The Zhitong Finance app learned that SDIC Securities released a research report saying that the domestic heat pump 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. The growth rate of the domestic sales market for heat pumps is expected to increase, and the share of leading brands continues 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).

Increased recognition boosts domestic sales of heat pumps

Following the rapid growth of the heat pump export market in 2022 (see the in-depth report “Air Energy: A Brief Explosion of Demand, or a Long-Term Expanding Track?”) 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%. SDIC Securities 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 SDIC'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, the domestic sales market has huge room for growth

According to online industry data, the market size of heating and hot water applications in the domestic sales market of heat pumps is about 18.8 billion yuan. SDIC Securities divided the country's provinces from north to south into three categories, and divided them into two categories according to the type of residents. Heating and hot water were considered separately, and the steady market size of the domestic heat pump sales market was hypothetically estimated. 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, SDIC Securities believes that the current domestic heat pump sales market still has room for 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. SDIC Securities 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, SDIC Securities believes that the domestic heat pump 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.