Guosen Household Appliance Industry's investment strategy for January 2025: Continuing the nationwide policy of trading in old appliances for new ones. Optimistic about the continuous release of demand for new household appliances.

Guosen released a research report stating that the effect of the policy of exchanging old for new appliances in 2024 is significant, which has driven appliance sales by over 200 billion. In November, the sales of large household appliances for export remained strong, with impressive growth in domestic and central air conditioning. Since the end of December, about 20 provinces and cities have announced the cross-year policy of exchanging old for new appliances in 2025, and it is expected that the policy will continue in 2025, leading to a continuous increase in appliance sales. Key points from Guosen include: - Many regions have announced the continuation of the policy of exchanging old for new appliances, stimulating continuous release of appliance demand. - As of January 5th, incomplete statistics show that 19 provinces and cities across the country have announced the continuation of the policy of exchanging old for new appliances in 2024. The eight major categories of TV, air conditioning, refrigerator, washing machine, computer, water heater, household stove, and range hood are still covered. Some regions, such as Hubei, have increased the subsidy qualifications for air conditioning products to 3 times and included 77 other household appliances in the subsidy scope. - On January 3rd, the National Development and Reform Commission stated in a press conference that it will strengthen the implementation of a new round of large-scale equipment updates and consumer goods exchange programs, providing more support for the replacement of consumer goods at home. It is estimated that the policy of exchanging old for new appliances will continue nationwide in 2025, with an expansion of product categories to further support the growth of appliance demand. - The impressive effect of the policy of exchanging old for new appliances in 2024 has driven appliance sales by over 200 billion. - Since the implementation of the policy of exchanging old for new appliances, the performance of China's appliance consumption has significantly improved. According to the Ministry of Commerce's national data platform for exchanging old for new appliances, as of December 19th, 33.3 million consumers have purchased 52.1 million units of eight major categories of household appliances, driving sales of about 239.09 billion yuan, with sales of first-level energy-efficient products accounting for over 90%. Calculated based on China's domestic appliance sales of 773.6 billion yuan in 2023, the sales driven by the policy of exchanging old for new appliances accounted for 30.9%. - According to data from Aoweiyun, before the implementation of the policy of exchanging old for new appliances (representing January 1st to August 25th), the retail sales growth of seven major categories of appliances (TV, air conditioning, refrigerator, washing machine, range hood, gas stove, water heater) was +3.5%/-6.3%. After the implementation of the policy, from August 26th to December 29th, the retail sales growth of the seven major categories of appliances was +25.0%/+66.5%, with a month-on-month increase of 21.5%/72.8%, with a more significant stimulating effect on offline sales. In November, domestic air conditioning and large kitchen appliances saw impressive growth, with strong performance in air conditioning exports. Industrial online data shows that in November, the domestic sales volume of household air conditioners, refrigerators, washing machines, televisions, range hoods, and gas stoves increased by +28.7%, +2.3%, +8.0%, +4.9%, +16.8%, and +15.0% respectively compared to the same period last year, while the central air conditioning sales volume decreased by 0.4%. In November, the export volume of household air conditioners, refrigerators, washing machines, televisions, range hoods, and gas stoves increased by +59.1%, +10.0%, +1.8%, +20.8%, +6.2%, and +18.0% respectively compared to the same period last year, with the export volume of central air conditioning increasing by 32.0%. In November, under the continued drive of the policy of exchanging old for new appliances, the main categories of large household appliances continued to show a strong growth trend, with air conditioning, range hoods, and gas stoves growing the fastest, while refrigeration and televisions had steady growth. In November, the exports of large household appliances remained strong, with impressive growth in domestic and central air conditioning. Key data tracking: - Market performance: The relative monthly return of the household appliance sector in December was +2.32%. - Raw materials: The monthly comparison of LME 3-month copper and aluminum prices in December was -1.9% and -1.8% respectively, while the cold-rolled sheet prices increased by 0.5% month-on-month. Shipping index: The monthly comparison of the US West Coast, US East Coast, and Europe routes in December was +6.73%, +1.08%, and +10.11% respectively. Core investment portfolio recommendations: White goods are recommended to include Midea Group Co., Ltd(000333.SZ), Guangdong TCL Smart Home Appliances(002668.SZ), HAIER SMARTHOME(600690.SH), Gree Electric Appliances, Inc. of Zhuhai(000651.SZ), Hisense Home Appliances Group(000921.SZ); Kitchen appliances are recommended to include Hangzhou Robam Appliances(002508.SZ); Small appliances are recommended to include Bear Electric Appliance(002959.SZ), Beijing Roborock Technology(688169.SH), Guangdong Xinbao Electrical Appliances Holdings(002705.SZ). Risk warning: Intensified market competition, lower-than-expected demand, significant increase in raw material prices.