Appliance stocks rise and fall behind: policy dividend double-edged sword

As the H-share market rebounded on September 27th, home appliance stocks listed on the Hong Kong Stock Exchange also collectively turned red. Its China Midea (0493.HK) and Hisense Kelon (0921.HK) intraday gains reached 13.3% and 13.85%, while Haier Electronics, Skyworth Digital and other gains also exceeded 5%.

However, this may only be a wave of decline in the curve of home appliances and Hong Kong stocks in the past month. From the news of the withdrawal of home appliances to rural areas, dividends began to spread. Home appliance stocks including Haier Electronics, Gome, Skyworth Digital began to dive.

Gome’s stock price was at HK$3.5 in early September and once fell to HK$2.3 on September 26.

At the same time, Haier Electronics and Skyworth Digital also set a price of HK$5.1 and HK$2.71 respectively on September 26. Compared with the end of August, Haier’s share price dropped by a minimum of 45.6%, while Skyworth’s digital number also dropped by 42.7%.

Collective decline

In fact, various companies have different conditions, but after the information on home appliances to the countryside policies was withdrawn on September 19 by the Ministry of Commerce, Ministry of Finance and Ministry of Industry and Information Technology, the three ministries and commissions confirmed that the appliance stocks began to collectively dive, among which Haier, the largest beneficiary of home appliances, went to the countryside. The stock price of electrical appliances fell the most. On September 20, the market fell for 26.79% for a while, and fell 14.26% on September 22, followed by Skyworth Digital’s sharp decline of more than 10% on two occasions. In response, Yang Dongwen, vice president of Skyworth Digital, stated that “the overall Hong Kong capital market has recently been sluggish. Some investors started to collectively sell after the home appliances to the countryside to confirm the withdrawal. This is an irrational performance.” Haier Group, Haier’s major shareholder, is also 9 On the 16th and 20th of the month, the company increased its shareholding by nearly 5 million shares, and its shareholding ratio has risen to 66.5%, which is to increase investor confidence.

He Yangqing, vice president of Gome, said, “The Gome stores are mainly primary and secondary markets, the proportion of which exceeds 70%. The level of the tertiary market is one of the focuses of GOME’s future expansion, and the proportion of home appliances to China’s Meimei electronics stores is less than the proportion. 5%. The exit policy of home appliances to the countryside has little impact on Gome.” Nevertheless, Gome’s stock price also experienced a 30% decline in the past month, which caused the Huang Guangyu family’s stock assets to shrink by at least 5 billion yuan. Bain Investment’s book loss also exceeded RMB 2 billion.

Future trend

For the collective decline in home appliance stocks, Luo Qingqi, a director of Pall Consulting, said, “Hong Kong’s capital market is very sensitive to policy dividends. Except for the normal rise in the performance of home appliance stocks in the past few years, the share price appreciation brought by home appliances to the countryside has increased by several times. The Haier Group, which has the largest number of handsets in the past month, has only fallen by 45%. Therefore, it is not ruled out that the home appliance stocks will continue to fall in the future but will gradually recover after six months."

Take Skyworth Digital as an example. In the financial crisis of 2008, its share price once fell to the lowest price of HK$0.28, its price-to-earnings ratio was only less than six times, and a series of domestic demand policies such as home appliances to the countryside created a new demand for 400 billion yuan for home appliances. The drop in raw material prices has increased the gross profit margin of home appliance stocks, which has caused Skyworth Digital’s net profit to increase by more than four times in fiscal 2009, which has pushed its stock price to its highest level in history.

Even if Skyworth Digital's share price fell sharply in recent days, Skyworth Digital's color TV shipments in August even rose by 36% year-on-year, which was a significant improvement over the first half of the year. Skyworth Digital also said that home appliances to the countryside has had little impact on its performance. Although the home appliances to the countryside began to show a gradual decline in April 2011, but for the beneficiary shares of home appliances to the countryside, from the beginning of December 2011, the demand for rural markets will increase significantly, plus one The negative growth in the secondary market that has already occurred may cause the growth of home appliance stocks in the first half of 2012 to slow down or even decline.

Haier Electronics pointed out that "we have already prepared for this, but in the long run, rural market demand will be the best domestic growth opportunity for Chinese home appliances, so the company can quickly enter the growth track after a short period of adjustment."

Yang Dongwen also stated that “protective housing and other policies support the demand for household appliances, while Beijing and other local governments have started to introduce energy-saving subsidies, leading to the recovery of the urban market. In addition, with the advancement of urbanization, 20 million new urban population will be added each year. It has support for home appliance demand, so there is no need to worry about the saturation of the domestic appliance market."

Luo Qingqi pointed out that the pain caused by the exit of home appliances to the countryside policy is still continuing, but in the long run, the decrease in gross profit margin caused by rising costs is the problem that household appliance companies need to solve.