Products are the king under the competition of home appliance stock market [institutional review]

Main points of investment:

Review of the secondary market: the home appliance industry rose 3.93% this week (2022.3.28-4.1). Among the household appliance segments and related sectors, the white and kitchen appliance sectors rebounded significantly, rising 5.03% and 4.46% respectively, higher than the overall increase level of the home appliance industry. In the black electricity sector, except for the zero group down 2.51%, both the black appliance and panel plates rose more than 1 percentage point. The small home appliance sector rose slightly by 1.17%, narrowing the increase compared with the previous week. In terms of individual stocks, of the 84 companies listed on A shares in the home appliance industry this week, 37 were up, 3 were flat and 44 fell.

Retail market performance: 2022W13 (3.21-3.27) domestic dual-end market sales of all-product household appliances are-18.81% (online) and-29.45% (offline) respectively compared with the same period last year, and the growth rate of the dual-end market has declined for two consecutive weeks. From the point of view of focusing on the sales of large household appliances, the overall growth rate of sales of large household appliances in all categories shows a downward trend, while the average price increase may continue to rise due to the continuous upward impact of raw material prices, of which the average price in the offline market has risen significantly, the average price in the offline market of refrigerators has increased by 1184 yuan per unit compared with the same period last year, and the average price of dishwashers and integrated stoves has also increased by more than 800 yuan per unit.

Raw materials and marine real estate data tracking: this week LME copper, aluminum prices remain high volatility. As of March 31, the settlement prices of LME copper and aluminum were $10337 / ton and $3503 / ton respectively, while rebar prices continued to rise, with settlement prices exceeding 5000 yuan / ton. As of March 31, the settlement price of SHIFE rebar was 5115 yuan / ton. The plastic price index and the price of galvanized sheet rose further slightly, and the price of cold-rolled sheet remained basically stable. The price of large-size LCD panels continued to decline slowly. The price of 43-inch panels in March was quoted at 68 US dollars per piece, which was the same as that of the previous month. On 50-55-65, the price quotation for inch panels was 84x107 per piece, respectively, down from the previous value by US $176 per piece in 1-2-3. In terms of shipping, among China's major foreign routes CCFI, with the exception of the US-West and East-West-Africa routes, which rose slightly by 1%, CCFI of other routes decreased month-on-month, and the CCFI of Australia-New Zealand routes decreased by nearly 3% from the previous month, a relatively significant decline. In terms of the real estate market, commercial housing transactions in all cities showed an upward trend, with significant growth in second-tier cities.

Opinions and investment suggestions: according to statistics, the retail sales of China's home appliance market in 2021 was 760.3 billion yuan, an increase of 3.6% over the same period last year, although it increased slightly, but it was still down more than 7 percentage points compared with 2019 before the epidemic. Under the background that the real estate cycle is coming to an end, the weakening of consumer will leads to a downturn in demand, or the main factors restricting the growth of China's home appliance market. Some of the early mature categories of large household appliances are limited by their durable goods properties, after the household ownership enters the bottleneck, the slow upgrading of consumers is difficult to further improve their market increment.

At the present stage, China's home appliance market is experiencing a period of transition from "channel is king" to "product is king". Consumers' consciousness is no longer the convenience of purchasing channels, but pay more attention to the personalization, quality and satisfaction of their immediate needs, such as integrated household appliances, health appliances and other emerging categories with high growth rate in the industry. Their rapid growth is not only due to the continuous increment caused by market gaps, but also due to the fact that their products can fully address the diversified needs of users in different scenarios, as well as brands' ultimate pursuit of user experience. Therefore, in the era of high profits, household appliance enterprises need to solve the needs of users as the premise, actively promote the continuous optimization of product structure, as well as the diversification of categories, the expansion of the scene, in order to comply with the market trend and enjoy the long-term growth dividend of the industry.

Therefore, it is recommended to continue to pay attention to Midea (000333.SZ), Haier Zhijia (600690.SH), Boss Appliances (002508.SZ), Polar Rice Technology (688696.SH) and optional consumer home appliances track head enterprises with a steady increase in mid-and high-end market share; entering the annual report disclosure period, it is recommended to pay attention to the targets related to high revenue and profit growth.

Risk tips: repeated epidemic situation; lower-than-expected market demand; intensified competition in the industry; risk of continuous fluctuations in raw material prices, shipping costs and exchange rates.