White Power Steady Black Power Continues Growth

Domestic A-shares rebounded in May, with the Shanghai-Shenzhen 300 Index and the Shanghai Composite Index rising 6.50% and 5.63% respectively, while the Shenwan Household Appliances Index rose only 3.72% in the context of relatively weak performance of Gree, Qingdao Haier and Midea Heavyweight. In May, the appliance sector underperformed the CSI 300 for the first time in May and the 2.78 and 1.91 percentage points of the Shanghai Composite Index. However, we continued to recommend strong performances such as TCL, Vantage and Boss. The Shenzhen 300 Index and the Shanghai Composite Index are 14.68 and 16.60 percentage points.

Air Conditioning: The growth of domestic sales continued to be steady, and the growth rate of exports has improved. In April, the domestic sales of air conditioners maintained steady growth, while the growth of exports in the context of a low base last year also picked up.

The overall performance of air-conditioning sales has generally been up year-to-date. However, domestic sales are still expected to exceed expectations in the year as a result of real estate recovery. It is still the weather that determines the core factors of air conditioning and domestic sales, while domestic cool weather in the country has caused some rational demands to be suppressed. In this context, this summer is expected to bring flexibility to air-conditioning, according to Columbia IRI climate analysis this year, the probability of China's summer temperatures higher than the historical average is greater, this year's peak season sales are still worth the wait.

Ice-washing: The refrigerator growth rate was slightly higher than expected, and the performance of washing machines remained stable. Both domestic and overseas sales of refrigerators increased in different degrees in April. The overall domestic sales of refrigerators exceeded expectations due to the beginning of the year. We think that the reason is that the real estate transaction volume and the protection of housing have been drastically promoted. The recovery of the urban market and the maintenance of refrigerators in the rural market continue to increase. However, in the long run, we are not optimistic about the growth rate of the refrigerator industry, and the average price will increase or promote the potential growth of the industry; washing machines, Although domestic sales maintained a steady growth during the month, the overall sales of the industry remained slightly declining due to the decline in exports. Considering that there is still some room for rural market demand, we believe that the domestic sales of the industry will continue to maintain steady performance this year.

Black Power: Domestic sales growth is still noticeable, and panel prices are still slightly down. Affected by the policy of saving energy and benefiting people, LCD TV domestic sales continued to grow well in April, and in the context of gradual withdrawal of policies, taking into account the promotion of rural CRT The endogenous growth momentum of electricity is still strong. We believe that the policy withdrawal will not have a significant impact on the black power industry; recent panel prices will continue to decline, mainly due to the cautiousness of energy-saving policy withdrawal under the expectation of complete machine manufacturers' stocking, but with the The release of short-term inventory needs by complete machine manufacturers and the arrival of the peak season for stock preparation in the third quarter are expected to gradually stabilize and recover.

Maintaining the industry's “optimistic” rating in the context of the broader market's correction, the major companies in the home appliance industry still have the characteristics of confirming growth in performance and relatively low valuations. We maintain the industry’s “optimistic” rating and continue to recommend the three major white-washing advantages. Electric faucet; and based on continued optimism for the company's panel business, we still maintain a “recommendation” rating for TCL Group, and we believe that the recent stock price correction provides a good opportunity to buy; in addition, we are optimistic about the long-term outlook for the kitchen appliance industry. We continue to maintain our "recommended" rating for Boss Electric and Vantage.