The Zhitong Finance App learned that Anxin Securities released a research report saying that 2023H1 heat pump domestic sales increased 17% year on year, and the domestic heat pump sales market growth rate in 2022 was 7%. The bank believes that the relatively rapid increase in domestic sales of heat pumps this year is mainly due to increased consumer recognition of the energy-saving economy of heat pumps, compounded by rising coal prices and residents' natural gas prices. Along with the popularity of the heat pump export market, the bank believes that the heat pump domestic sales market has entered a new era of post-coal-to-electricity conversion in 2022. Looking back, the importance of the domestic retail market will become more and more prominent. With the further increase in consumer acceptance, the heat pump domestic sales market has entered a new stage of spontaneous and benign growth.

Investment advice: The bank believes that the growth rate of the domestic sales market for heat pumps is expected to increase, and the share of leading brands will continue to increase. It is recommended to focus on Sunrise Oriental (603366.SH), Haier Smart Home (600690.SH), Midea Group (000333.SZ), Gree Electric (000651.SZ), Inwalt (301272.SZ), and Rujing Technology (301525.SZ).

Anxin Securities's views are as follows:

Increased recognition led to the acceleration of domestic sales of heat pumps: Following the rapid growth of the heat pump export market in 2022, domestic sales of heat pumps began to accelerate this year.

According to industry online data, 2023H1 heat pump domestic sales increased 17% year on year, and the heat pump domestic sales market growth rate in 2022 was 7%. The bank believes that the relatively rapid increase in domestic sales of heat pumps this year is mainly due to increased consumer recognition of the energy-saving economy of heat pumps, compounded by rising coal prices and residents' natural gas prices. According to the bank's cost estimates for various types of hot water and heating equipment, heat pumps have economic advantages in both hot water and heating applications.

From 10 billion to 100 billion dollars, there is huge room for growth in the domestic sales market: according to online industry data, the market size of heating and hot water applications in the heat pump domestic sales market is about 18.8 billion yuan.

The bank divided the country's provinces from north to south into three categories, divided into two categories according to the type of residents. Heating and hot water were considered separately, and hypothetically estimated the steady market size of the domestic sales market for heat pumps. Estimation results show that the steady-state market size of heat pumps is about 208 billion yuan. Based on the forecast of the Heat Pump Professional Committee of the China Energy Conservation Association, the bank believes that the current domestic sales market for heat pumps still has potential growth of close to 10 times.

The domestic sales market for heat pumps has entered a new era of post-coal-to-electricity conversion:

Domestic sales of heat pumps are roughly divided into four stages. The bank believes that domestic sales of heat pumps have passed the embryonic stage, promotion and popularization stage, and have also gone through the 2016-2021 policy promotion stage. As of 2021, the clean heating rate in northern China has reached 73.6%, exceeding the target of 70% in the “Northern Region Winter Clean Heating Plan (2017-2021)”. Along with the popularity of the heat pump export market, the bank believes that the heat pump domestic sales market has entered a new era of post-coal-to-electricity conversion in 2022. Looking back, the importance of the domestic retail market will become more and more prominent. With the further increase in consumer acceptance, the heat pump domestic sales market has entered a new stage of spontaneous benign growth.

Brand marketing and product improvement, relays to unleash market potential:

In the domestic sales market in the new era, consumer requirements for heat pump products are increasing. Heat pump companies competed to increase brand marketing efforts, increase their influence through celebrity endorsements and variety show collaborations, while also further promoting consumer education. With the spread of technologies such as aeration and enthalpy, the low ambient temperature operation capability and reliability of heat pump products have been further improved, and market potential has been further unleashed.

Risk warning: Large fluctuations in energy prices, rising raw material prices, changes in subsidy policies, and forecasting results falling short of expectations.