According to Zhitong Finance APP, BOCOM INTL has released a Research Report stating that the continuation and expansion of the trade-in policy supports the acceleration of household appliance replacement demand during the Spring Festival, and the significant increase in the purchase limit of Air Conditioners and the growth rate of categories is worth attention. Benefiting from the support policy for trade-ins, product categories with high efficiency levels and smart appliances have seen retail sales grow by double digits year-on-year for four consecutive months. The performance of smart products is outstanding, and there is a continued Bullish outlook on leading appliance companies with diverse category layouts, complete channels, and strong competitiveness in the mature Air Conditioner market.

Bocom International's main points are as follows:

Continuation and expansion of the trade-in policy.

On January 8, 2025, the National Development and Reform Commission and the Ministry of Finance issued a notice regarding the implementation of a large-scale equipment update and consumer goods trade-in policy. It proposed continuing to directly arrange ultra-long-term special treasury bond funds to expand support for consumer goods trade-ins. For household appliance products, in addition to the traditional eight items (Refrigerator, Washing Machine, Television, Air Conditioner, Computer, Water Heater, Gas Stove, Cooker Hood), four more categories will be included in the subsidy scope: Microwave, Water Purifier, Dishwasher, and Rice Cooker.

At the same time, the limit on the number of subsidized Air Conditioner products has been expanded from 1 to 3. The subsidy standard remains the same as before, with a 15% subsidy on the sales price for secondary energy efficiency or water efficiency standard products, and 20% for primary energy efficiency. Subsidy records from 2024 will not affect eligibility for subsidies in 2025.

The support for trade-ins accelerates the release of household appliance replacement demand.

Since the nationwide old-for-new policy was implemented at the end of August 2024, it has significantly boosted consumer appliance sales, with retail sales achieving year-on-year growth of 25.0%/45.1%/26.8% in September/October/November respectively. According to industry data, the internal sales volume of Refrigerators/Washing Machines/Televisions in November 2024 saw year-on-year increases of 2.3%/8.0%/4.9%, while Air Conditioners/Cooker Hoods/Gas Stoves and other relatively fixed appliances experienced even faster growth at 28.7%/16.8%/15.0% year-on-year.

Overall, according to the Ministry of Commerce Statistics, in 2024 the old-for-new appliance policy drove over 36 million consumers to purchase 56 million units of eight major categories of home appliances, with sales exceeding 240 billion yuan. The nationwide sales under this policy surpassed 100 billion yuan in just 79 days, and exceeded 200 billion yuan in only 40 days, demonstrating that the demand for upgrades is accelerating the release of consumption potential.

High energy efficiency and smart products are gaining attention.

In product categories benefiting from the old-for-new support policy, sales of Grade 1 energy efficiency products accounted for over 90%, driving double-digit year-on-year growth in the retail sales of high energy efficiency and smart home appliances for four consecutive months. Simultaneously, smart products performed excellently, with nearly 10 million smart home products such as robot vacuums and smart locks being upgraded.

Investment suggestion: remain Bullish on leading home appliance enterprises.

Remain Bullish on leading home appliance enterprises with diverse product layouts, well-established channels, and competitive positions in the mature air conditioning market, such as Gree Electric Appliances, Inc. of Zhuhai (000651.SZ), Midea Group Co., Ltd (000333.SZ,00300), and HAIER SMARTHOME (600690.SH,06690).