Huaxi: Platform anti-internalization becomes a new trend, and the average price of small household appliances has been significantly repaired.

Huaxi released a research report stating that at the current moment, there has been a change in the narrative of the small household appliances industry, with demand recovering growth under the effects of national subsidies and low base prices. Under top-down policy guidance, the trend of platform anti-overwork has become a new trend, and after intense price wars, the tail end has accelerated clearance, significantly repairing the average price of small household appliances. E-commerce platforms represented by Douyin have reduced commission rates and refunded promotion fees, limiting the high sales expenses of small household appliance companies and potentially improving return on investment. In the second quarter, companies like Xiaoxiong, Beiding, Feike and other small household appliance companies have lower profit margins compared to the same period last year due to multiple favorable factors. Huaxi's main points are as follows: Demand Side: National subsidies + low base + replacement cycle, 25Q1 small household appliances experience growth recovery In 25Q1, online sales and revenue of kitchen small household appliances increased, with sales growth rates mostly in the double digits, and some categories such as electric steamers, health pots, soy milk makers, and juice extractors saw sales growth rates in the high double digits. The reasons for the growth of kitchen small household appliances in 25Q1 are mainly: 1) National subsidies have continued to have a strong pulling effect, and in 2025, besides the original 8 categories of household appliances, microwave ovens, water purifiers, dishwashers, and rice cookers have been included in the subsidy range; 2) The low base effect in 25H1 is significant. 3) Replacement cycle is coming. Combined with Ovi data, 2019 was the peak of the kitchen small household appliance market, and after 5 years of use, 2025 may usher in a replacement cycle. Personal care small household appliances face growth bottlenecks, but they also experience growth recovery under the influence of national subsidies. In 25Q1, national subsidies continue, and the online sales revenue growth rates of shavers, electric toothbrushes, and hair dryers are 11%, 9%, and 3% respectively compared to the same period last year. The model of proportionate subsidies for high-priced clean appliances is more advantageous, with a more pronounced pulling effect. In 24Q4, the online sales revenue growth rates of sweeping machines and floor scrubbers were 174% and 32% respectively, with significant acceleration compared to the previous period. Profit Side: Q2 small household appliance companies have the potential to see high elasticity in profit margins With multiple favorable factors, there has been a significant recovery in average prices in 25Q1. In 25Q1, the online average prices of all kitchen small household appliance categories, shavers & electric toothbrushes, and sweeping machines have grown year-on-year, with growth rates around 10%. The recovery in average prices is mainly due to: 1) National subsidies favor high-end models in proportionate subsidies, which have a certain pulling effect on product structure upgrades. 2) Top-down policy guidance, 2025 is a big year for e-commerce platforms to counter overwork. 3) Under the price wars of the past two years, the accelerated clearance at the end after optimization has greatly reduced the motivation for top-roll price. The gross profit margin of major kitchen small household appliance companies in 23-24 showed a downward trend, and the recovery in average prices is expected to increase the gross profit margin. Douyin channels have gradually reduced fees, and Q2 small household appliance profit margins are expected to have high elasticity In addition to price wars, another factor suppressing corporate profitability is the high flow costs. In 24Q4, there was a noticeable reduction in corporate sales expenses. Douyin channels already account for a considerable proportion of sales of small household appliances, but due to Douyin's high flow costs, companies generally have poor profitability. There are expectations for fee reductions on Douyin: 1) Commission-free; 2) Automatic refund of promotion fees. At the organizational level, Douyin's advertising department has merged with Douyin e-commerce, directly improving the advertising efficiency and commercialization capabilities of Douyin e-commerce. Huaxi believes that the positive changes on Douyin since the beginning of the year are a direct benefit to small household appliance companies with a high proportion of sales on Douyin channels. In the second quarter, low base effects come into play, raising gross profit margins through average price recovery, e-commerce platform policies favoring merchants, Douyin fee reductions & brand-side investment efficiency improvement under multiple favorable factors, small household appliance companies are expected to rebound in net profit margins. As for the targets: It is recommended to actively pay attention to Bear Electric Appliance(002959.SZ), Shanghai Flyco Electrical Appliance(603868.SH), Ecovacs Robotics(603486.SH), Shenzhen Crastal Technology(300824.SZ). Risk Warning: The analysis of the report is based on online data. If the data is distorted, it will affect the reliability of the conclusions; policies may not be implemented as expected; cost rate improvement may not meet expectations; intensification of competition between brands.