According to Zhithong Finance APP, gtja released research reports stating that according to data from the Ministry of Commerce, in early November, the sales of home appliances in key monitored retail enterprises increased by 45% year-on-year; as of November 11, 21.608 million consumers purchased 32.719 million units of 8 major categories of home appliances. In terms of channels, offline growth is higher than online, and it has strong sustainability. Due to differences in subsidy participation among different provinces, the overall focus is more on supporting offline channels, and offline channels, due to not participating in the november 11 shopping festival-related subsidies, are showing an accelerated growth trend month-on-month, making it more sustainable. As the november 11 shopping festival-related big promotions occurred during weeks 43-46, the online growth rate during the november 11 shopping festival-related period has narrowed.

The sales structure of refrigerators and washing machines, as well as color TVs, has improved to a greater extent.

With the strong push of significant subsidy policies, the consumption structure of most home appliances is showing an upward improvement trend. gtja pointed out that by comparing the average selling price of each category during the subsidy period with the accumulated annual average price before the subsidy, the absolute prices in online channels have fully increased. Additionally, under the guidance of subsidies towards high energy efficiency standards, the average price increase of color TVs, which originally had a high proportion of low energy efficiency, is the most obvious (the impact of panel price changes is not included here).

The production and sales data for air conditioners in October have been released, showing a year-on-year high growth rate for both domestic and overseas sales. Data from the industry online monitoring shows that in October 2024, the production of household air conditioners was 14.057 million units, up by 48.0% year-on-year; sales were 12.869 million units, up by 37.9% year-on-year. Among them, domestic sales amounted to 6.289 million units, up by 24.1% year-on-year, and exports totaled 6.58 million units, up by 54.3% year-on-year.

More than half of the subsidy funds for home appliances in 2024 have been used, supporting the demand for upgrades in second-tier and sinking markets.

gtja stated that based on estimates of the total scale of home appliance-related subsidies and recent public information disclosure and recent channel survey results in hubei, wuhan, chengdu, and qingdao, it is expected that by mid-November, about 80% of the national fund pool for replacing old appliances with new ones in 2024 has been used. According to the tracking of the growth rate of various categories in different provinces, it is found that the replacement/new purchase demand in first-tier cities like Beijing and Shanghai is more reflected in emerging home appliances with low penetration rates, while traditional categories show relatively weak growth. The strong growth rate in various provinces in the central and western regions also indicates that the real substantial upgrade demand is in the second and third-tier and sinking markets.

Recommended symbols: Major appliances are the most stable and the most directly benefit from policy stimulation, recommending midea group co., ltd (000333.SZ)(2024PE: 13.7x), haier smarthome (600690.SH)(14.2x); the black goods sector also benefits from the trade-in policy, recommending tcl electronics (01070)(9.6x), hisense visual technology (600060.SH)(13.9x). Real estate policies continue to release bullish signals, and the kitchen appliances, which have a stronger post-cycle attribute, have a replenishment opportunity, recommending hangzhou robam appliances (002508.SZ)(13.0x), vatti corporation (002035.SZ)(12.8x).

Risk warning: The trade-in policy may not perform as expected in terms of subsequent stimulating effects, the risk of insufficient post-cycle demand due to continued decline in real estate sales and completions, and the risk of raw material price fluctuations.