Looking ahead to 2025, the home appliance industry will be a year of refocusing on domestic investment opportunities. High-value single products will benefit, the market may return to the path of consumption upgrading, and the market will usher in more healthy competition; at the same time, it is also a year full of adjustments and uncertainties in export sales.
The Zhitong Finance App learned that Southwest Securities released a research report saying that in 2024, the home appliance industry as a whole still showed strong resilience, and both domestic and foreign sales performed well under the stimulus of the national supplement policy and the overseas inventory replenishment cycle. Looking ahead to 2025, the home appliance industry will be a year of refocusing on domestic demand investment opportunities. High-value single products will benefit, the market may return to the path of consumption upgrading, and the market will usher in more healthy competition. At the same time, it is also a year full of adjustments and uncertainties in export sales. It is a critical year for changes in the international layout of the home appliance industry. Based on the significant global leading advantages of the home appliance industry, the opportunities outweigh the challenges. It is recommended to focus on the three main lines of investment: policy opportunities, export to emerging markets, and diversified layout.
The main views of Southwest Securities are as follows:
Looking back at 2024:
In 2024, the home appliance industry as a whole still showed strong resilience. Under the stimulus of the national supplement policy and the overseas inventory replenishment cycle, both domestic and foreign sales performed well. Demand side: In terms of domestic sales, demand for Q1 channels was replenished, and demand for Q2-Q3 terminals weakened, showing an overall downward trend in volume and price. As the national supplement policy was implemented and promoted in September, the Q4 market regained vitality, volume and price rose sharply, and the domestic sales market growth rate showed a V-shaped trend throughout the year; in overseas markets, demand for replenishment of domestic appliances continued to be booming. According to industry online data, sales of air conditioners, refrigerators, and washing machines increased 2%, 2.3%, and 5.9%, respectively, from January to October 2024, while export sales increased by 33.7%, 19.8%, and 17.1%, respectively.
Cost side: Prices of major raw materials such as copper, aluminum, and ABS have all risen, and shipping costs on major routes have also shown an upward trend. However, home appliance companies are actively implementing efficiency reforms, reducing costs and controlling fees, and overall profitability has improved slightly.
In terms of market performance: The home appliance industry index had the highest increase, mainly due to the influence of the dividend style at the beginning of the year, and in line with the solid fundamental performance of the home appliance industry, the home appliance industry showed impressive gains. In May, the market began to worry about raw material price increases, inventory, export sales base, etc., and the performance of the home appliance industry was weaker than the market. After September, as the continued implementation of the “national subsidy” policy for home appliances stimulated the recovery of domestic demand and the continued strong performance of export sales, industry valuations began to pick up. The home appliance industry index remained in line with the industry's growth rate, showing a V-shaped trend throughout the year.
Looking ahead to 2025:
In 2025, under the guidance of a more active fiscal policy and a moderately loose monetary policy, stimulating domestic demand is still an important issue for economic development. As a highly standardized, fully competitive home appliance industry will still be one of the most beneficial consumer categories. After channel and policy refinement and adaptation in the fourth quarter of 2024, the 2025 home appliance subsidy policy will further stimulate domestic demand for home appliances.
As the world's largest manufacturer and exporter of home appliances, China's air ice washing production capacity will account for 81.3%/57.6%/52% of global production capacity in 2023, respectively, and 89.9% of global color TV production capacity in 2022. Despite the uncertainty of tariff policies and geopolitics, export sales will also be an important issue for home appliance companies. Among them, demand expansion in emerging markets such as Asia, Africa, and Latin America may bring important opportunities; leading global companies in design, manufacturing, supply chain, transportation, and sales networks will further increase industry concentration. As the number of major categories in the global home appliance market gradually increased, the entire industry entered the stock market stage, and home appliance companies and upstream parts companies gradually began to seek outreach and actively participate in the NEV and robotics industry chains.
Overall, 2025 will be a year for the home appliance industry to refocus investment opportunities in domestic demand. High-value single products will benefit, the market may return to the consumption upgrade path, and the market will usher in more healthy competition. At the same time, it is also a year full of adjustments and uncertainties in export sales. It is a critical year for changes in the international layout of the home appliance industry. Based on the significant global leading advantages of the home appliance industry, the opportunities outweigh the challenges.
It is recommended to focus on the following three main lines of investment:
(1) Seize policy opportunities and focus on beneficiary targets. In the context of a more active fiscal policy and a moderately loose monetary policy, we speculate that the subsidy policy for the home appliance industry will continue. We recommend focusing on leading home appliances with a complete range of categories and channels to fully enjoy policy dividends: Midea Group (000333.SZ), Haier Smart Home (600690.SH), and Gree Electric (000651.SZ).
(2) Focus on export to emerging markets. Looking at major global markets, the penetration rate of home appliances is high in mature markets such as North America and Western Europe, and the penetration rate of home appliances in emerging markets such as Middle East Africa and Southeast Asia is low. Judging from market performance in the past few years, China's home appliance exports to emerging markets have shown stronger growth momentum. It is recommended to focus on the home appliance target with emerging markets such as Asia, Africa and Latin America as the main export destination: Changhong Meiling (000521.SZ).
(3) Focus on multiple layouts. It is recommended to focus on individual stocks such as Zhaochi Shares (002429.SZ), where the main business is developing steadily and the epitaxial business contributes to new growth momentum.
Risk warning:
The risk of large fluctuations in raw material prices, the risk of large fluctuations in the RMB exchange rate, and the risk of increased industry competition.