 23 million air conditioners. In addition, the average annual demand for refrigerators, washing machines, and air conditioners in the rural market is 10 million, 10 million, and 8 million.

According to the “Planning Proposal”, the research on the common technologies and key technologies of the home appliance industry, standardization construction, cultivation of independent brands, research and development of key parts and components, major equipment technological transformation, new energy-saving and environmentally friendly products, and industrialization of innovative products will be piloted. Marketization and other policies and financial support, focusing on the key components of the policy and financial support to enhance the development level of the whole machine; to give the national science and technology support project fund support and foreign trade fund support. In addition, in the promotion of energy-saving emission reduction work, it will also promote the adoption of air-source, solar energy and other new energy home appliances related policy support.

The "Planning Proposal" also proposes that by the end of the "Twelfth Five-Year Plan" period, China's home appliance export value target will reach 60 billion U.S. dollars, an average annual increase of 8.4%, and its share in the global export market will reach 35%.

Planning to promote home appliance upgrades

At present, China's home appliance industry still maintains a high degree of prosperity. Datong Securities believes that household appliances such as refrigerators and televisions have a 10-year replacement cycle. When they are updated to a certain extent, they will have a certain degree of impact on sales. In addition, the household electrical appliance industry and the real estate industry are closely related, after the country introduced a series of control policies on real estate, housing sales continued to decline, so the demand for home appliances also appeared a short-term decline. However, due to the continuous emergence of new product and new technologies, urbanization is also accelerating. Therefore, although the home appliance industry may adjust in the short term, it is still promising in the medium to long term.

In addition, nationwide energy-saving subsidies for home appliances are exceeding expectations. Guotai Junan stated that in the context of the “Twelfth Five-Year Plan” for energy-saving and emission reduction, the energy-saving subsidies for home appliances are expected to continue and bring about policy investment opportunities.

For the future development of the home appliance industry, the Home Appliances Association recently released a technical roadmap for the industry and planned the development direction of the sub-sectors such as air conditioners, washing machines, and refrigerators in the next 10 years. Energy saving, environmental protection, product structure upgrade, and intelligentization have become The main direction of technological development. The industrial technology roadmap encourages major companies to carry out technological research and development to achieve technology upgrades and product upgrades in the home appliance industry. Orient Securities believes that after the rapid growth phase of the industry in the past two years, stable industrial growth will promote the rational development of enterprises, enhance technology accumulation, and use technology to drive products to form long-term competitiveness.

Among them, the technical development direction of the air-conditioning industry technology roadmap is energy saving, environmental protection, and product upgrades; the technical development direction of the washing machine industry technology roadmap is water-saving and green design; the technology development direction of the refrigerator industry technology roadmap is energy-saving, environmental protection, and intelligence The high-end trend of the washing machine industry is obvious. The sales of drum washing machines have increased significantly, surpassing the pulsator.

Oversold highlights industry value

Since November 15th, the Shanghai Stock Exchange Index has undergone a new round of adjustments, showing the operating characteristics of the second bottom. As of December 5, the Shanghai Composite Index fell 195.48 points overall, a decrease of 7.73%, while the home appliances sector index fell as much as 11.46% over the same period, in a clear leading decline. Among them, Yimikang, Sanglejin, Little Swan A, and Keliyuan had a decline of around 20% in this round of adjustments. Highly-owned shares, Fengfan shares, camel shares, Yilipu, Meiling Electronics, and Kangsheng Shares, Hongtu Hi-tech, Shuangliang Energy, Qingdao Haier, etc. fell by about 15%.

Of course, three stocks such as ST Xoceco, Qinshang Optoelectronics, and ST Qian Miles were in the red in the current round of adjustment, becoming the top three stars in the home appliance sector. In addition, Supor, Dongfang Thermal Power, Shenzhen Konka, TCL Group, BDO Runda and other stocks performed relatively strong, a total of 13 household appliances stocks, outperforming the broader market.

In spite of this, some analysts pointed out that the negative news about the exit of home appliances to the countryside and the possibility that the global economy may bottom out has been fully digested in the stock price, and the huge drop in the home appliance sector since the third quarter has made the value of the industry investment prominent. It is worth noting that the home appliance industry is expected to bring about thematic investment opportunities because of favorable policies: On the one hand, the air conditioner industry has begun to discuss subsidies for inverter air conditioners, which may be launched in the second or third quarter of next year. On the other hand, the lighting industry expects LED lighting subsidies.

The increase in the income of urban and rural residents in China, the implementation of policies to stimulate household appliances consumption such as home appliances to the countryside, trade-in replacements, etc., have boosted the growth of domestic consumer electronics. However, in the second half of 11 years, due to real estate regulation and other reasons, since May of this year, the industry's profit growth has slowed down significantly. The relevant data show that on October 10, the Ministry of Commerce released data showing that in the first nine months of this year, sales of home appliances to the countryside were 74.77 million units, and sales were 188.1 billion yuan, up 42% and 62% year-on-year respectively. Among them, 9.08 million units were sold in September, with sales of 24.2 billion yuan, up 50% and 67% respectively year-on-year. As of September 2011, a total of 189 million units of products were sold nationwide for home appliances to rural areas, with sales of 429.9 billion yuan and subsidies of 49 billion yuan.

Changjiang Securities believes that policy withdrawals and real estate restrictions have little effect on the overall growth rate of the industry. With the gradual weakening of the marginal effect of the current policy stimulus, it is difficult to gradually withdraw from the overall sales of the home appliance industry. On the contrary, the gradual withdrawal will make more policy-dependent SMEs gradually lose the policy “protection umbrella”, which helps With the development of market mechanisms and the increase in industry concentration, policy exits are hard for the listed companies to bearish. In addition, the real estate purchase restrictions on the overall sales of the appliance industry is also difficult to have a more significant impact, on the one hand, the purchase of the policy on the impact of housing turnover is relatively small; the other hand, the current sales of commercial housing sales on the relevance of home appliances sales gradually reduced.

Everbright Securities also believes that in the future, the home appliance industry will enter the policy withdrawing period, and the business climate has declined. These expectations have been reflected in the continuous decline. It is worth noting that the price of raw materials began to decline, and the industry's profit margin is expected to increase in the second half of the year. It is expected that in the second quarter of next year, with the expected difference in the quarterly report and the expectation of an industry turning point turning upward, it is expected to usher in a better market performance. Therefore, despite the slowdown in the growth of the industry, household appliances are one of the few industries in China that have international competitiveness. The performance of leading companies can traverse the cycle and revenue profits continue to grow. The current valuation level is worth strategic allocation.

Industry leaders benefit significantly

Under the policy stimulus, the upgrading of home appliance quality will accelerate, and the improvement of business quality will be even more significant. The improvement of profitability will be more certain next year, and it is expected to set a new high. Guotai Junan said that the robustness of sales in the household appliance industry is also more secure and that it is more than expected; the sales of color TVs may be even more pronounced. The comprehensive promotion of energy-saving and subsidy policies will benefit white and black enterprises, among which Gree, Haier, Midea, and Hisense will benefit the industry leaders more significantly. Under the investment logic of “Quality Upgrade”, it is recommended that household appliances lead Gree, Haier, Midea, and owner electronics, sunshine lighting and Jiuyang shares.

Ping An Securities believes that the short-term opportunities are not obvious. The performance of home appliance companies has entered a decline stage. The macro-level policies have begun to fine-tune, and the game of policies and performance has caused the market to oscillate. In the medium term, if the economy is significantly down, household appliances will usher in a better buying opportunity.

Can pay attention to three types of investment targets: First, bottom-up: Midea Electric Appliances, Qingdao Haier. The point of view of the United States and the United States is the improvement of profitability after the strategic transformation; Qingdao Haier looks at the expansion of equity incentives after implementation. The second is the long-term growth of space to determine the leading: Gree Electric. In the context of the slowdown in the growth of the industry and rising costs, the stronger characteristics of the home appliance industry will become more pronounced. Leading companies will always be the focus of investment. Air-conditioner leading Gree is recommended. Third, the real estate-related: In 2012, the economy may exceed expectations, will bring about the acceleration of the construction of affordable housing, kitchen and electric enterprises are the most sensitive to real estate, concerned about Wanhe Electric, the owner of electrical appliances.

According to the three quarterly reports announced, the home appliance industry's revenue growth stabilized quarter by quarter. First Venture Securities believes that in the long term, the industry is still supported by factors such as newer demand, higher rural holdings, growth in export markets, and increased concentration due to a new round of industry competition to achieve stable growth, and upstream and downstream bargaining power. The more competitive companies can benefit from the stable growth of the industry. They have the ability to grow steadily, and are more likely to exceed expectations, and have a higher safety margin. The recommended investment portfolios are Gree Electric Appliances, Midea Electric Appliances, Hisense Electric Appliances and Hefei Electric Appliances. Sanyo.

From the perspective of long-term growth, Shenyin Wanguo is optimistic about the air-conditioner industry with large growth potential in the future, as well as home appliance companies with the advantage of three or four lines and strong product innovation capabilities. From the perspective of determining the short-term performance, it is more optimistic about the growth of the industry and the profitability of the black industry. It is recommended that Qingdao Haier, which benefits the improvement of the black-box industry and improves profitability of endogenous driving profitability, behaves better than that of Gree Electric Appliances, benefiting from the upgrade of ice washing and Qingdao Haier with a higher third-tier and fourth-tier layout. Positioning high-end kitchen appliances, electric appliances, and Supor, which has gradually recovered from the quality crisis.