According to a research report released by CICC, according to industry online data, domestic air conditioner shipments in September 2024 were 6.1 million units, a year-on-year increase of +7.4%. Since August, driven by the gradual implementation of high temperature and trade-in subsidies across the country, air-conditioning retail has resumed rapid growth, driving domestic sales and shipments to turn positive in September, and the current round of destocking cycle has come to an end. In terms of overseas exports, the export shipments of air conditioners in September were 6.02 million units, a year-on-year increase of +39.8%, continuing to maintain a high prosperity. Although the inventory cycle is basically over, under the influence of multiple factors such as high overseas temperatures in the summer of 2024, continued demand for air conditioners in emerging markets, and an increase in the share of independent brands, air conditioning exports have exceeded market expectations for many consecutive months.

CICC's main views are as follows:

In September, the retail sales of home and empty goods increased highly, and the shipment side began to resume growth

Since August, the hot weather has continued across the country, and at the same time, the trade-in has been fully rolled out across the country, driving the omni-channel retail sales of air conditioners in August/September to +22%/+35% year-on-year respectively, reversing the downward trend from June to July. 2Q24 retail sales were lower than market expectations, resulting in a backlog of domestic sales of air conditioners, and the recent good terminal dynamic sales drove the growth rate of domestic sales and shipments in September to turn positive. In July/August/September, the domestic shipments of air conditioners were -21%/-5%/+7% year-on-year, respectively. At present, the channel is flattened, and the cycle of replenishment and destocking is significantly faster than that of the past inventory pressing mode.

CICC believes that the current round of air conditioning destocking has ended, and the industry is also more optimistic about subsequent domestic sales under the stimulation of subsidies. According to industry online data, the domestic sales and production of air conditioners in October/November/December were +5.2%/+8.0%/+10.4% year-on-year compared with last year.

The trade-in is expected to drive the continuous growth of domestic sales in 4Q24, and the leading companies will benefit more

According to the data of the Ministry of Commerce, as of October 15, 20.667 million consumers applied and 10.134 million consumers purchased 14.624 million units of 8 categories of household appliances, enjoying 13.17 billion yuan of central subsidies, driving sales of 69.09 billion yuan. Under the influence of comprehensive factors such as the maturity of the implementation process of the subsidy policy and the improvement of consumer awareness, we see that the demand will accelerate before and after the National Day holiday. AVC data, 24W40-W41 (9.30-10.13) air ice washing offline retail sales were +215%/+138%/+123% year-on-year, and online retail sales were +50%/+54%/+35% year-on-year, respectively, and the average price of the industry increased significantly. From the perspective of enterprises, the benefits of the top brands are more obvious, on the one hand, the energy-efficient products targeted by the subsidy account for a high proportion of the products of the top brands, and on the other hand, the offline store qualifications and numbers of the head brands are more advantageous. In September, the share of domestic air conditioning shipments of Midea and Haier air conditioners increased by +2.8ppt/+2.9ppt year-on-year to 32.8%/13.1%.

Exports maintained rapid growth

According to customs data, the export value of household appliances (in US dollars) and the export volume in September were +4.5%/+7.1% year-on-year, and the growth rate fell but the performance of air conditioning was significantly better than that of the industry. Although the inventory cycle is basically over, under the influence of multiple factors such as high overseas temperatures in the summer of 2024, continued demand for air conditioners in emerging markets, and an increase in the share of independent brands, air conditioning exports have exceeded market expectations for many consecutive months. According to industry online data, the export shipments of air conditioners in July/August/September were +43%/+32%/+40% year-on-year, which was better than the previous production schedule. At the same time, the industry is also more optimistic about the follow-up production schedule, and the export output of the industry from October to December was +51% (up 17%)/+41% (up 19%)/+11% year-on-year compared with the export performance of the same period last year.

In terms of targets: Haier Smart Home (600690.SH), Hisense Home Appliances (000921.SZ), Gree Electric Appliances (000651.SZ); Black electricity recommends TCL Electronics (01070); Kitchen appliances recommend Robam Appliances (002508.SZ), Vantage (002035.SZ); Recommended Roborock (688169.SH) for cleaning appliances; Small appliances recommend Supor (002032.SZ).

Risk factors: the risk of declining market demand; Market competition intensifies the risk.