Guolian: The domestic sales of household appliances are at a crucial moment of transition. The advantage of "price band + channel" is being added.

Guolian released a research report stating that the revenue of the 24Q1-Q3 household appliance sector increased by 5.00% year-on-year to 1145.6 billion yuan, with a 1.58% year-on-year increase in 24Q3 but a slight slowdown compared to the previous quarter; the net profit attributable to the parent company of the 24Q1-Q3 sector increased by 7.91% year-on-year to 95.1 billion yuan, with a 1.51% year-on-year increase in 24Q3. Policy incentives have a lag effect, cost pressures from exchange rates exist, leading enterprises continue to improve operational efficiency, and profitability demonstrates resilience. With the boost from the replacement of old appliances, domestic sales of household appliances may be at a turning point, substantial subsidies for sales are expected, and the off-season product categories show strong resilience; high-end consumer demand is expected to rise in 24Q4, as policies are likely to stimulate upgrades and price realization, the advantage of "price + channel" will further benefit leading companies. Guolian's main points are as follows: White goods: Domestic sales turning point in sight, export momentum continues The revenue of the white goods sector in 24Q1-Q3 increased by 4.54% year-on-year to 793.9 billion yuan, with a 0.37% year-on-year increase in 24Q3 and a slowed growth rate compared to the previous quarter; the net profit attributable to the parent company of white goods in 24Q1-Q3 increased by 12.74% year-on-year to 73.7 billion yuan, with a 9.57% year-on-year increase in 24Q3. During the period, exports of refrigeration and washing machines remained stable, while air conditioners maintained high growth; overall, the export market was robust, as domestic policies stimulated retail recovery and significant inventory clearance, improvement in 24Q4 is foreseeable; due to previous rises in copper prices, pressure on average prices, and the impact on revenue structure, the gross margin in 24Q3 was under pressure, but leading companies showed strong operational efficiency and improved net profit margins. Brown goods: Exports outperform domestic sales, short-term performance fluctuations The revenue of the brown goods sector in 24Q1-Q3 increased by 8.59% to 140.7 billion yuan, with a 10.40% year-on-year increase in 24Q3 and 9.16% in 24Q2; the net profit attributable to the parent company of brown goods decreased by 14.70% year-on-year to 3.3 billion yuan in 24Q1-Q3, with a 31.18% year-on-year decrease in 24Q3, and 3.96% in 24Q2. The decline in domestic sales volume of color TVs narrowed, while exports continued to grow; with the gradual stimulation of domestic demand for color TVs through the replacement of old appliances, future prospects are promising; the previous sharp rise in panel prices had a delayed impact on costs, coupled with the dilution of expenses from sector growth and changes in revenue structure of leading companies, the industry's performance may fluctuate in the short term. Late-cycle appliances: Continued decline in revenue and profitability The revenue of the late-cycle sector in 24Q1-Q3 decreased by 2.59% year-on-year, with a 9.18% year-on-year decrease in 24Q3, and policies boosting retail demand since September have not yet translated into revenue; Kitchen appliances/large appliances/lighting appliances/integrated stoves in 24Q3 saw revenue drops of 6%/1%/-55%. The net profit attributable to the parent company of the late-cycle sector in 24Q1-Q3 decreased by 8.48% year-on-year, with a 20.50% year-on-year decrease in 24Q3; the gross margin/period expenses ratio/attributable net profit margin in 24Q3 decreased by 1.78/+2.28/-2.18pct, mainly due to declining revenue and consumption downgrade. The significant boost in demand for kitchen appliances from the replacement of old appliances is expected, and improvement in sector operations is anticipated in 24Q4. Smart home: Slight revenue growth, significant performance decline The revenue of the smart home sector in 24Q1-Q3 increased by 6.15% to 26.906 billion yuan, with a 2.66% year-on-year increase in 24Q3 and 2.06% in 24Q2; the net profit attributable to the parent company of the smart home sector decreased by 5.99% to 2.591 billion yuan in 24Q1-Q3, with a 46.97% year-on-year decrease in 24Q3, and 3.73% in 24Q2. The global retail growth of robot vacuum cleaners in 24Q3 is expected to continue, while other product categories may experience short-term fluctuations; affected by factors such as delayed revenue recognition and changes in overseas operation models, leading companies saw a slowdown in revenue growth and a noticeable decline in profitability due to short-term impacts of brand promotion & promotions. Small kitchen appliances: Export growth maintained, profitability continues under pressure The revenue of the small kitchen appliances sector in 24Q1-Q3 increased by 6.39%, with a 2.09% year-on-year increase in 24Q3 and a slowdown compared to the previous quarter; despite superior growth in exports, growth rates are slowing down due to a high base, while domestic sales are under pressure; in 24Q3, the revenue of export-oriented/domestic-oriented enterprises increased by +11%/-7%. The net profit attributable to the parent company of the small kitchen appliances sector in 24Q1-Q3 decreased by 6.70%, with a 16.81% year-on-year decrease in 24Q3; the profitability of the sector/domestically-oriented/export-oriented enterprises in 24Q3 decreased by -1.29/-2.59/-0.01pct. Looking ahead, export growth may slow down or decrease month-on-month, while improvements in domestic sales are more certain with the implementation of policies and major promotional events. In conclusion, the recommended targets are as follows: firstly, leading white goods companies, including Midea Group Co., Ltd (000333.SZ), Gree Electric Appliances, Inc. of Zhuhai (000651.SZ), HAIER SMARTHOME (600690.SH), Hisense Home Appliances Group (000921.SZ); secondly, late-cycle targets, including Vatti Corporation (002035.SZ), Hangzhou Robam Appliances (002508.SZ); thirdly, leading companies in the two-wheeler, robot vacuum, and brown goods sectors, including YADEA (01585), Ecovacs Robotics (603486.SH), Beijing Roborock Technology (688169.SH), Hisense Visual Technology (600060.SH). Risk warnings: policies may not be implemented as expected; fluctuations in raw material prices and exchange rates; improvements in external demand may not meet expectations.