The overall performance recovery of household appliances is getting better

Recently, listed companies in the household appliance industry have disclosed their performance forecast for 2022, and the overall performance is getting better.

According to the statistics of the reporter from the Southern Finance and Economics All-media, of the 24 listed enterprises in the household appliance industry, 13 have achieved a pre-increase in performance, 2 have turned losses into profits, 3 have made a pre-decrease, 2 have made a loss for the first time, and 3 have continued to lose.

In the past year, weak real estate sales, high overseas inflation have affected exports, and the epidemic has repeatedly become the "three mountains" weighing on household appliance enterprises. According to AVC data, the total retail sales of China's home appliance market in 2022 was 708.1 billion yuan, down 7.4% year on year, the lowest in the past three years.

Looking forward to 2023, many institutions predict that the household appliance consumption market is expected to hit the bottom and recover. Some analysts pointed out that the household appliance industry will be the three key words of "recovery, transformation and cost reduction". In the context of the decline in external demand, the superposition of real estate recovery and the improvement of income will further promote the recovery of consumption; In the context of the energy revolution, household appliance enterprises will also further accelerate the transformation; Under the background of falling prices of industrial products and stable prices of consumer goods, the cost pressure of household appliance enterprises will be relieved.

Image source: Visual China

High growth against the trend

The performance of China's home appliance industry in 2022 will be weak as a whole due to the downturn in the after-cyclical sales of real estate and the repeated epidemic that drag down consumer demand.

Despite the weak market sales in the home appliance industry, some categories still achieved countertrend growth. For example, the sales of floor washers, sweeping robots and other categories increased by more than 10% compared with the same period in 2021, and the sales, sales and average prices of floor washers achieved a year-on-year increase.

As for the listed companies, the head enterprises have obvious characteristics of "the strong are always strong".

Suber (002032. SZ) estimated that the net profit in 2022 would be 2 billion yuan to 2.1 billion yuan, a slight increase over the same period of the previous year. Suber said, "It is mainly due to the improvement of the product structure, the increase of the proportion of direct retail sales, and the continuous promotion of cost reduction and efficiency increase. At the same time, the government subsidies included in the current profit and loss of the company and the income from monetary capital investment increased over the same period of the previous year, and the loss of credit impairment decreased over the same period of the previous year, so the overall profitability was improved over the same period of the previous year."

Sanhua Intelligent Control (002050. SZ), Hisense Video (600060. SH), Deye Shares (605117. SH), Lake Electric (603355. SH), and Zhaochi Shares (002429. SZ) forecast a substantial increase in performance in 2022, with a minimum increase of more than 50%, of which the growth of Zhaochi Shares reached 185.28%~233.33%.

Wanhe Electric (002543. SZ) is expected to have a net profit of about 555 million yuan to 681 million yuan in 2022, with a range of 55.0% to 90.0%. The growth was mainly due to the increase in income and expenditure during the reporting period, the continuous optimization of the product structure and the improvement of the market competitiveness of the products, and the increase in exchange earnings year-on-year.

A person related to Wanhe Electric told the Southern Finance and Economics All-media reporter, "The company's revenue performance was average, and its profit increased significantly, mainly due to the improvement of the operation quality."

Two home appliance enterprises have successfully turned losses into profits. Oma Electric Appliances (002668. SZ) is expected to have a net profit of about 340 million yuan to 515 million yuan in 2022, with a range of 531.75% to 744.49%. This is mainly because the operating risks and debt crisis related to the original financial technology sector have been resolved. In September 2022, the controlling shareholder of the company, TCL Home Appliances, took the initiative to assume the payment responsibility of about 300 million yuan of historical implicit debt of the business.

Whirlpool (600984. SH) is expected to have a net profit of about 22 million yuan to 32 million yuan in 2022, a significant increase compared with the loss of 589 million yuan in the previous year, mainly due to the company's optimization of business model, promotion of new channel business, and promotion of new project development, as well as the benefits from cost reduction and efficiency increase and exchange rate fluctuations.

Performance differentiation

However, some leading enterprises recorded significant losses. Shenkangjia A (000016. SZ) is expected to lose 1.2 billion yuan to 1.55 billion yuan of net profit in 2022, due to the year-on-year decline in the disposal of non-current assets.

In recent years, Konka's profitability mainly depends on the disposal of assets, and its main business has a weak profitability. In the first half of 2022, the color TV business recorded an operating income of 2.39 billion yuan, but the operating cost was as high as 2.419 billion yuan, with a gross profit margin of -1.21%.

An investor asked why Konka had lost money in the color TV and refrigerator business for many years? Kang Jia Dong Secretary said that while the scale of consumer electronics business declined, the gross profit of consumer electronics business decreased significantly due to the fluctuation of raw material prices, the increasingly fierce market competition, and the continuous decline of the average retail price of consumer electronics products.

In addition, many home appliance enterprises recorded losses.

Beiease (688793. SH) expects a net profit loss of 95 million yuan to 120 million yuan, a year-on-year decrease of 230.63% to 203.42%; ST Dehao expects a net profit loss of 380 million yuan to 480 million yuan, with a range of 9.34% to 28.23%.

The estimated net profit loss of Esda (002403. SZ) is 48.67 million yuan to 69.03 million yuan, with a range of 22.0% to 45.0%* ST Coship (002052. SZ) expects a net profit loss of 30 million yuan to 51 million yuan.

Liu Buchen, the chief planner of Shangbing Wamou Enterprise Management Company, believes that the household appliance industry has continued to decline for four years since its peak in 2018, which is extremely rare in the development history of China's household appliances in the past three decades. There are both long-term inevitable factors and short-term accidental factors. There are two long-term inevitable factors. First, the household appliance industry will officially enter the stock market era by 2018, and the incremental space will become smaller; Second, the prosperity of the real estate market has decreased in recent years, and the appliance industry with a high positive correlation with the real estate has been greatly affected. The short-term accidental factor is that the COVID-19 pandemic has lasted for three years worldwide, which has a great impact on the home appliance market.

According to the research of the 21st Century Economic Report reporter, the household appliance enterprises with substantial growth in performance have the following characteristics: First, by providing relevant services and products for the new energy automobile industry with rapid growth, the revenue and profits have increased significantly; Second, the emerging categories of circuits in the household appliance industry, such as air fryers, dishwashers, clothes dryers, cleaning appliances, and intelligent micro investment, have a higher visibility; Third, the industry is gradually developing towards high-end, intelligent and green. With the support of green smart home appliance consumption subsidies and other policies, a new round of home appliance consumption boom is coming.

Cross-border layout

In order to hedge against the adverse effects of weak real estate sales, household appliance enterprises need to reduce costs and increase efficiency internally, and on the other hand, they need to find new performance growth points by developing new categories and channels, and even by cross-border layout of new energy industry, prefabricated vegetables, medical devices and other fields.

In 2022, the concept of prefabricated dishes was hot under the promotion of policies, but it is still in the early stage of development, and has not yet been able to bring significant revenue improvement to enterprises.

Among them, Gree Electric Appliances (000651. SZ) established a prefabricated vegetable equipment manufacturing company, claiming to build a 100-billion-level prefabricated vegetable equipment industrial alliance, and is the largest listed appliance enterprise in the field of prefabricated vegetables.

Midea Group (000333. SZ), in addition to launching prefabricated food products in its official shopping mall, also launched the "Midea Smart Kitchen Solution", which combines smart home appliances with prefabricated food, with the aim of improving the market competitiveness of small kitchen appliances.

Compared with the cross-border outbreak of prefabricated vegetables, the new energy thermal management has actually brought income growth to household appliance enterprises.

Only listed household appliance enterprises that focus on the new energy industry in the performance forecast are Sanhua Intelligent Control, Dunan Environment, Shenkonjia A, Lake Electric, etc.

Taking Sanhua Intelligent Control as an example, the estimated net profit in 2022 will be 2.526 billion yuan to 3.031 billion yuan, with a year-on-year increase of 50% - 80%.

Sanhua Intelligent Control clearly stated that the main reason for the expected increase in performance was that the company, as a leading enterprise in the field of thermal management of new energy vehicles, cooperated with major high-quality automobile enterprises, and continued to obtain orders, achieving rapid growth in performance; In addition, in the process of changing the competitive pattern of the refrigeration and air conditioning electrical parts industry, the global layout and industrial leading advantages have become prominent, resulting in significant performance growth.

In addition, Midea, TCL, Konka, Skyworth, Gree and other leading household appliance enterprises have successively entered the new energy photovoltaic circuit, and have laid out in the fields of new energy vehicle electric compressor, new energy vehicle drive motor, photovoltaic silicon, glass accessories, household photovoltaic, photovoltaic household appliances and other fields.

Recently, Haier Group set up Qingdao Kataic Automobile Technology Development Co., Ltd., which was once considered by the market to enter the automobile industry, and the relevant person in charge of Haier Group said: "Haier is currently relying on its Kaos industrial Internet platform to jointly build an industrial Internet sub-platform in the automobile industry with relevant automobile enterprises, aiming at enabling the digital transformation of enterprises in the automobile industry chain."

Similar to Haier, most home appliance enterprises do not directly build cars, but choose to start from the supply chain of new energy vehicles.

At the beginning of this century, head appliance enterprises set off a wave of car building, but most of them failed.

Ding Shaojiang, chief analyst of Qianqu GKURC think tank, said, "At present, few home appliance enterprises are really involved in vehicle manufacturing, such as Gree and Skyworth, which mainly build cars by acquiring enterprises, while other home appliance enterprises are mainly involved in the penetration of the new energy industry chain, such as engaging in automobile intelligent solutions and auto parts related businesses, and jointly building the smart car ecosystem."

Northeast Securities Research Report estimates that the domestic new energy vehicle thermal management market size will be about 70 billion yuan in 2025, and the market size of the four core segments of air conditioning compressor, valve, heat exchanger and pump will be about 50 billion yuan.

The transformation of household appliance enterprises into new energy vehicle thermal management may be promising. Four foreign enterprises, namely, Electric Assembly Group, Valeo, Mahler and Hanon, accounted for about 60% of the global market share of thermal management of fuel vehicles in 2019. The development of new energy vehicles is expected to break the monopoly.

Chen Yulu, an analyst in the home appliance industry of Northeast Securities, pointed out that "it is expected that the new energy vehicle thermal management industry will form a three-pronged pattern in the future. Domestic auto parts and home appliance enterprises can form an important two poles by relying on local advantages, policy support and cost advantages. Compared with domestic auto parts enterprises, home appliance enterprises have more advantages in technology, scale, capital and acquisition and integration, so the competitiveness after transformation cannot be ignored."

Marginal improvement of property

In 2023, with the adjustment of epidemic prevention and control measures and the continuous warming of real estate policy, the household appliance industry gradually stepped out of the difficulties of the past three years and ushered in recovery.

According to the data, during the Spring Festival in 2023, emerging categories of household appliances will perform well. According to the data of Suning's offline stores, the sales of sweeping robots, floor washers, dishwashers and other products increased by 119% year-on-year; The sales volume of air fryers, barbecues and steam ovens increased by about 145% year on year.

A senior household appliance industry observer said that, "Traditional household appliances and kitchen appliances, such as refrigerators, washing machines, air conditioners and color televisions, have a certain periodicity. Most of them take 10 years as the iteration cycle, and the market has been highly saturated. For example, according to the national statistics, the number of color televisions per 100 households in China has reached 121 in 2021. The actual iteration speed of everyone's electrical products is not proportional to the user demand, and its iteration speed is mostly closely related to the purchase of new houses."

Unlike most electric appliances, emerging small household appliances such as sweeping robots, air fryers, dishwashers, intelligent micro-throughs, barbecues, steam ovens and other products cater to the new lifestyle, especially the consumption habits of young people, so these products are still in the growth space. However, it should also be noted that the market size of most emerging small household appliances is only at the level of 120 billion yuan, which is difficult to drive the growth of the entire industry.

Therefore, the real recovery of the household appliance industry still depends on the improvement of the real estate industry and the overall transformation of products to high-end, intelligent and green.

The research report of CITIC Securities predicts that the real estate and related industry chain will recover in the second quarter of 2023. On the demand side, the two major restraining factors of epidemic situation and delivery will be gradually resolved, and there is room for further optimization of mortgage loan interest rate and purchase and loan restriction measures. It is expected that the sales of commercial housing nationwide will increase by 4.7% year on year. Among them, the correlation between air conditioning and kitchen appliances and real estate sales is strong, and the growth trend is basically the same. For example, the sales of air conditioning generally lag behind real estate sales by about 0.5-1 years, and the sales of range hood generally lag behind real estate sales by about 0.5-1.5 years, The recovery of real estate is expected to drive the release of demand.

Guo Haifei, deputy director of the Green Innovation Office of the Advisory Committee of the China Investment Association, believes that with the end of the epidemic, if the real estate market recovers, the tourism and hotel industry recovers, as well as the office leasing and offline sales of shopping malls stabilize, the home appliance industry may usher in a recovery.