中国白色家电：不要把太多希望寄托在补贴上

1、24 January 2019BE ChinaChinaEQUITIESDURABLE GOODSDont pin too much hope on subsidiesChina White GoodsThe government has hinted at the possibility of new subsidies on appliances, aimed at boosting consumptionIf that should happen, the benefits would not be as great as in earlier similar programmes; a

2、ir conditioners should do bestPrefer to from RMB49.60), QD Haier (TP to RMB18.50 from RMB17.50)The market expects subsidies on appliances. A senior economic policy official told stateTVinearlyJanuarythatthegovernmentmightintroducenewmeasurestoboost of and to stabilise the No more has been said about

3、 this, but the market is sitting up. The big three appliance makers shares rebounded10%year-to-date(vs6%fortheCSI300).Inthisreport,weweighwhether the government is likely to go ahead with the idea and, if so, what a new subsidy programme might look like and how effective it might be compared with ea

4、rlierones.Dontpintoomuchhopeonsubsidies.Wevebeenherebefore,sowelookedback at subsidy programmes that ran between 2009 and 2013 and found that times have changed.Indeed,wecametothefollowingconclusions:(1)Subsidieswouldbejust a short-term remedy. The last subsidy programmes only front loaded the deman

5、d rather than changing the trends of the (2) A new stimulusisunlikely.Boostingdemandinruralareasaccountedfor56%ofsubsidies on in A is to now of in would be needed to achieve a similar effect. The market for appliances is much largerthanin2008,andweestimatethatOldforNewandEnergyEfficientsubsidies to

6、have effect. (4) Air conditioners make the best target. Greater penetration and sales of energy-efficient products would have the mostimpact.Big and small winners. If a new subsidy package were to be activated, we estimate that annual sales and net profit of the top three players would enjoy a 6% an

7、d 11% impact, respectively. But smaller players would also do well, as in past programmes.Buy on the sector, with Gree as our preferred stock. We base our bottom-up call on Gree on limited downside and the final dividend pay-out for 2018e as a potential catalyst. Our target prices for Gree, Midea an

8、d QD Haier imply 2019e PEs of 12x, 13x and 14x, respectively, and EV/EBITDA multiples of 8x, 9x, and 7x.Lina Yan*Consumer Analyst, Hong Kong and ChinaThe Hongkong and Shanghai Banking Corporation Limited HYPERLINK mailto:linayjyan.hk linayjyan.hk+852 2822 4344Karen Choi*Head of Consumer and Retail R

9、esearch, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch HYPERLINK mailto:karen.choi karen.choi+82 2 3706 8781Vishal Goel* Associate Bangalore*Employed by a non-US affiliate of HSBC Securities (USA) Inc. and not registered/qualified pursuant to FINRA regul

10、ations HYPERLINK /regform.php?id=aTdlZjE6N21kazVgM2A Register now HYPERLINK /regform.php?id=aTdlZjE6N21kazVgM2A Register now HYPERLINK /regform.php?id=aTdlZjE6N21kazVgM2A Current _ HSBCUpside/ Marketcap3M ADTV PE (x) EV/EBITDA(x) CompanyTicker CurrpriceNewOld Rating downside(USDm)(USDm)FY17aFY18eFY1

11、9eFY17aFY18eFY19eGree Electric000651CH RMB41.3048.8048.80Buy18.2%35,04023711.28.8Midea000333CH RMB38.9146.1049.60Buy18.5%40,78617417.513.812.010.59.8Qingdao Haier600690CH RMB14.9718.5017.50Buy23.6%13,6565416.55.2Source: Bloomberg, HSBC estimates (priced at close of 22 January 2019)Disclosures & Disc

12、laimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it.Issuer of report: The Hongkong and Shanghai Banking Corporation LimitedView HSBC Global Researchat: HYPERLINK / Contents HYPERLINK l _bookmar

13、k0 New subsidies would be neither HYPERLINK l _bookmark0 panaceanorcatalyst HYPERLINK l _bookmark1 Sensitivityanalysis13 HYPERLINK l _bookmark2 Gree(000651CH)15 HYPERLINK l _bookmark3 Midea(000333CH)18 HYPERLINK l _bookmark4 Qingdao Haier(600690CH)21 HYPERLINK l _bookmark5 Disclosureappendix28 HYPER

14、LINK l _bookmark6 Disclaimer32New subsidies would be neither panacea nor catalyst There appears to be some excitement in the market about potential new subsidies on appliances aimed at boostingconsumption We do the math and find the effect of new subsidies would be less effective than previously; ai

15、r conditioners would benefitmost Buy with pecking order Gree (TP RMB48.80), Midea (TP RMB46.10 versus RMB49.60 before) and QD Haier (TP RMB18.50 versus RMB17.50 before)Limited prospects of new subsidy catalystOn 8 January the vice-president of the National Development and Reform Commission (NDRC) Ni

16、ng Ji Zhe told state television that the government was aiming to introduce consumption stimulus measures, including purchase incentives or subsidies for autos and home appliances, to help stabilise economic growth. There have been no further statements or information on this matter. However, in thi

17、s report, we try to answer investors questions about what such measures might entail, what effect they could have, and how they might compare with those launched between 2009 and 2013. They included a Go Rural programme and an Energy Efficient programme throughout those years, as well as an Old for

18、New programme from 2009 to 2011.Our key conclusions are as follows: Any subsidies would be just short-term remedies.Thesubsidiesin2009-13onlyfrontloadeddemandratherthanchangingthelong-termtrends of the industry. If we take the long view, as shown in Figure 1, the underlying retail volume CAGR for wa

19、shers, fridges and air conditioners (ACs) was only 5.8%, 3.4% and 6.2% over the 2008-18period.Figure 1. Retail volume CAGR (2008-18)5.8%6.2%5.8%6.2%3.4%6.0%5.0%4.0%3.0%2.0%1.0%0.0%Source: CMM, HSBCFridgesAir A new Go Rural push is unlikely.Among the 2009-13 subsidy programmes, Go Rural was the most

20、important. It accounted for 56% of the total subsidies given out by the government and 44% of the total retail demand created under the subsidy programmes.However, the rural penetration of appliances is much higher now than in 2008. For example, the rural penetration for fridges and washers reached

21、92% and 84% in 2017 compared with 30% and 49% in 2008.Under the old Go Rural programme, the total subsidy given amounted RMB82bn and led to appliance sales of 275m units.We estimate that a new Go Rural programme can only stimulate appliance demand by 70m units with a total subsidy size of RM28bn. Th

22、e potential for a new Go Rural is unlikely because there is limited room for further growth in the rural penetration of washer and fridges and the rural penetration for AC and water heaters is constraints on rural infrastructure.Figure 2. Old versus new subsidy programmes152,030109.8%152,030109.8%68

23、.4%78,9194.0%45,20127,909-65.8%140,000120,000RMB million100,000RMB million80,00060,00040,00020,0000Total 3GoRuralOld Subsidy% in size toold 100.0%40.0%0.0%-20.0%-40.0%-60.0%-80.0%Source: Ministry of Commerce, HSBC estimatesFigure 3. Effectiveness of 2009-13 programmes200.3%67.2%200.3%67.2%67.2%32.6%

24、8.6%8.6%OldNewOldGo RuralNewEnergy efficientOldNewas%ofretailvolumebeforesubsidystartedOld for Newas % of appliances 150.0%100.0%50.0%0.0%Source: Ministry of Commerce, HSBC estimates More spending is needed to achieve a similar effect to that of the 2009-13 programmes:As Figures 2 and 3 show, to hav

25、e an effect similar to that of the last Old for New and Energy Efficient programmes based on (1) the ratio of subsidised appliances to the annual retail volume (year before the programme) and (2) the level of subsidy to retail price ratio, the total subsidy needed would be RMB124bn. This would be 93

26、% higher than the total RMB64bn spent under the old programmes. A new subsidy programme aimed at ACs would be most effective.As we show in Figure 4, by boosting the urban ownership penetration and that of Energy Efficient types I and II, a new AC subsidy programme would boost total AC sales by 111m

27、units with a subsidy programme size of RMB56bn.Figure 4. New subsidy aimed at ACs only110.8132.0%110.8132.0%72.486.2%.%million unitsmillion unitsTotalPenetrationEfficient of the (m As % of retailSource: Ministry of Commerce, HSBC estimates140.0%120.0%100.0%80.0%60.0%40.0%20.0%0.0%Figure 5: Appliance

28、s subsidies, 2009-13Go RuralOld for NewEnergy EfficientNew Energy EfficientTrial coverageShandong, Henan, Sichuan + 149 provinces & cities: Beijing, Tianjin,provinces/cities include Jiangsu, Zhejiang,Shanghai, Jiangsu, Zhejiang, Shandong,Anhui, HenanGuangdong, Fuzhou, ChangshaTrial periodDecember 20

29、07 to December 2011 +June 2009 to May 2010December 2008 to December 2012NationalNationwideJune 2010 to 23 provinces/cities andNationwideNationwideimplementationApril 2011 to Nationwide fromPeriodFebruary 2009 to February 2013June 2010 to December 2011June 2009 to May 2011June 2012 to May 2013Subsidy

30、 subjectRural residentsUrban and rural residentsUrban and rural residentsUrban and rural residentsSubsidy range13%10%about 9% of AC retail4.9% (3-23%), 3-12% for ACs,price8-12% for LCD TVs, 7-12% forrefrigerators, 5-23% for washersSubsidised categories16 kinds, including TVs, refrigerators,13 kinds,

31、 including TVs, refrigerators,Air conditioners, orFive kinds, including ACs, TVs,washing machines, ACs, waterwashing machines, ACs, wateraverage RMB293 subsidyrefrigerators, washing machines,heaters, etc.heaters, etc.per unitswater heatersFiscal sourceCentral government (80%),Central government (80%

32、),Central governmentCentral governmentLocal government (20%)Local government (20%)(100%)(100%)Source: Ministry of CommerceAppliance subsidy programmes 2009-13InFigure6,wesummarisetheamountofsubsidy,theunitsofappliancessoldunderthesubsidy programmes and the retail value of appliances sold during thep

33、eriods.Figure 6: Appliance subsidies, 2009-13Go RuralOld for NewEnergy EfficientNew Energy EfficientAnnual totalY-o-y diffTotal subsidy (RMBm)20098,9741,7502,00012,724201016,93412,3759,54038,84926,125201128,59723,5003,10355,20016,351201227,19790028,097(27,104)201311,30011,300(16,797)Total81,70337,62

34、514,64312,200146,171Total number of appliancessubsidised (m)2009375547201061322912275201194441615432201283588-6720136060-27Total275815065471Retail sales of appliancessubsidised (RMBm)200969,03317,50022,222108,7552010130,262123,750106,000360,012251,2572011219,980235,00034,478489,457129,4452012209,206

35、18,443227,649(261,808)2013231,557231,5573,908Total628,481376,250162,700250,0001,417,431Source: Ministry of CommerceIn 2011, both the subsidy amount and the new appliance sales under the subsidy programmes peaked at RMB55.2bn and RMB489bn, respectively.In 2012, the scale of the subsidy programme shru

36、nk y-o-y and all programmes ended in 2013.In Figure 5, we summarise the appliance subsidy programmes initiated by the Chinese government to stimulate consumption.As shown in Figure 7, the retail sales of the big three appliance categories (washers, fridges and ACs) dropped by 14% after delivering an

37、 annual CAGR of 15% over the 2008-11 period.Figure 7: Appliance subsidy versus industry growth24.1%14.5%24.1%14.5%7.0%12.9%489.5-14.5%360.0227.6231.6108.812.738.8700.0600.0RMB billon500.0RMB billon400.0300.0200.0100.0200920102011201240.0%20.0%0.0%-20.0%-40.0%-60.0%-80.0%-100.0%Retail CAGR (2009-11)T

38、op 3 Total 15.2% Gree 39.9% Midea 38.5% Qingdao Haier 49.5% TotalApplianceretailsalesunderprograms YoY %Source: Ministry of Commerce, CMMThe impact on companies in 2009-13White goods manufacturers directly benefited from the subsidy programmes, in our view. Firstly, on sales, the domestic revenue of

39、 the top three white goods makers over the 2009-13 period registered a CAGR of 23.8%.Figure 8: Top three appliance makers domestic revenue73.4%21.2%73.4%21.2%18.0%-5.4%174.0210.9199.6235.5100.3500.0RMB billon400.0RMB billon300.0200.0100.02009201020112012100.0%0.0%-20.0%-40.0%-60.0%-80.0%-100.0%CAGR

40、(2009-13)Top 3 Total 23.8% Gree 29.0% Midea 14.4% Qingdao Haier 28.6% 3revenueYoY%Source: Company ReportsHowever, the subsidy programme benefited smaller players more than the top players. In Figure 9, we show Gree and Mideas share in the bidding results of the Go Rural programme.Figure 9: Gree and

41、Mideas share in the bidding for the Go Rural programmeResults announcement date5-Mar-0914-May-0911-Feb-1015-Nov-1030-Dec-11% of total models winning the bidsGree6%6%7%8%8%Midea6%6%7%8%6%Annual market share (% value)20092009201020112012Gree28%28%28%32%36%Midea26%26%26%27%27%Source: Ministry of Commer

42、ceSecondly, on margins, the subsidy received by white goods manufacturers contributed significantly to their earnings during the period. In 2010, government grants accounted for 58.4% of the top three white goods makers net profit and that dropped to 7% in 2013.Figure 10: Government grants as % of n

43、et profits83.4%58.4%83.4%58.4%52.5%34.8%23.9%32.5%19.1%9.5%18.9%10.5%9.9%2.7%13.5%7.3%2.7%6.1%60.0%30.0%20.0%0.0%Net ProfitCAGR (2010-13) 29.2% 36.5% 19.4% 27.0% 2010201120122013 3Gree HaierSource: Ministry of Commerce, Company reportsLastly, on valuation, the top threes one-year forward PE averaged

44、 13.5x during the 2009-11 period versus an average PE of 10.9x from January 2009 to thepresent.Figure 11: Top threes one-year-forward PE weighted by marketcap13.510.913.510.910.88.3Jan-11Jan-13Source: BloombergOne YearAverage Average PE (x) What can the government do in this cycle?in a We a In Figur

45、e 12, we summarise the unit subsidy versus the retail price in 2009-13.Figure 12: Unit subsidy and retail ASP for appliances sold under subsidy programmes GoRural Old forNew Energy Efficient New Energy Efficient (Rmb/unit) subsidyperunitretail price subsidyperunitretailpricesubsidy/unitsubsidy perun

46、it20092421,8753503,70030020102652,2853843,75834620112842,5615333,64819420122972,6781882013188Average2972,3504633,702293188Source: Ministry of Commerce, HSBCIn Figure 13, we breakdown the subsidies broadly into programmes aimed at penetration, at replacement and at upgrade.Figure 13. Three types of a

47、ppliance subsidies in 2009-1313.0%10.0%13.0%10.0%6.5%463297233500RMB per unit400RMB per unit300200100-Penetration(Gorural)Replacement(OldforUpgrade AverageperunitAverageas%ofretailpricesSource: Ministry of Commerce, HSBC20.0%10.0%0.0%-10.0%-20.0%-30.0%-40.0%-50.0%Then, we apply the same metrics to p

48、otential new appliance subsidy programmes under the same type and we assess the potential effect.Potential new Go RuralWe calculate the incremental spending in any new Go Rural programme that would be involved in taking rural penetration of fridges and washers to 95%, the current urban penetration l

49、evel for fridges and washers. Likewise, we calculate what would be involved in raising the rural penetration of AC/water heaters to 60 and 75 per 100 households from 49 and 63 in 2017. We believe the rural penetration of AC/water heaters is still constrained by the infrastructure of the electricity

50、network and gas connections in rural areas. The incremental sales volume under such a new Go Rural programme would be equivalent to a total of 70m units. This is lower than the 275m units sold in the previous Go Rural programme from 2009 to February2013.Figure 14: Prospective new Go Rural programme

51、Oldprogramme Newprogramme Penetrationsubsidyprogramme20092012 %change2017 Target %change% changeRural penetration (per 100 households)Fridges Washers ACHeaters Number of appliances sold (munits)As % of retail volume for Fridges + Washers + ACs + Heaters owned before subsidystartsAverage subsidy as %

52、 of retail prices Average subsidy per unit (RMB)37531236275176%13%2976767254281%26%107%16%928449637033%13%398959560753%13%22%20%-75%-81%34%-66%Total size of the subsidy programme (RMBm)81,70327,909Source: Ministry of Commerce, HSBCProspective new Old for NewFigure 15: Prospective new Old for NewOld

53、programmeNew programme% changeAs % of total Fridges + Washers + ACs + Heaters owned before subsidy starts9%9%0%No. of appliance sold under the programme (m units)8112757%Average subsidy as % of retail prices10%10%0%Average subsidy per unit (RMB)46362034%Total size of the subsidy programme (RMBm)37,6

54、2578,919110%Source: Ministry of Commerce, HSBCNew Energy EfficientFigure 16: New Energy EfficientOldNewprogramme% changeAs%oftotalFridges+Washers+ACs+Heatersownedbeforesubsidystarts67%67% No. of appliance sold under the programme(munits)115145Average subsidy as % ofretailprices7%Average subsidy peru

55、nit(RMB)233313Total size of the subsidyprogramme(RMBm)26,84345,201Source: Ministry of Commerce, HSBCFigure 17 shows that energy efficiency type I and II products respectively constituted 95% and 92% of total fridge and washers offline retail value in 2018. Thus, the potential upgrade demand from a n

56、ew Energy Efficient programme might be more limited than in the previous programme, especially for washers and fridges.90.8%95.8% 90.8%95.8% 95.3%92.2%84.0%76.059.0%44.8%0.5%44.8%48.531.3%36.427.5%4.2%5.1%5.1%.1%III Total I&III Total I&III Total I & Fridges2014201881%580.0%70.0%40.0%30.0%0.0%Source:

57、 CMM offline retailAC the best targetFrom the above analysis, it is clear that any new stimulus aimed at all appliance categories would have only a limited effect given the already high penetration rates for ownership and energy-efficient products. The exception is AC, which still has scope for both

58、 urban ownership growth and penetration of energy-efficient products.Therefore, in Figure 18, we have designed a new subsidy programme aimed at AC only.Figure 18: Prospective new subsidy aimed at AC only2017Target% change1. Penetration demandUrban penetration (per 100 households)13717024%Average sub

59、sidy as % of retail prices15%Average subsidy per unit (RMB)594No. of appliance sold under the programme (m units)72As % of retail volume for AC in 201886%Total size of subsidy programme (RMBm)42,9852. Energy-efficient demand2018Energy I and II as % of total retail volume48%70%47%Average subsidy as %

60、 of retail prices9%9%Average subsidy per unit (RMB)293338No. of appliance sold under programme for 2 years (m units)38As % of retail volume for AC in 201846%Total size of subsidy programme (RMBm)12,988Aggregate subsidy programme onACNo. of appliances sold under programme for 2 years (m units)111As %