Home Appliance Industry: Sales Growth Slows Down, Profitability Stabilizes

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

2011 Review: As the economy has declined, the bottoming out of valuation has been affected by the downward economic cycle and diminishing policy effectiveness.

Consistent with the sales trend, the growth rate of corporate income and profits decreased quarter by quarter. In the molecular industry, the prosperity of white electricity, small household appliances, and kitchen and bathroom has declined, while the performance of color TVs has been stable this year. The continued introduction of new products is a weapon for the color TV company's resistance cycle.

Since 2011, the home appliance sector has fallen by 10.65%. Compared with the Shanghai-Shenzhen 300, the excess return rate was 1.88%. The sector’s revenue was the fifth largest in the market and the overall performance was fair. In terms of the molecular industry, the excess return rate of Baiyin to CSI 300 is 0.99%, that of color TV is 10.68%, and that of small household appliances and kitchens is -6.59%. Color TV benefits from the stability of the fundamentals, and this year has achieved relatively good relative returns. .

The Zhongpai Group began to reduce the performance of the home appliance industry, and the overall net profit growth of the home appliance sector was expected to be reduced from 35% to 29%. The market is expected to gradually decline. This year's home appliance sector stock price adjustment is relatively full, the current price-earnings ratio has been at the bottom of history.

Outlook for 2012: Decline in growth rate, cost reduction in sales: growth rate falls before low and high

On the macro level, real estate and exports are two risk points for future economic growth. A year and a half after the real estate regulation lasted for a long time, the effect began to manifest. Real estate developers are under pressure to destock. In the future, they need to pay attention to the impact of the decline in real estate investment on the overall economy. The continued deepening of the European debt crisis has also had an adverse impact on China’s future exports. At present, the government has made forward-looking adjustments to the economy through monetary and fiscal policies to cope with the possible risks of the economy. However, the current policy is still mainly stabilizing and the trend of slower economic decline has not been changed. In the medium term, there is a possibility that there will be a rapid decline in the economy. When the intensity of policies is increased, the economy will rebound in stages.

At the industry level, stimulus policies are gradually exiting. Since 2009, the government has introduced three policies for home appliances to the countryside, trade-in replacement, and energy-saving air-conditioning subsidies. Under the stimulus of the policy, sales of home appliances have experienced rapid growth. The current policy began to gradually withdraw, air-conditioning energy-saving subsidies policy has been withdrawn in June of this year, the old-for-new policy withdrawal at the end of this year, home appliances to the countryside policy in November this year, Sichuan, Henan, Shandong, the first three provinces to exit, the three provinces accounted for 30% of home appliances to the countryside sales The national home appliances to rural areas policy exit will be in January 2013. The impact of the policy on sales overdraft will also gradually appear. The industry has entered a period of adjustment to digest the rapid growth of the previous period.

Another factor that needs attention at the industry level is real estate. From historical data, there is a certain trend in the correlation between real estate and home appliances. At present, the growth rate of sales of commercial housing is in a downward avenue, and the impact on home appliances is negative. However, if the economy exceeds expectations, it will accelerate, or the housing will accelerate, or the housing will gradually relax. There is room for marginal improvement in the negative factors of real estate. We have done a sensitivity analysis of 10 million sets of household electrical appliances (assuming here, the actual number of completed affordable housing units), and kitchen appliances have the greatest flexibility.

With the retreat of the industry stimulus policy and the downturn of the macro economy, the growth rate of the industry will fall back to a platform, and at some point in 2012, as the economy exceeds expectations, the policy will increase the degree of relaxation and macroeconomic factors. Turned negative, the industry growth rate is expected to stabilize at a low level. Our forecast for domestic sales of air conditioners, refrigerators, washing machines, and LCD TVs in 2012 was 5%, 0%, 4%, and 5%, respectively. The forecast for export growth was 0%, 0%, 0%, and 5%, respectively.

Profitability: steady increase

The profitability of home appliance companies is sensitive to changes in costs. The main raw materials for white electricity, small household appliances, and kitchen electric appliances are bulk commodities such as copper, aluminum, steel, and plastic. The main raw material for color TV is the LCD panel. In the context of the global economic downturn, the prices of these raw materials have now shown a downward trend. In 2012, the cost pressure of home appliance companies will be reduced.

In terms of prices, the continuous rise in air-conditioner prices reflects the industry's dual oligopoly competition. The price of this year's ice wash was low and high before the end of the year. The main reason is that the size of the United States' system in the first half of the year made competition in the industry intensified. The strategy in the second half of the year turned to ensure profit, and competition in the industry slowed down. It is expected that the loose competition will continue. The prices of color TV products have remained stable this year. After the enterprises experienced the price war at the beginning of last year, the stocks were generally more cautious and the industry competition slowed down. At the same time, the continued increase in the proportion of new products such as LED, 3D and smart TV also maintained the average price. Played a positive role, color TV companies' profitability is currently at a relatively good level. Under the background of stable prices and reduced costs in 2012, the profitability of home appliance companies is expected to increase steadily.

Maintain industry "recommended" rating

2012 was the year of adjustment. The early-stage home appliance stimulus policy played a good role. With the gradual withdrawal of the policy, the industry began to enter the adjustment phase to digest the high growth in the previous period. 2012 is a year of turbulence. The macro factors are expected to go from negative to positive at some point in 2012, which will prompt the industry to grow at a low level.

We believe 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 fluctuate. In the medium term, if the economy is significantly down, household appliances will usher in a better buying opportunity. Concerned about three types of investment opportunities: First, bottom-up: Midea Electric, 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. The third is related to real estate: In 2012, the economic slowdown, will bring about the acceleration of the construction of affordable housing (or the gradual relaxation of commercial housing), kitchen and electric enterprises are the most sensitive to real estate, attention Wanhe Electric, the boss of electrical appliances .