Orient: Short-term pressure on white goods production, overall exports better than domestic sales

Orient released a research report stating that the expected summer high temperatures brought by El Nino are expected to become a positive catalyst for the repair of subsequent terminal demand, and the bank expects the pace of air conditioner production to show a trend of starting low and then increasing. For the refrigeration and washing product category, the bank expects exports to continue to be the core support of industry production resilience. With a high domestic base, short-term pressure is expected, and export trends are expected to be differentiated, with the pace starting low and then increasing throughout the year. Related targets: HAIER SMARTHOME (600690.SH, not rated). Orient's main views are as follows: With high domestic base, the short-term production of household air conditioners is under pressure, and the expected pace throughout the year is starting low and then increasing According to industry online data, the total production of household air conditioners in June was 15.15 million units, a year-on-year decrease of 26.2% in production, and an actual decrease of 19.3% in production. Among them, 1) domestic production was 9.36 million units, a year-on-year decrease of 31.5% in production, and an actual decrease of 24.0%, short-term pressure on domestic air conditioner production is mainly affected by the overdrawn demand from previous policies, inventory and cost pressures, manufacturers proactively reducing production to adapt to the market. 2) Export production was 5.79 million units, a year-on-year decrease of 15.7% in production, and an actual decrease of 20.8%, mainly affected by geopolitical disturbances and economic environment dragging down overseas air conditioner replacement demand. However, the expected summer high temperatures brought by El Nino are expected to become a positive catalyst for the repair of subsequent terminal demand, and the bank expects the pace of air conditioner production throughout the year to show a trend of starting low and then increasing. Refrigeration and washing production exports are better than domestic sales, and overall production has resilience According to industry online data, the total production of refrigerators in June was 7.83 million units, a year-on-year decrease of 0.9% in production, and an actual decrease of 4.1% in production. Among them, 1) domestic production was 3.1 million units, a year-on-year decrease of 7.2% in production, and an actual decrease of 13.6%, mainly due to the suppression of production by the landing of new energy efficiency standards and the weakening effect of the replacement policy. 2) Export production was 4.73 million units, a year-on-year increase of 3.7% in production, and an actual increase of 2.4%, with a slight increase in export production, mainly due to domestic companies undertaking overseas returning orders with cost advantages, coupled with the demand from Europe and emerging markets driving export growth. In June, the total production of washing machines was 6.98 million units, a year-on-year increase of 3.4% in production, and an actual decrease of 1.9% in production. Among them, 1) domestic production was 2.9 million units, a year-on-year increase of 1.0% in production, and an actual decrease of 1.4%, mainly affected by the postponement of replacement demand in the sinking market and rising raw material costs. 2) Export production was 4.08 million units, a year-on-year increase of 6.8% in production, and an actual increase of 0.8%, mainly due to enterprises accelerating overseas layout, deepening core regions with their own brands going overseas, and sufficient overseas orders, various positive factors supporting the maintenance of high export production levels. For the refrigeration and washing product category, the bank expects exports to continue to be the core support of industry production resilience. There is still a high level of inventory in the air conditioning industry, and overall inventory at the industry channel end is increasing As of April, the total commercial inventory of the air conditioning industry was 57.552 million units, a year-on-year increase of 12.7% and a month-on-month increase of 5.4%, with inventory still at historically high levels. In terms of brands, Gree, Midea air conditioning channel inventory scale ranks at the forefront, with 14.166 million units and 11.478 million units respectively, a year-on-year decrease of 2.9% and an increase of 21.2%, a month-on-month increase of 4.7% and 10.1%. Haier air conditioning channel inventory was 7.028 million units, a year-on-year increase of 37.7% and a month-on-month increase of 4.8%; TCL, Hisense, AUX and other channel inventory scales also increased. The inventory in the Q2 air conditioning channel is further increasing on a high basis in Q1, and the industry shipment situation may be better than the terminal sales performance. The bank expects that industry production will continue to be suppressed in the future, and the level of industry inventory is expected to improve after the major promotions. Risk warning The continuity of the old-for-new subsidy policy is uncertain, tariffs are repeatedly disturbing, and raw material costs are fluctuating.