(Yicai) Jan. 21 -- Suning’s shares gained after the Chinese home appliances retailer said it expects to have made its first annual profit since 2020, mainly because of a government initiative to encourage consumers to replace old electrical goods with new ones.

After jumping by as much as 4.9 percent on the Shenzhen stock market earlier today, Suning [SHE: 002024] closed up 2 percent at CNY2.09 (29 US cents) a share. It has climbed 87 percent from a 52-week low of CNY1.12 on June 25 last year.

Net profit was likely between CNY500 million and CNY700 million (USD68.4 million and USD95.7 million) last year, compared with a year-earlier net loss of CNY4.1 billion (USD560.5 million), the firm announced late yesterday. After deducting non-recurring items, Suning expects its net loss to have shrunk 72 percent to 77 percent to between CNY1.2 billion and CNY1.5 billion.

The Nanjing-based company focused on developing its core home appliances business last year, optimizing its store structure, and improving product cost performance, it noted. Thanks to the national consumer goods trade-in program, sales surged 65 percent last quarter from a year earlier, the firm added.

The government introduced trade-in subsidies for certain consumer goods last March. Earlier this month the number of eligible categories was raised from eight to 12, with the addition of dishwashers, microwave ovens, rice cookers, and water purifiers. The policy is a key initiative to stimulate consumer spending, support domestic manufacturing, and promote energy efficiency.

Suning processed more than 16,000 product trade-ins at the county level last year, leading to a 191 percent surge in related orders, the company told Yicai.

Besides strengthening cost controls, Suning saw non-recurring profit and loss projects, including asset disposals and debt resolution, bring in about CNY1.8 billion to CNY2 billion of revenue.

Retail sales of home appliances in China soared 12 percent to a record CNY1.03 trillion (USD143.3 billion) last year, with more than 37 million consumers buying over 62 million appliances through trade-ins so far, according to the National Bureau of Statistics and the Ministry of Commerce.

Editor: Martin Kadiev