Hong Kong stock concept tracking | The policy of replacing old household appliances with new ones continues. By 2025, the retail of household appliances is expected to achieve both quantity and price increase. (Including concept stocks)

On January 15, the offices of the Ministry of Commerce and three other departments issued a notice on the work of replacing old home appliances with new ones by 2025. Subsidies will be provided to individual consumers who purchase refrigerators, washing machines, televisions, air conditioners, computers, water heaters, kitchen stoves, range hoods, water purifiers, dishwashers, rice cookers, and microwave ovens with energy efficiency or water efficiency standards of level 2 or above. The subsidy standard is 15% of the final sales price of the products, and an additional 5% subsidy will be provided for products with energy efficiency or water efficiency standards of level 1 or above. Each consumer can receive a subsidy for one unit of each type of product (up to 3 units for air conditioners), with a maximum subsidy of 2000 yuan per unit. Relevant stocks: Midea Group Co., Ltd (00300), HAIER SMARTHOME (06690), Hisense Home Appliances Group (00921), TCL ELECTRONICS (01070). BANKCOMM International stated that for the first quarter of this year, considering the consumption demand during the New Year and Spring Festival, funds of 81 billion yuan have been allocated for subsidies for replacing old consumer goods. Compared to the 50 billion yuan/20% subsidy ratio for home appliances last year, it is expected that the first quarter will drive sales of home appliances, digital products, and other categories to exceed 150 billion yuan, compared to the total sales of social zero communication equipment and household appliances in the first quarter of 2024 of 383.2 billion yuan. Since 2024, the policy of replacing old consumer goods has been continuously expanded and strengthened, continuously releasing huge potential in the domestic demand market. Home appliances are a key area for promoting the replacement of old consumer goods. On July 25, 2024, the National Development and Reform Commission and the Ministry of Finance issued a notice on "Several Measures to Support Large-scale Equipment Renewal and the Replacement of Old Consumer Goods", and the effect of the replacement policy has exceeded expectations after it was implemented. The Central Economic Work Conference mentioned in 2024 that efforts will continue to boost consumption and expand domestic demand comprehensively, implementing a special action to boost consumption. Zhongjin pointed out that by reviewing the four rounds of consumer goods subsidy policies in mainland China in history, estimating the fiscal scale of each round of policies, and designing a framework for calculating fiscal multipliers, estimates were made of the current multipliers of each round of subsidy policies and the cumulative multipliers within 2 years after the policy was introduced. The calculation shows that the fiscal subsidy multiplier is relatively high, providing strong driving force for related consumption. The bank estimates that the subsidies for replacing old goods in the fourth quarter of last year may exceed 110 billion yuan, with a fiscal multiplier of around 2.8. This year's "enhanced expansion" of replacing old goods may exceed 2010 and become the year with the greatest intensity of consumer goods subsidies, which may have a more significant boost effect on the total social retail sales. In terms of exports, the home appliance industry has continued to have high overseas orders, with broad market opportunities in emerging markets along the Belt and Road. According to the General Administration of Customs, from January to November 2024, China's household electrical appliance exports reached 4.099 billion units, a year-on-year increase of 21.3%, with a cumulative export value of 91.72 billion US dollars, a year-on-year increase of 14.1%. The growth momentum in exports continues to be strong, the product structure is being optimized. Benefiting from the recovery of global demand, significant growth in emerging markets, and various factors such as overseas merchants stocking up in advance, the export momentum of home appliances continues to strengthen. Against the backdrop of a steady recovery in the home appliance industry, the performance of leading home appliance companies is generally impressive. In the first three quarters of 2024, Midea Group Co., Ltd, HAIER SMARTHOME, Hisense Home Appliances Group, Guangdong Xinbao Electrical Appliances Holdings, and other listed companies in the home appliance industry saw a year-on-year growth in net profit. Guangdong Xinbao Electrical Appliances Holdings stated during a recent institutional survey that certain product categories of the company have benefited from the replacement of old home appliances policy implemented in 2024. With the support of macroeconomic policies and the recovery of consumer confidence in the future, the company remains confident in the domestic small home appliance market. BOCOM INTL's research report stated that the continuation and expansion of the policy of replacing old goods will accelerate the release of the demand for home appliance replacement during the Spring Festival, and the significant increase in the quantity limit of air conditioner purchases and the growth rate of categories are worth noting. In the product categories supported by the replacement policy, retail sales of high energy efficiency levels and smart home appliances have experienced double-digit year-on-year growth for four consecutive months, with excellent performance in smart products. The report remains optimistic about leading home appliance enterprises with diverse category layouts, comprehensive channels, and mature competitiveness in the air conditioning market. HAITONG INT'L believes that the terminal retail sales of home appliances in 2025 are expected to achieve a simultaneous increase in quantity and price, leading companies are expected to achieve steady growth in domestic sales revenue, and the significant increase in average selling prices of home appliances driven by the policy of replacing old goods will lead to a noticeable increase in profit margins for home appliance companies. With the downward trend in interest rates, the dividend yield of leading home appliance stocks remains attractive, with a focus on white goods and brown goods leaders that benefit from the policy of replacing old goods and have global competitiveness. Related concept stocks: Midea Group Co., Ltd (00300): In the first three quarters of 2024, Midea Group Co., Ltd achieved operating income of 318.975 billion yuan, a year-on-year increase of 9.57%; net profit attributable to shareholders of listed companies was 31.699 billion yuan, a year-on-year increase of 14.37%. HAIER SMARTHOME (06690): At the end of October 2024, Macquarie issued a research report stating that it reiterated the "outperform the market" rating for HAIER SMARTHOME (06690) and raised the net profit forecast for the next two years by 0.7% and 2.3%, expecting a 15% increase in net profit in 2024, in line with the management's target. This is mainly due to the continuous digitalization driving efficiency improvements, with the target price raised by 9% to 40.5 Hong Kong dollars. The report stated that third-quarter revenue increased by 0.5% year-on-year, better than the bank and market.Expected to fall by 2.4% and 1.9%. Due to cost control, the net profit increased by 13.2% year-on-year, exceeding the market's pre-market expectations by 1.6% and 3.4%. The bank expects HAIER SMARTHOME's fourth quarter to continue to improve, with revenue growth reaching high single digits, surpassing the company's mid-single digit target. The company management expects the growth momentum in October to continue for the next two months.Hisense Home Appliances Group (00921): In the first three quarters of 2024, Hisense Home Appliances Group achieved operating income of 70.579 billion yuan, a year-on-year increase of 8.75%; net profit attributable to the parent company was 2.793 billion yuan, a year-on-year increase of 15.13%; non-net profit attributable to the parent company was 2.289 billion yuan, a year-on-year increase of 10.99%. TCL ELECTRONICS (01070): TCL ELECTRONICS previously announced the global shipment data of TCL TVs for the first three quarters of 2024. Thanks to the continuous improvement in product strength and global brand influence, the global shipment volume of TCL TVs in the third quarter of 2024 increased by 19.7% year-on-year to reach 7.49 million units. As of the first three quarters of 2024, the global shipment volume of TCL TVs totaled 20.01 million units, an increase of 12.9% year-on-year. The company's mid-to-high-end products continue to be favored by the market, with year-on-year growth rates of 61.1% and 162.8% for global shipment volumes of TCL QLED TVs and TCL Mini LED TVs in the first three quarters of 2024, respectively.