GF Securities: 25-year policy implementation expected to continue boosting domestic demand for household appliances.

GF SEC releases a research report stating that the policy of replacing old equipment with new ones will be implemented in 2025, resulting in an expansion of product categories and an increase in funding. The scale of the program next year may increase significantly. Looking back at the significant achievements of the program in 2024, the industry saw improvements in both volume and price, with leading companies benefiting more and market shares rebounding. In particular, the household appliances sector showed steady growth in performance, with stable ROE and high dividend advantages, expected to benefit from the stimulus of the old-for-new policy. It is also recommended to pay attention to opportunities in the leading companies in the two-wheeled and black electronics sectors. GF SEC's main points are as follows: The policy of replacing old equipment with new ones will be implemented in 2025, with an expansion of product categories and an increase in funding. On January 8th, the National Development and Reform Commission and the Ministry of Finance issued a notice regarding the implementation of a policy to support large-scale equipment upgrades and consumables replacement in 2025. The policy will continue to support eight categories of household appliances such as refrigerators, washing machines, TVs, air conditioners, computers, water heaters, household stoves, and range hoods, with subsidy levels remaining consistent with 2024. The new additions include a maximum of 3 subsidies per consumer for air conditioning products, as well as the inclusion of microwave ovens, water purifiers, dishwashers, and rice cookers in the subsidy scope. The scale of the program in 2025 may increase significantly. On January 8th, during a regular policy briefing by the State Council, Zhao Chenxin, Deputy Director of the National Development and Reform Commission, stated that the total capital for supporting the new program using ultra-long-term special government bonds in 2025 would be significantly higher than last year. Fu Jinling, Director of the Department of Economic Construction of the Ministry of Finance, mentioned that the central finance has already allocated 81 billion yuan for the old-for-new policy for consumer goods in 2025. This funding will support the seamless implementation of the policy in various regions (as of January 5th, 19 provinces and cities have announced seamless implementation), with future funding distribution leaning towards areas with good results based on the "incentive compatibility" principle. Significant achievements in the old-for-new program in 2024, with improvements in volume and price in the industry. According to data cited by Securities Times from the Ministry of Commerce, in 2024, over 36 million consumers purchased over 56 million units of the eight major categories of household appliances, driving a sales volume of 240 billion yuan. It is estimated that more than 45 billion yuan of central subsidy funds were consumed. According to data from AVCloud, in weeks 35 to 52 of 2024 (August 26 to December 29), online and offline sales of the seven major product categories saw year-on-year increases of 19%, 5%, and 25% online, and 49%, 10%, and 67% offline, showing significant improvements in both volume and price. In terms of retail sales growth during the period, air conditioning (online +43%, offline +95%) > smoke stove (online +30%, offline +87%) > color TV (online +34%, offline +54%) > refrigeration (online +20%, offline +60%). Leading companies benefit more, with market shares rebounding. Since the introduction of central subsidies, products with first-class energy efficiency standards accounted for approximately 90% of those receiving subsidies, leading to an improvement in the retail structure. Leading companies have a more complete product layout, wider channel coverage, and superior channel qualifications, making them relatively more beneficial in this round of central subsidy policies. According to AVCloud data, leading companies saw an increase in both online and offline retail sales shares. Investment recommendations: The white goods sector shows steady growth in performance, with stable ROE and high dividend advantages, expected to benefit from the stimulus of the old-for-new policy. It is recommended to invest in Midea Group Co., Ltd (00300, 000333.SZ), Gree Electric Appliances, Inc. of Zhuhai (000651.SZ), HAIER SMARTHOME (06690, 600690.SH), Hisense Home Appliances Group (00921, 000921.SZ). For the two-wheeled sector, it is recommended to look at Aima Technology Group (603529.SH), Ninebot Limited (689009.SH), YADEA (01585), and for the black electronics sector, TCL ELECTRONICS (01070), Hisense Visual Technology (600060.SH), Xgimi Technology (688696.SH). Risk factors: Policy falling short of expectations; terminal demand falling short of expectations; significant increases in raw material prices.