Rigid demand Jiqi appliance enterprises are not afraid of the end of home appliances to the countryside policy

In response to the news that the price of home appliances to the countryside has dropped due to the recent drop in stock prices, Hong Kong-listed Skyworth Digital made a positive response. The move changed the company's stock price fell sharply, yesterday, rose 7.1% in intraday trading, closed up 3.27% to close at 3.47 Hong Kong dollars. As for the issues affecting the expiry of the policy of home appliances going to the countryside, several listed companies in the A-share home appliance industry have also shown little influence.

Skyworth Digital believes that even if the home appliances to the countryside policy is over, TV demand will continue to grow in the medium term. At present, televisions with cathode-ray tubes are still mostly used in townships, and there will be a lot of demand for upgrading in the future. As the price of TV panels has continued to drop in the past few years, the price of flat-panel TVs has dropped, and the income of farmers has continued to increase, which will increase the affordability of rural consumers to flat-panel TVs. Skyworth Digital also emphasized that the growth in demand for TVs in the future is mainly driven by consumer demand for TV products, not because of subsidies.

Skyworth Digital provided a set of data on the proportion of sales of home appliances to the countryside from April 1, 2011 to August 31, 2011, which accounted for the total sales of the company's China Color TV Division. The first-phase region accounted for 5%, the second-phase region accounted for 8%, and the third-phase region accounted for 16%.

For the impact of the expiry of the policy on home appliances going to the countryside, the judgments of several listed companies in the A-share home appliance industry converge with Skyworth Digital.

Qingdao Haier said that the expiry of the home appliances to rural areas policy is not an emergency, and major companies should be prepared for this. In the short term, there may be some impact, but in the long run, rigid market demand will continue to drive sales.

Sichuan Changhong stakeholders believe that the policy of home appliances to the countryside covers the entire industry, so the end of the policy will not affect the market structure. “The effect of home appliances to the countryside lies mainly in popularizing household appliances, and now the deployment rate of home appliances such as rural color TVs, refrigerators, and washing machines has improved significantly. As for the demand for consumption upgrades, the policy of home appliances to rural areas is not very useful. One piece is still driven by the needs of the market itself."

The viewpoint of home appliance companies has also been recognized by institutional researchers. Gao Hua Securities researcher believes that sales under the Home Appliances to the Countryside policy has fallen to a relatively low level since April. It is expected that sales under this subsidy policy will remain at the current level of 19 billion yuan in the next two months, and may continue to decline in the months after November 30 this year when the three provinces and one city’s home appliances to the countryside policy is over. However, in the medium term, sales in the rural market should maintain upward momentum and become a major growth driver.

Xiangcai Securities researchers also believe that the policy effect of home appliances to the countryside has weakened. He said that in the future, the policy stimulating effect of home appliance demand will gradually weaken, industry demand will gradually shift from policy-oriented to just-demand-oriented; demand for rural home appliances is still strong, and yuan needs to be excessively worried.

According to a joint notice issued by the Ministry of Finance, the Ministry of Commerce, and the Ministry of Industry and Information Technology, the policy on home appliances to the countryside in the first phase will end on November 30, 2011 as scheduled. The second phase will end on November 30, 2012 and the third phase will end on January 31, 2013.

Affected by this news, the stock price of Skyworth Digital has fallen sharply in recent days. In particular, it fell 14.96% to HK$3.41 for the whole day on September 19, and fell again to 1.47% on September 20. The transaction volume was also heavy, with turnover reaching 110 million Hong Kong dollars and 150 million Hong Kong dollars respectively. Affected by the same news, the stock prices of listed companies of major A-share home appliance companies also fell in different degrees recently.