Home appliance market shows signs of recovery

Household appliances are closely related to people's livelihood. Household appliances consumption is an important part of household consumption and plays an important role in stabilizing growth, promoting consumption and expanding employment. As 2022 is drawing to a close, the future trend of the home appliance market is also attracting market attention.

"With the arrival of the year-end sales promotion season, enterprises will speed up the inventory clearing, and the pressure situation of the home appliance industry will gradually improve, and the long-term fundamentals of the industry will not change." Jiang Feng, executive director of the China Household Appliance Association, told the Securities Daily that the home appliance industry should seize the opportunity to promote consumption and expand domestic demand, keep up with the changing market demand, and take new steps in high-quality development.

Recently, a number of institutions released research reports predicting that the household appliance consumer market is expected to hit the bottom and recover. On December 27, CICC released a report saying that the recovery of household appliance consumption is the trend of the times, but there may be setbacks in the short term. It is expected that the domestic demand for household appliances is expected to bottom out in the next quarter to two quarters. West China Securities also pointed out that, from the perspective of demand, the prosperity of household appliance consumption demand is still on the left. With the strengthening of domestic demand and the priority of expanding consumption, the demand for household appliances is likely to be released. It is expected that the inflection point on the demand side will lead to an increase in the valuation of the household appliance industry. Zhongtai Securities believes that the year 2023 can be more optimistic, optimistic about the pro cyclical plate elasticity of household appliances.

Since this year, affected by multiple factors, the home appliance market has experienced a downturn. According to the data of the National Home Appliance Industry Information Center, the overall scale of China's home appliances in the first quarter of 2022 fell 12.3% year on year, and gradually recovered in the second and third quarters. The market scale in the first three quarters reached 522.4 billion yuan, down 8.9% year on year.

Although the overall scale declined in the first three quarters, China's home appliance market still has strong resilience, and some deterministic growth opportunities are emerging. During the "Double 11" and "Double 12" this year, the sales of green energy-saving home appliances, high-end home appliances and smart home appliances in offline stores of many home appliance retailers rose by more than 120% month on month, showing signs of recovery.

"As residents' lives gradually return to normal, the momentum of economic growth is poised to return. The main driving factors of the market are the improvement of consumer confidence after production and life return to normal, the recovery of consumer demand for quality and health appliances, the release of some of the backlog of demand, the iterative upgrading of industrial products and functional technologies, and the joint promotion of enterprise and channel ends." Zhao Meimei, President Assistant and General Manager of Research and Innovation Department of Ovi Cloud, said in an interview with Securities Daily. Aowei Cloud expects that the retail sales of household appliances will increase by 3% year on year next year.

Wang Hongji, general manager of Zhongyikang White Electricity Business Unit, told the Securities Daily that it is expected that the home appliance market will gradually recover in the coming months, and there will be a significant increase in the home appliance market next year. "The repression of external factors on consumption will gradually weaken next year, and the vitality of social consumption is expected to continue to recover. In the future, the national support policy for expanding consumption will also be implemented throughout the country, which will strongly stimulate household appliances consumption. Next year, China's economy has great potential for recovery, which will also strongly boost household appliances consumption. In addition, as the real estate market gradually recovers, household appliances consumption will be driven, with significant growth."

In 2022, the household appliance industry will experience many twists and turns, and related enterprises will face pressure of performance growth. From the perspective of the secondary market, the stock prices of Gree Electric Appliances, Midea Group and other companies have gone out of the downward curve and their valuations have halved.

Analysts from Zhongtai Securities believe that, from the perspective of business performance, compared with consumer leaders horizontally, the valuation of household appliance leaders is still highlighting the gold value in the scarce range. Later, with the further promotion of consumer subsidies and real estate recovery, the fundamental elasticity and emotional upward space of the household appliance industry after marginal improvement are large. Enterprises should seize the triple opportunity of "valuation improvement, domestic substitution and demand creation".

Zhang Jianfeng, Executive Deputy Secretary General of the China Household Appliance Business Association, said in an interview with the Securities Daily that throughout 2022, the continuous introduction of consumption promotion policies and the release of new national standards have driven the industry to develop more normatively, the technology has been upgraded iteratively, and there is still room to stimulate the smart high-end home appliance export market. If household appliance enterprises want to break out of the fierce homogeneous competition, they need to find a new way, take the initiative to capture the changing trend of policies, industries, markets, etc., dynamically capture the new demand points of consumers, and take the lead in the innovation field.