According to Zhitong Finance APP, Guosen released a research report stating that the old-for-new policy in 2024 has shown a significant effect on household appliance sales, driving sales over 200 billion. In November, large household appliances exports continue to maintain high prosperity, with excellent growth in air conditioning and central air conditioning. Since the end of December, about 20 provinces and cities have announced the continuation of the old-for-new policy for household appliances into 2025, which is expected to continuously drive the release of demand for replacing household appliances and boost performance growth in the appliance industry.

Guosen Securities' main points are as follows:

Multiple regions have announced the continuation of the old-for-new policy for household appliances, continuously driving the release of appliance demand.

As of January 5, according to incomplete statistics, 19 provinces and cities across the country have announced the extension of the 2024 old-for-new policy for household appliances, covering eight major categories including televisions, air conditioners, refrigerators, washing machines, computers, water heaters, home stoves, and cooker hoods; in some regions such as Hubei, the subsidy eligibility for air conditioning products has been increased to three times, and 77 other household appliance products have been included in the subsidy range.

On January 3, the National Development and Reform Commission stated at a press conference that they will strengthen and expand the implementation of a new round of large-scale equipment updates and consumer goods old-for-new policies, increasing support for replacing home decoration consumer goods. It is expected that the old-for-new policy for household appliances nationwide will likely continue in 2025, with some expansion in categories, further supporting the growth of demand for household appliances.

The effectiveness of the old-for-new policy in 2024 is remarkable, having driven household appliance sales over 200 billion.

Since the implementation of the old-for-new policy, the performance of household appliance consumption in the country has significantly improved, showing obvious policy effects. According to the national data platform for old-for-new household appliances from the Ministry of Commerce, as of December 19, 33.3 million consumers purchased 52.1 million units of eight major categories of household appliances, driving sales of approximately 239.09 billion yuan, with the sales of first-level energy efficiency products accounting for over 90%. Based on the domestic sales of household appliances in China in 2023, which is 773.6 billion yuan, the sales driven by the old-for-new policy account for 30.9%.

According to data from AVC, before the implementation of the old-for-new policy (represented by January 1 to August 25), the online and offline retail sales growth rates of the seven major categories of household appliances (Television, Air Conditioner, Refrigerator, Washing Machine, Cooker Hood, Gas Stove, Water Heater) with national subsidies were +3.5%/-6.3%; after the implementation of the national subsidies, from August 26 to December 29, the online and offline retail sales growth rates of the above seven categories were +25.0%/+66.5%, with an increase in growth rate of 21.5 percentage points/72.8 percentage points, showing a more obvious stimulating effect on offline sales.

In November, domestic sales of Air Conditioners and major kitchen appliances saw impressive growth, while overseas sales of Air Conditioners performed strongly.

According to data from the Industry Online, in November, the year-on-year domestic sales of household Air Conditioners/Refrigerators/Washing Machines/Televisions/Cooker Hoods/Gas Stoves increased by +28.7%/+2.3%/+8.0%/+4.9%/+16.8%/+15.0%, while the domestic sales of central air conditioners decreased by 0.4%; the year-on-year overseas sales of household Air Conditioners/Refrigerators/Washing Machines/Televisions/Cooker Hoods/Gas Stoves increased by +59.1%/+10.0%/+1.8%/+20.8%/+6.2%/+18.0%, with the overseas sales of central air conditioners increasing by 32.0% year-on-year.

In November, domestic sales continued to be driven by the old-for-new policy, with the shipment performance of major household appliance categories maintaining a good upward trend. Among them, Air Conditioners, Cooker Hoods, and Gas Stoves saw the fastest growth, while Refrigerators and Washing Machines, as well as Televisions, saw steady growth. The overseas sales of major household appliances in November also maintained high prosperity, with household and central air conditioners showing bright growth.

Key data tracking:

Market performance: In December, the relative return of the appliance sector was +2.32%.

Raw materials: In December, the month-on-month prices of LME 3-month Copper and Aluminum decreased by -1.9% and -1.8% respectively; the price of cold-rolled plates increased by +0.5% month-on-month. Shipping index: In December, the month-on-month increases for routes to the West Coast/East Coast/Europe were +6.73%/+1.08%/+10.11%.

Core investment portfolio recommendations: For white goods, recommend midea group co., ltd (000333.SZ), TCL smart home (002668.SZ), haier smarthome (600690.SH), gree electric appliances, inc. of zhuhai (000651.SZ), and hisense ha (000921.SZ); for kitchen appliances, recommend hangzhou robam appliances (002508.SZ); for small appliances, recommend bear electric appliance (002959.SZ), beijing roborock technology (688169.SH), and guangdong xinbao electrical appliances holdings (002705.SZ).

Risk warning: Increased market competition; demand below expectations; significant rise in raw material prices.