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NEWS

NEWS

Wenzhou Qinhua Refrigeration Equipment Co., Ltd.
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06

2023

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04

Looking Forward to the First Quarter Report of the Home Appliance Industry: Domestic demand shows a weak recovery, and some companies are expected to exceed expectations

The overall domestic demand in the Q1 home appliance sector showed a weak recovery, and the continued destocking overseas led to weak exports. The overall performance of real estate completion and second-hand housing data is relatively weak, resulting in a weak recovery trend in most home appliance category terminals in Q1 2023. Meanwhile, exports are still affected by factors such as overseas destocking, resulting in overall weak performance.
In the white electricity sector, there has been an improvement in the shipping end of air conditioners, and overall export pressure is still ongoing. On the retail end, the online sales of air ice washing from January to February were+23.8%/-2.0%/-9.3% year-on-year; Offline YoY+0.2%/-9.3%/-16.8% (Ovi data). Considering the impact of the epidemic on the shipping end, we have combined the domestic sales and shipments of domestic air conditioners from December to February (industry online data), and the cumulative year-on-year increase is still+10.5%. Based on the production scheduling data in March, it is expected that the domestic sales and shipments of air conditioners in Q1 will increase by 17% year-on-year (referring to Q4's year-on-year increase of -5%), indicating that there has indeed been an improvement in domestic sales and shipments; In terms of exports, Q1 channel inventory still puts pressure on export enterprises, but the expected decrease in production scheduling has narrowed, indicating that export enterprises are more optimistic about their future judgment. It is expected that the revenue growth rate of the Q1 segment is expected to rebound, with a growth range of+0% to 5%. On the performance side, the profitability of each enterprise is still differentiated, and the overall base of 22Q1 is relatively high, with an expected+5 to 10%.
In the small home appliance sector, the demand boom is weak, and the Xiaoxiong and Feike brands, which account for a large proportion of domestic sales, have performed well. Most small home appliance categories have optional attributes, and in the context of weak consumer demand, sales are under pressure. According to Magic Mirror and Ovi data, the sales of kitchen appliances/floor cleaners from January to February were -7%/-23% year-on-year, maintaining a downward trend. However, the floor washing machine industry is still in a high growth stage, with sales from January to February being+48% year-on-year. The performance of various companies is differentiated, with Xiaoxiong and Feike, which have a relatively large proportion of domestic sales and have strategic upgrading and optimization, rising against the trend. From January to February, Xiaoxiong Kitchen's Xiaodiantao series sales and sales were+4% and+24% year-on-year, respectively. Feike's razor JD sales and sales were+18% and 24%, respectively. Based on their significantly better performance than the industry's data, and considering the positive contribution brought by their internal business optimization, it is expected that the first quarter's performance is expected to exceed expectations. In addition, according to Ovi data, in the kitchen appliance sector, the online and offline sales of cigarette stoves in Q4 2022 and Q1 2023 decreased year-on-year, with leading companies performing well. It is expected that the revenue of the sector will remain flat and slightly decrease, and potential calculations suggest that the smaller scale of new products will result in a slower performance growth rate than revenue. In the display lighting sector, the export of color TVs has recovered significantly, with a significant increase in the share of 75 inch large screen color TVs and a stabilization of panel prices, which is expected to drive continuous improvement in the profit margins of black TV companies.
Investment suggestion: The home appliance industry is greatly affected by real estate data in the short term, and the effect of the continuous relaxation of upstream real estate policies still needs to be transmitted over time. There is no significant recovery trend in home appliance terminal sales. However, considering the weak consumer demand environment, the trend of middle class consumption degradation and emphasis on cost-effectiveness is prominent. It is expected that stocks that can balance their own product upgrades with the structural decline in market demand will perform better than expected, Considering that some categories have shown signs of improvement in marginal data and that overseas destocking has been ongoing for a long time, we expect to gradually improve in the second half of the year. We can be cautiously optimistic about the recovery from the end of the second quarter to the third quarter. Recommend Hisense Video (13.4X), Feike Electric (31.9X), Xiaoxiong Electric (27.9X), Gree Electric (8.0X), Hisense Electric (19.1X), Stone Technology (29.1X), Haier Zhijia (14.5X), Xinbao Co., Ltd. (15.0X), Midea Group (12.1X), and Kovos (26.9X).

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