中国家电业：仔细选择你的新家用电器VIP

1、20 March 2019 Asia Pacific/China Equity Research Consumer DiscretionaryChina Home Appliances SectorResearchAnalystsTonyWang852 21016728 HYPERLINK mailto:tony.wang MichaelShen852 21016711 HYPERLINK mailto:michael.shen HarrietLiu852 21016591 HYPERLINK mailto:harriet.liu INITIATIONChoose your new home

2、appliances carefullyFigure 1: Retail sales growth to diverge across segments in2019-20E 25%2012-17 CAGR2018E2019E2020E15%5%-5%-15%RefrigeratorWashingmachinePremiumSmallapplianceACkitchenwareSource: Euromonitor, CMM, Credit Suisse estimatesInitiating coverage with a selective view. We expect domestic

3、 white goods sales growth to further decelerate to 2%/4% YoY in 2019/20E from21%/6% YoY in 2017/18 due to limited stimulus impacts and a weaker property market. While see further downside for air conditioners (AC), washing machines (WM) and refrigerators would continue to deliver solid growth on mul

4、tiple structural drivers. The return of a premiumisation trend could be another theme to watch out for in 2H19, with premium kitchenware brands expected to be the majorbeneficiary.Structural drivers emerging in WM and refrigerator. We expect WM refrigerator sales to see 5-7% CAGR over 2019/20E, driv

5、en by a strongerreplacement cycle (75% of total demand) offsetting the negative impact of the property market, and a 5% ASP increase per annum driven by ongoing product upgrading. We are more bearish on AC due to destocking pressure (channel inventory at six months of sales vs a normalised level of

6、three to four months) and a potential price war in 2019.Cyclical recovery in premium kitchenware. We believe, after a challenging 2018, the worst could be over for premium kitchenware brands.We expect the top brands to resume growth in 2H19/2020 at 5-7% from a 10% decline in 2018, thanks to: (1) pro

7、perty relaxation policies in top-tier cities; (2) faster industry consolidation; and (3) new product category expansion.Stock calls. We like Haier Electronics/QD Haier for their market share gain potential and visible growth on secular product upgrade in WM andrefrigerator. We like Robam on a potent

8、ial recovery in premium kitchenware in 2H19 and favourable risk-reward scenario. Our least preferred name is Gree due to AC destocking and downside risks inmarginand exports.OF THIS THE OF to do in its As a be have a of of this Focus charts and tablesFigure 2: Impacts from stimulus policy in 2019 co

9、uld be milder than in the lastroundFigure 3: entering into a mild destocking phase on slowing demandUnit per 100 households120 2008-2012: Homeappliance 2008-2012: Homeapplianceto countryside806040200Washing machineRefrigeratorWashing machineRefrigeratorAC80604020-2013 2014 2015 2016 2017 2018 2019E

10、2020ECommercial demand (mn units) Residential demand (mn units)Domestic shipment volume (mn units, RHS)12010080604020-KitchenwareSmallSource: Euromonitor, CreditSuisseestimatesSource: CMM, IOL, Credit SuisseestimatesKitchenwareSmallFigure 4: while refrigerator and washing machine are entering into s

11、trong replacementcycle160140Entering intoFigure 5: Prefer companies with high exposure in WM, refrigerator andkitchenwareMostpreferredLeastpreferredreplacement120Contribution to operating profit by segment100CompanyWMFridge& applianceACOthers80604020- RobamQingdao Midea200120032005200720092011201320

12、152017JoyoungSuporRefrigerator ownership in rural (mn units)Washing machine owership in rural (mn units)Source: National Bureau of StatisticsSource: Company data, Credit Suisse estimatesFigure 6: CS China Home AppliancescoverageCompany nameTickerCSRatingTarget (LC)Upside/Downside (%)MarketcapP/EEPS

13、CAGR (%)5-y average fwd P/E(USDm)2019E2020E2019-20EHaier Electronics1169.HKO30.3209,00013.711.814.313.4Robam002508.SZO34.1184,10217.114.711.617.5Qingdao Haier600690.SSO20.01615,68113.111.411.010.8Midea Group000333.SZN50.2248,34415.714.07.510.3Joyoung002242.SZN22.8(1)2,62221.017.814.316.9Supor002032.

14、SZN66.1(1)8,18427.422.819.716.2Gree Electric000651.SZU40.1(16)42,93412.212.8(7.6)7.0Source: Company data,Credit Suisse estimatesInitiatingcoveragewith aselectiveapproach: preferHaierElectronics and Robam andbearishonGreeExpect white salestofurther decelerate to2%/4%in 2019/20E; butwesee structuralgr

15、owth opportunities in WM&The worstisnearly overforkitchenware premiumbrandson propertypolicySteady growthforsmall homeappliances expected,thoughwe see no upsidesurpriseSectorvaluation stretchedwithnear- term negativecatalystsWepreferHaier Electronics,Robam and QD Haieronstrong productportfolioand on

16、goingindustry Choose your new home appliances carefullyWe initiate coverage on China home appliance sector with a selective view. We believe that the sector faces a tug of war between a cyclical downturn dragged by a slowing property market and rising demand from replacement/upgrade demand. This rou

17、nd of stimulus policy is unlikely to reverse the downturn in the overall market, but we see structural drivers emerging in washing machines/refrigerators/small appliances, which would serve as a multi-year growth driver for the sector from 2019 onwards. We also like premium kitchenware brands on a p

18、otential demand recovery in top-tier cities. Most preferred: Haier Electronics, Robam and QD Haier; least preferred: Gree, Supor.White goods: Policy unlikely to reverse the downturnWe believe the downturn in white goods could last longer than market expectation as magnitude of policy stimulus will b

19、e more moderate than previous rounds and consumer sentiment could remain weak in the near-term. We expect domestic white goods sales to further decelerate to 2%/4% YoY in 2019/20, from 21%/6% YoY in 2017/18. That said, we see structural growth opportunities in the refrigerator and washing machine se

20、gments over 2019-20E on a strong replacement cycle, sustained product upgrade trends, and ongoing industry consolidation. On the flip side, we are more conservative on the mid-term outlook for AC due to destocking and pricing pressure over 2019-20.Kitchenware: Premium brand at the end of the tunnel2

21、018 was a tough year for the kitchenware sector, especially for premium brands such as Robam, due to sluggish property sales, intensified market competition and a consumption downgrade trend in top-tier cities. However, we expect the worst to be nearly over and the premium segment to resume growth i

22、n 2H19 and 2020 at 5-7% YoY, after a 10% decline in 2018, thanks to: (1) potential relaxation policies in top-tier cities; (2) faster industry consolidation; and (3) product category expansion to become the long-term growth driver.Small appliances: Safe harbour but no upside surpriseThe small applia

23、nces market is more resilient amid macro headwinds as replacement demand and product category expansion are the key growth drivers. We expect the industry continue to deliver a 5% volume growth over 2019-20E and a 3% ASP increase per annum supported by product mix and consumption upgrade.Near-term c

24、autious but limited downside seenThe sector has rallied 35% YTD on the back of stimulus policies, credit easing and the MSCI A-share weight increase. With the market cap-weighted forward P/E of white good players trading at 13x, 0.7 std. above its ten-year average, we believe most of the positives h

25、ave been priced in and see near-term risks from weaker demand in 1H19, AC destocking and more earnings downgrades. That said, better earnings visibility in 2H19 and undemanding valuations compared to global peers should limit thedownside.Stock recommendationsWe initiate coverage on the sector with a

26、 selective view and prefer stocks with: (1) higher exposure in categories that benefit from a secular consumption upgrade trend; (2) less exposure to AC and low-tier markets; (3) a strong product portfolio and brand positioning; and (4) undemanding valuations with limited downsides in earnings. We a

27、ssume coverage on Haier Electronics and QD Haier with OUTPERFORM, Midea with NEUTRAL, and Gree with UNDERPERFORM. In the kitchenware and small appliances space, we assume coverage on Robam with OUTPERFORM, and Joyoung/ with NEUTRAL, and initiate Supor with NEUTRAL.Figure 7: Global home appliance val

28、uationtableHome applianceTickerCSRatingPriceCurrent (LC)Market capEPS CAGR (%)P/E (x)P/BV(x)ROE (%)EV/EBITDA(x)Div yield (%)(USDm)2019-20E2019E2020E2019E2020E2019E2020E2019E2020E2019E2020EChina home applianceMidea Group000333.SZN49.348,3447.515.714.03.53.023.623.112.5Gree Electric000651.SZU47.942,93

29、4(7.6)2.724.64.94.7Qingdao Haier600690.SSO17.315,68111.02.220.92.32.7Haier Electronics Grp1169.HKO25.29,00014.313.717.01.82.1HISENSE HOME000921.SZNR12.12,26613.01.718.718.75.9N.A.2.93.3HISENSE HOME0921.HKNR11.02,2661.61.418.418.44.0N.A.3.64.2Homa002668.SZNR6.31,022N.A.8.2N.A.1.5N.A.19.7N.A.9.7N.A.1.

30、3N.A.Changhong Meiling000521.SZNR4.254510.316.62.32.7N.A.N.A.0.71.2Chinese white goods(simple avg)18.812.3Robam002508.SZO29.04,10211.63.625.025.613.4Vatti002035.SZNR12.71,66618.313.825.42.73.4Zhejiang Meida002677.SZNR13.61,30628.617.630.133.311.1N.A.3.94.4Vanward002543.SZNR16.21,38020.015.017.318.78

31、.3N.A.3.74.5Chinese kitchenware(simple avg)19.615.924.525.84.1Supor002032.SZN66.98,18419.727.428.828.515.7Shanghai FLYCO603868.SSNR45.32,93911.919.731.731.112.5N.A.3.54.0Joyoung002242.SZN22.92,62214.321.023.724.916.9XinbaoElectrical002705.SZNR11.61,38520.215.5N.A.3.64.2KingClean603355.SSNR26.41,5801

32、6.617.714.915.59.9N.A.1.21.5Chinese small appliance(simple avg)16.620.322.62.52.9Global home applianceDaikin Industries6367.TO12435.032,5994.52.213.91.21.3Whirlpool CorpWHR.NN1338,474.33.6A O SmithAOS.NNR51.38,6156.718.925.023.2N.A.N.A.1.71.9SEBSEBF.PANR149.48,49710.82.719.71.61.7ElectroluxELUXb.STO

33、241.47,47621.814.620.922.03.8Coway021240.KSO96,5006,29610.316.615.35.04.431.63.74.1De LonghDLG.MINR22.53,8106.717.717.317.210.0Rinnai5947.TN7,5703,4881.019.57.01.21.2ArcelikARCLK.ISU19.42,40536.61.113.821.03.3Noritz5943.TNR1,672761(4.2)17.34.45.0N.A.N.A.2.42.8International players3.114.724.82.42.5So

34、urce: Company data, Wind, The BLOOMBERG PROFESSIONALTM service, Credit Suisse estimatesTable of contents HYPERLINK l _bookmark0 Choose your new homeappliancescarefully3 HYPERLINK l _bookmark1 White goods: Policy unlikely to reversethedownturn3 HYPERLINK l _bookmark2 Kitchenware: Premium brand at the

35、 end ofthetunnel3 HYPERLINK l _bookmark3 no3 HYPERLINK l _bookmark4 Stockrecommendations3 HYPERLINK l _bookmark5 White goods: Policy unlikely to reversethedownturn6 HYPERLINK l _bookmark6 Stimulus impact to be milderthan2008-127 HYPERLINK l _bookmark7 Prefer refrigeration/washing machine to AC on mu

36、ltiple structuralgrowthdrivers.10 HYPERLINK l _bookmark8 Near-term risks for exports despite a likely de-escalation of thetradewar HYPERLINK l _bookmark9 Kitchenware: Premium brand at the end ofthetunnel HYPERLINK l _bookmark10 Premium segment to benefit from a potential recovery intop-tiercities23

37、HYPERLINK l _bookmark11 Premiumisation on pause,notreversing23 HYPERLINK l _bookmark12 Consolidation is faster thanmarketexpectation24 HYPERLINK l _bookmark13 New categories to become the nextgrowthengine25 HYPERLINK l _bookmark14 Small appliances: Safe harbour but noupsidesurprise HYPERLINK l _book

38、mark15 Stable growth supported by lower penetration and a shorterreplacementcycle26 HYPERLINK l _bookmark16 E-commerce as a new engine todrivegrowth27 HYPERLINK l _bookmark17 Upgrading leads toASPuptrends27 HYPERLINK l _bookmark18 Further room formarketconsolidation28 HYPERLINK l _bookmark19 Near-te

39、rm cautious but limiteddownsideseen HYPERLINK l _bookmark20 Stockrecommendations HYPERLINK l _bookmark21 Keyrisks34 HYPERLINK l _bookmark22 Haier Electronics Grp (1169.HK /1169HK) HYPERLINK l _bookmark23 Robam (002508.SZ /002508CH) HYPERLINK l _bookmark24 Qingdao Haier (600690.SS /600690 CH)45 HYPER

40、LINK l _bookmark25 Midea Group (000333.SZ / 000333CH)48 HYPERLINK l _bookmark26 Joyoung (002242.SZ /002242CH)51 HYPERLINK l _bookmark27 Gree Electric (000651.SZ / 000651CH)54 HYPERLINK l _bookmark28 Supor (002032.SZ /002032 CH)57 HYPERLINK l _bookmark29 Small appliance leader with ademanding valuati

41、on57Weexpectdomestic white goodssalesto moderateto 2%/4% YoY in2019/20EStructuralgrowth opportunitiesin refrigeratorsand washing White goods: Policy unlikely to reverse the downturnAfter a challenging 2018 for domestic consumption including home appliances, the government finally announced its long-

42、awaited stimulus package in January 2019 to boost domestic consumption. More favourable policies could be under way including tax reductions and property policy relaxation (mainly in the top-tier cities). However, given that the magnitude of policy stimulus would be more moderate than in previous ro

43、unds and consumer sentiment could remain weak in the near term, we believe that the downturn in white goods could last longer than market expectations.We expect domestic white goods (AC, washing machines and refrigerators) sales to grow 2%/4% YoY in 2019/20E, further decelerating from +6% YoY in 201

44、8 and 21% YoY in 2017, on weak end-demand and moderating ASP increases. We dont expect any meaningful recovery until mid-2020 (vs. consensus views 3Q19 or 4Q19) as we are more conservative on the mid-term demand outlook, especially in AC. We also see downside risks in exports in the near term due to

45、 front-loading activities in 2H18, a slowing global economy and RMB appreciation, despite a likely de-escalation in the US-China trade war.Although the overall demand could remain lacklustre in the near term, see structural growth opportunities in the refrigerator and washing machine segments over 2

46、019-20E on a strong replacement cycle, sustained product upgrade trends and favourable competitive landscape. We are constructive on the premiumisation trend for refrigerators and washing machines, supported by a secular product upgrading and favourable competitive dynamics. Moreover, the margin cou

47、ld surprise to the upside for refrigerator and washing machine manufacturers thanks to easing cost pressure and VATcuts.17%Figure 8: Domestic white good retail sales17%Figure 8: Domestic white good retail salesprojectionsRetail sals(Rmbbn)ACRefrigeratorWashingmachineWhite goods retail sales - yoy(%)

48、60030%28%50025%22%21%20%15%30010%6%7%6%5%2004%3%2%2%4%0%100-5%-5%-10%200820092010201120122013201420152016201720182019E2020E2008-12: Home appliancestorural eAC2009-11: Old for new program2009-13: EnergysavingsubsidyeOverallSource: Euromonitor, Credit Suisse estimatesThestimulus in 2008-12 resultedina

49、 significantincreasein appliancepenetrationin ruralareasStimulus impact to be milder than 2008-12The details and strength of the home appliance stimulus are still unclear. Only Beijing has announced a detailed plan so far but whether other cities launch similar programmes is still unknown. Neverthel

50、ess, we believe the impact of stimulus on white goods would be much more moderate than the previous stimulus packages (e.g., the Home appliances to the countryside one from 2008-12), due to: (1) less support from the central government;much higher penetration in rural areas compared to 2008; and (3)

51、 rising household debts and a gloomy economic outlook weigh on consumerconfidence.A brief review of home appliance stimulus in 2008-12In December 2017, the Home appliances to the countryside programme was launched in three provinces in December 2007. Rural residents were entitled to a 13% price subs

52、idy on purchasing the elected home appliances. In February 2009, the government extended it nationally, aiming to boost domestic consumption in the context of the Global Financial Crisis and economic slowdown. According to the Ministry of Finance, the accumulated sales/sales volume of home appliance

53、s under this programme was Rmb720 bn/300 mn units. In addition, the government also launched the old for new programme and energy saving subsidy programme to promote energy-efficient products in the sameperiod.The stimulus package resulted in a significant increase in appliance penetration in rural

54、areas, especially for under-penetrated categories such as refrigerators and ACs. Ownership per 100 rural households rose from 26 to 67 for refrigerators, from 46 to 67 for washing machines, and from nine to 25 for ACs from 2007-12.Figure 9: Ownership per householdsin ruralFigure 10: Refrigerator sal

55、es peaked in2011Ownership per 100 rural households67676367676362535746494537263023259101216706050403020100200820092008200920102011WashingmachineRefrigeratorAC2012Domestic sales (mn units)1201008060402002009 2010 2011 2012 2013 2014 2015 2016 2017 2018ACFridgeWMACFridgeWMSource: National BureauofStat

56、isticsSource: ChinaIOLHowever, the stimulus package also front-loaded the demand to some extent and led to the weaker growth after 2013, especially for refrigerators which were the biggest beneficiary from the stimulus. Moreover, the stimulus has hampered the industrys consolidation as struggling sm

57、all firms were saved by the subsidies with the boosting of low-end markets. The CR3 (the market share of the three biggest players) of the refrigerator industry declined from 51.2% in 2009 to 45.6% in 2013 while that of the washing machine industry dropped from 66.3% to61.9%.Figure 11: CR3 in theref

58、rigeratormarketFigure 12: CR3 in the washing machinemarket0.0% 55.8% 55.8%56.6%49.8% 51.9% 52.2%51.2% 48.7%47.5%45.6%46.9%12.4% 12.2%10.3%10.6% 8.9%10.6% 11.3%11.9%11.7% 11.8%13.0%13.5% 13.6% 7.3% 8.1% 8.6%9.8% 10.3% 12.5% 13.0%28.0%24.7%25.0%27.7%27.5%29.4%30.4%30.1%30.9%31.5%2009 2010 2011 2012 20

59、13 2014 2015 2016 2017 20180.0% 76.7% 76.7%77.8%66.3%12.6%12.1%68.2%8.6%61.9%63.9%64.6%64.3% 5.1% 5.2%68.6%71.1%10.6%8.1%8.1% 6.4% 3.2%33.3%34.2%24.7%25.9%20.5%21.5%25.0%28.1%30.1%31.4%29.9%30.8%31.5%34.8%33.2%34.4%33.2%33.0%33.4%34.6%2009 2010 2011 2012 2013 2014 2015 2016 2017 2018HaierMideaNo.3br

60、andTotalHaierMideaNo.3brandTotalHaierMideaCR3brandTotalSource:IOLSource:IOLAfter a challenging 2018 for domestic consumption including home appliances, the government finally announced its long-awaited stimulus package in January 2019 to boost domestic consumption. The details and strength of the ho