Pacific Securities released a research report saying that in 2024, domestic sales-based home appliance enterprises may form a low base of income, performance and valuation, looking forward to 2025, with the support of policies, enterprises with high-quality fundamentals may have a reversal logic. At the same time, the impact of overseas capacity construction or tariff reduction, the structural opportunities in emerging Southeast Asia/Latin America/Middle East Africa markets are worth paying attention to. At present, the thematic investment opportunities brought by AI+ and "WeChat stores" are worth paying attention to.

The main views of Pacific Securities are as follows:

1. Domestic sales: pay attention to the continuation of the trade-in policy + the bottom reversal of low-base high-quality enterprises.

1) Policy side: In 2024, the trade-in policy will effectively promote the renewal of the stock of household appliances, and the central + local government will release a signal that the national subsidy is expected to continue in 2025, and the leading household appliances may take the lead in benefiting.

2) Demand side: In the context of weak overall demand, cost-effective consumption is rising, and home appliance companies with high cost-effective positioning are expected to benefit.

3) Base side: Although there will be policy stimulus in 2024, domestic demand will be weak throughout the year, and domestic home appliance enterprises may form a low base of income, performance and valuation, and in 2025, under the support of policies, enterprises with high-quality fundamentals may have a reversal logic.

2. Exports: The impact of overseas capacity construction or tariff reduction, and structural opportunities in emerging markets are worth paying attention to.

1) Policy side: The uncertainty of U.S. tariffs on China may inhibit exports, but the impact on the home appliance industry is limited, and the target with small risk exposure to the United States and overseas capacity construction in advance is expected to benefit.

2) Base side: In 2024, the overall performance of the export chain will be relatively strong, forming a high base, and under pessimistic expectations, the channel may have the sentiment of stocking in advance, and there may be a new round of opportunities after the inventory is digested.

3) Structural: Southeast Asia/Latin America/Middle East and Africa markets are growing rapidly, and emerging markets may still have a lot of room for improvement in 2025.

3. Thematic opportunities: AI+ and WeChat store

　　1) AI+: AI end-side applications typified by smart glasses may become a new outlet.

In 2024, AI glasses will receive widespread attention from the market, Ray-BanMeta integrated AI voice interaction function sales will exceed one million, M11 Baidu will release the first "Xiaodu AI glasses", Samsung plans to launch AR glasses in 2025Q3, and the attention of the AI glasses market has increased under the catalysis of a series of events. Optimistic about home appliance companies such as Edifier, TCL Electronics, and Biyi Co., Ltd., which have deployed AI+ in advance, are also looking forward to the implementation of product-side applications.

2) WeChat Store: The "Send Gifts" function is closely integrated with the social attributes of WeChat, and the huge user group brings natural demand.

In the short term, consumers may try to experience new functions based on freshness, which is good for small kitchen appliances and personal care massage small appliances with low unit price and strong gift attributes; In the medium and long term, it may lead a new round of changes in e-commerce channels, and companies with strong brand power and content marketing capabilities are expected to stand out. We are optimistic about small household appliance brands such as Supor, Joyoung, Beiding, Mofei, Feike, and Bei Easy, which are the first to lay out their own WeChat stores.

Investment Advice:

It is recommended to focus on it

1) White appliances and whole-house intelligence: Midea Group (000333.SZ), Haier Smart Home (600690.SH), Gree Electric Appliances (000651.SZ), Hisense Home Appliances (000921.SZ), TCL Smart Home (002668.SZ), Edifier (002351.SZ);

2) Black electricity and intelligent projection: TCL Electronics (01070), Hisense Video (600060.SH);

3) Intelligent short transportation: Nine Company-WD (689009.SH), Yadea Holdings (01585), Emma Technology (603529.SH);

4) Small kitchen appliances: Xiaoxiong Electric (002959.SZ), Beiding (300824.SZ), Biyi (603215.SH).

Risk warning: fluctuations in raw material prices, exchange rate fluctuations, tariff uncertainties, tight shipping capacity, fluctuations in real estate policies, and focused on the company's performance falling short of expectations