Hong Kong stock concept tracking | Trade-in subsidies for some small home appliances continue, with strong export momentum in the small home appliance category (with concept stocks attached)

The subsidy scope of the old-for-new household appliances has been expanded, with the number of household appliance categories eligible for subsidy increasing from 8 to 12. Each consumer can now receive a subsidy for purchasing up to 3 air conditioning products, up from 1 previously, and it is expected that the policy will further stimulate residents' household appliance consumption. Cinda's research report stated that the actual scrappage rates of air conditioners, refrigerators, washing machines, and televisions in 23 years were approximately 27%, 42%, 66%, and 82% respectively. There are a large number of durable household appliances that should be scrapped but are still in use beyond their intended lifespan. Driven by the old-for-new subsidy policy, China's old household appliances may enter an accelerated scrappage phase, with the actual scrappage rates of air conditioners and refrigerators expected to increase significantly. Selecting representative consumer categories of household appliances, from the perspective of domestic demand fundamentals, some optional product categories have shown signs of recovery in high-frequency data. Similarly to durable consumer goods, the small household appliances sector in 2024 also experienced growth in overseas orders for replenishing inventory, with the potential for overseas expansion to become a long-term strategy. According to a research report by CITIC SEC, in 2024, the small household appliances industry experienced a year where domestic sales faced pressure but stabilized, while overseas sales continued to grow steadily. However, industry players were under pressure from pricing, affecting their performance. Looking ahead to 2025, the National Development and Reform Commission plans to expand the scope of the old-for-new subsidy to some small household appliance categories. The demand from emerging markets for overseas exports is expected to remain strong. Considering the significant decline in the small household appliances sector in the past, it is anticipated that the domestic market expectations and fundamentals will reverse in 2025, while overseas demand is expected to continue. Additionally, small household appliance companies have more flexibility compared to white goods companies. With the recent trend of "gifting" on WeChat, it is recommended to pay attention to investment opportunities in the small household appliance sector. Related Hong Kong stocks for small household appliances: Midea Group Co., Ltd (00300), JS GLOBAL LIFE(01691), HAIER SMARTHOME(06690), Hisense Home Appliances Group(00921)