As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts.

2025/04/2212:59:03 hotcomm 1956

(report producer: CITIC Securities)

Home appliances: fundamentals are bottomed out, waiting to be improved

since the beginning of 0 years to date. As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. The continued downturn in the market comes from the constraints of multiple factors: 1. The post-cycle of real estate and the impact of local epidemics, the completion of real estate and sales data have continued to decline sharply since the end of 2021, and the short-term domestic sales expectations are difficult to say optimistic; 2. Overseas inflation continues to be interpreted, and Europe and the United States may ease price pressure through a significant interest rate hike , and the export prosperity may usher in a decline; 3. Raw material prices have continued to rise this year. Although there has been a pullback in the recent period, they still remain at historical highs, eroding the profitability of enterprises; 4. Emerging industries have high certainty under the support of policies, resulting in capital diversion. With the proposal of the policy of "stabilizing growth" and the real estate policy has been loosened, the above-mentioned restrictions have improved marginally, and the fundamentals have been bottomed out, and it is expected to gradually improve in the future.

raw material prices have declined in stages, and the pressure on the cost side may be alleviated. Raw materials account for more than 80% of the cost of home appliances, of which steel, copper, aluminum, and plastic account for about 60% of the cost of air conditioners, refrigerators, washing machines and kitchen appliances. Since the beginning of this year, raw material prices have risen rapidly and then fallen, and the prices of copper, aluminum, plastics and cold-rolled plates have begun to decline year-on-year, and the cost-end pressure of home appliance companies may be alleviated.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

exchange rate , the exchange rate of RMB against the US dollar may continue to be under pressure. Under strong export data, the RMB exchange rate against the US dollar has remained stable at around 6.4 for a long time, and the impact of exchange rate fluctuations on the export business of home appliance companies has weakened. However, since April, affected by the expectation of Fed rate hikes, the RMB has depreciated rapidly, and the RMB has fallen below 6.8 against the US dollar. Considering that US inflation continues to exceed expectations, the subsequent rate hike of is expected to be strong in , we believe that the RMB exchange rate against the US dollar may continue to be under pressure, and companies with a large proportion of exports may benefit in stages.

White electricity: Profit recovery is expected, pay attention to the "high-end" trend

Local epidemic disturbs domestic sales, and it is expected to usher in a concentrated recovery after the epidemic. Due to the repeated impact of the epidemic in some areas of China, since this year, domestic sales of air, ice and washing have been weak. The sales and shipments (industry online caliber) in January-4 months were 0.0%/-6.1%/-10.0% year-on-year, respectively, and the sales volume on the retail end (Aowei Cloud Network caliber) was -8.7%/-6.4%/-6.9% year-on-year, among which the air conditioner shipment side performed more positively, reflecting the strong willingness of downstream dealers to pick up goods. Considering that the epidemic prevention and control policies in various places are being promoted in an orderly manner, the logistics and supply chains are gradually recovering, and consumption subsidy policies in various places are being introduced one after another, it is expected that subsequent demand will be released in a concentrated manner.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Overseas demand is under short-term pressure under high base and may gradually recover in the second half of the year. During the epidemic, European and American countries adopted strong consumer subsidy stimulus policies, and with the decline in subsidies in the third quarter of 2021, overseas consumer demand has gradually begun to be under pressure. Judging from the U.S. home appliance inventory data, the U.S. home appliance inventory has recently hit a record high in five years. In addition, U.S. real estate sales have cooled down in recent months. The transaction volume has continued to negatively increase since the second half of 2021, which has also dragged down the demand for home appliances. Under the comprehensive effect, domestic home appliance exports declined. From January to April, air and wash export shipments (industry online caliber) were +3.9%/-8.8%/-16.0% year-on-year respectively, and from January to May, the overall home appliance exports ( General Administration of Customs caliber) were -6.0% year-on-year. However, considering the withdrawal and compensation cycle, it is expected that the overseas base pressure will be alleviated in the second half of the year.

High-end development is in full swing, and promoting new sales and selling opens up space. With the rise of ownership, the increase in the proportion of renewals, and the trend of consumption upgrading, the trend of high-end home appliances is obvious. Among them, ice and washing products benefit from structured upgrades. Taking ice and washing as an example, the proportion of large-capacity ice and washing has increased significantly in recent years. drum washing machine has gradually become the first choice for the update. The refrigerator's freshness and frost-free and the washing machine's sterilization and hot drying functions have gradually established consumer awareness.Structural upgrades have effectively driven the increase in the average price of products. According to data from Zhongyikang, between 2015 and 2021, the sales share of refrigerators above 7,000 yuan increased from 8.0% to 24.8%, and the proportion of washing machines above 5,500 yuan increased from 4.6% to 25.4%. The increase in the average product price helps enterprises effectively transmit raw material cost pressure. As the pressure on raw materials slows down, the profitability of subsequent leading enterprises is expected to continue to be restored.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

channel innovation combined with digital cost reduction and efficiency improvement, and the advantages of leading companies continue to be strengthened. In recent years, leading air conditioners, Midea and Gree have carried out channel changes to streamline sales levels, and reduced price increase rate and to further enhance the competitiveness of terminal products; in addition, leading enterprises continue to promote digital and informatization changes, on the one hand, improve financial flexibility, efficiently respond to user needs, and improve operational capabilities. On the other hand, they significantly reduce the cost rate and warehousing and logistics costs, and improve corporate profitability. With the reform of leading channels and the advancement of digitalization, the comprehensive competitiveness of the industrial chain has been further improved. Faced with the complex and changing external environment and the price increase of raw materials, leading enterprises have shown strong operating resilience, and the gross sales poor remain stable, reflecting the leading strong brand + scale manufacturing capabilities.

Haier Smart Home: High-end and globalization are progressing smoothly, ushering in a harvest period of strategic layout. As the domestic home appliance industry develops into a mature stage, high-end and globalization have become new growth points in sales scale. After the early layout of Haier , it has entered a strategic harvest period: 1. High-end: Casarte has been in the layout for many years, and its technology and reputation have accumulated deep accumulation. In recent years, revenue has maintained high growth. The original shortcomings such as kitchen appliances and air conditioning businesses have also been significantly strengthened; the Sanyiniao brand follows the trend of home appliance suites and improves Haier's ability to provide overall solutions. 2. Globalization: Through reforming the organizational structure, sharing channels and R&D platforms, and in-depth localized operations, synergies are gradually released and profit margin optimization is obvious. 3. Digitalization: The company continues to promote digital process reengineering, from digital R&D design, logistics and service process reengineering, interconnected factories and other links, continues to promote the optimization of operational efficiency, continuously improve the cost rate, and improve profitability.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Projection: The industry is in high prosperity, the leading advantages strengthen

The industry is in high prosperity, and the epidemic does not change the trend of high-speed penetration. As the new generation of people who pursue personality and quality life become the main consumer force, the demand for large-screen audio and video is gradually emerging. Smart micro-investment has high cost performance in the field of large-size displays, and also has the advantages of convenient transportation and eye protection for movies, entering the stage of high-speed penetration. According to IDC data, the scale of household investment grew rapidly from 2017 to 2021, with a CAGR reaching 27.9%. In 2022, due to the repeated logistics obstacles caused by the epidemic, sales growth slowed down in March and April, but with the arrival of the 18 promotion festival and the advancement of epidemic prevention and control, the industry returned to high prosperity. According to Magic Mirror data, as of June 8, the projection pre-sale + cumulative sales of Taobao platforms increased by 27.1% year-on-year. It is expected that with the ease of chip supply and the recovery of logistics in the second half of the year, the industry is expected to continue to maintain rapid growth. Under the influence of

core shortage, LCD achieves a large volume to lower the average price. Chip shortage has always been one of the factors that plague industry supply. Due to the constraints of chip shortage, the share of DLP products has continued to decline. According to Luotu data, DLP sales accounted for only 38% of the online smart projection in 2022Q1. Since the LCD routes are all low-priced products, the technical barriers are low, and brands are mixed. With the increase in the number of participating brands, it will achieve rapid increase in volume and drive the overall average price of the projection industry to decline. Considering that DLP technology has a comprehensive leading LCD technology in display effects (light efficiency, contrast, resolution, etc.), it is expected that with the ease of chip supply pressure, the proportion of DLP is expected to rebound and drive the industry's average price to rise.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

content e-commerce is in line with product characteristics, and emerging channels quickly increase volume. Smart projection products have achieved rapid development in emerging channels, and the strong experience and display effect of live streaming goods can effectively attract consumers' attention. According to Aowei monitoring data, emerging e-commerce platforms such as Douyin, Kuaishou, and , Pinduoduo accounted for 21% of the overall online share in April 2022, an increase of 3% from the previous month.At present, emerging channels are still mainly white-brand low-priced products. With the layout of leading companies, mid-to-high-end models are also expected to enjoy the dividends of the development of emerging channels .

has one super and many strong structures, and the advantages of the leading companies continue to strengthen. The smart micro-investment market is showing a strong pattern. According to IDC data, the share of Xgimi is far ahead of 21.2% in 2021, followed by other domestic brands Nut, Fengmi and Dangbei, with market shares of 7.5%/3.5%/3.0% respectively. Among them, Jimi's share continues to increase with its product (software + hardware), channel and supply chain advantages. brand effect is gradually building, with obvious brand premium and its advantages continue to strengthen. Fengmi, as a late-stage show, has grown rapidly in recent years. The parent company Light Peak Technology has accumulated a deep technology. We expect that as the product line is gradually filled, Fengmi's share is expected to continue to increase in the future.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

4K The era is coming, and multiple technical routes are blooming. So far in 2022, leading projection brands have launched new 4K products. Among them, Fengmi V10 and Vidda C1 laser micro-investment have directly explored the price of 4K high-end projection below 7,000 yuan with the parent company's strong independent research and development technology and cost control capabilities. At present, 4K is the most certain direction in the subsequent upgrade of intelligent projection structures. The current sales volume penetration rate is less than 1%. In the future, with the reduction of costs, the price of 4K intelligent micro-investment is expected to further decline, thereby accelerating the popularity. In terms of technical routes, the projection market is also showing a trend of blooming flowers. Xiaomi launches the first LCOS full-color laser micro-investment product, which has aroused the market's attention to the development of LCOS. If domestic LCOS manufacturers progress smoothly, they are expected to break TI's DMD chip monopoly in the future and effectively reduce product costs.

Jimi Technology : The leading advantages continue to be strengthened, and overseas expansion opens a new growth curve. 1. Product structure upgrades, and profitability continues to improve: Since 2021, the company's mid-to-high-end hot products H3S and RS Pro2 have continued to increase in volume, leading the industry's development trend and driving a significant improvement in its own profitability. 2. Complement the product lines in overseas markets, and the independent brands are growing rapidly: the company's independent brand product lines are being quickly filled, and at the same time actively promote the expansion of overseas channels, such as online entry into well-known B2C platforms such as Japanese Lotte ; establishing business relationships with MediaMarkt, the first electrical appliance retailer, etc. Under the joint action of products and channels, the company's overseas independent brands continue to grow rapidly. 3. To obtain "Key Software Enterprise Certification , the parent company's income tax of 47.64 million yuan in 2021 is expected to be refunded in 2022. If certified in succession year, the corporate income tax rate will drop from 15% of current high-tech enterprises to 10%, further boosting profitability. Overall, as the industry leader, the company has significant advantages in products, channels and supply chains, and its overseas layout has potential. Smart Micro Investment is still in the stage of rapid penetration. With the upgrading of product structure, the company is expected to take the lead in enjoying dividends.

Kitchen appliances: emerging categories are increasing at a high rate, leading companies have opened up the second curve

in the era of consumption upgrading, emerging categories of kitchen appliances are increasing at a high rate. As people's living standards improve, they no longer meet the basic smoke stove needs, and the functions carried by the kitchen gradually increase. Consumers are beginning to pay attention to kitchen appliances that improve the quality of life, and emerging supporting kitchen appliances represented by all-in-one machines and dishwashers are popular. In 2021, the domestic sales of all-in-one machines/dishwashers in my country will be 5.6 billion yuan, and the CAGR from 2018 to 2021 will be 34/21%, entering a stage of rapid growth.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Emerging categories ASP is high and the steady-state space is considerable. The unit price of all-in-one machines, dishwasher and integrated stove products is relatively high, with the average annual prices in 2021 being about 5900, 5100 and 8400 yuan respectively; assuming that the stock of urban/rural all-in-one machines in a steady state is 25/5 units per 100 households, the dishwasher is 40/10 units per 100 households, and the integrated stove is 30/5 units per 100 households, and the update cycle is 13 years, then it can be measured that the sales space of all-in-one machines/ dishwasher / integrated stove is 879/647/263%; assuming that the stable state price is 4500/4500/8500 yuan, it is estimated that the sales space of all-in-one machines is about 420/680/930 100 million yuan, an increase of about 650/580/270% year-on-year. The overall market size is higher than that of smoke stoves, and the space of the kitchen appliance industry has expanded significantly.

Take the dishwasher as an example to analyze the marginal improvement of three major factors:

1. middle-class class has grown, and potential demand is strong. With the rapid development of China's economy, the middle class has gradually grown. In 2018, the middle class accounted for 59%/34% in first- and second-tier cities/third- and fourth-tier cities, an increase of 44%/31% compared with 2010, and there is still room for improvement in the future. The improvement of purchasing power has promoted the reshaping of residents' consumption concepts, among which home appliances, as an important part of home life, have attracted attention first. Dishwashers, all-in-one machines, etc., as high-frequency kitchen appliances with consumption upgrade attributes, may match the release of potential demand.

2. Industry R&D investment has increased, and product experience has continued to improve. Before 2015, players in the dishwasher industry were mainly composed of foreign-funded enterprises such as , , and the product performance was relatively Western and did not match the characteristics of heavy oil fume in Chinese kitchens. In 2016, Fangtai launched a localized sink dishwasher, which not only effectively removes oil stains, but also solves installation space problems, which in turn ignites the market. The current product strength of dishwasher is still far from its ideal level, but the vast steady-state industry space attracts leading manufacturers such as Haier, Fangtai, Boss, and Midea to join and strengthen R&D investment. The dishwasher product experience is expected to continue to improve, supporting a steady upward penetration rate.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

3. The kitchen dominance changes, and consumer cognition iteration. In the past, the purchase of kitchen appliances was dominated by the post-60s/70s. Due to their conservative consumption awareness and lack of product awareness, most elders tend to wash their hands. As time goes by, the post-80s and post-90s have gradually taken over the kitchen dominance, and their understanding of dishwashers has become more abundant (after the market share of domestic manufacturers has increased, they have begun to increase marketing efforts for emerging categories such as dishwashers) and in-depth (the willingness to actively understand and the popularity of public discussion has increased), and they are willing to pay a premium to free their hands and stay at home. The basic market of kitchen appliance consumption has gradually ushered in a switch, and the industry may be close to the turning point of nonlinear growth.

Boss Electrical Appliances : The downward trend in real estate will not hinder the growth of smoke stoves, and the expansion of categories will create a second curve. 1. The company's share of hood machines still has room to increase. In 2020, the company's omni-channel sales market share of hood machines was only 12%, far lower than the KA channel 20%. With the continuous advancement of urbanization, e-commerce and the company's downswing strategy, it is expected that the company's hood machines market share will still have room for growth. 2. System-based development promotes the rapid increase in emerging categories. The dishwasher, all-in-one machine and smoke stove are both large kitchen appliances. The company uses the brand and offline channels to match smoke stoves. In 2021, the company's dishwasher/all-in-one sales volume was yoy+ 101/71%, and emerging categories achieved rapid growth in volume and strong momentum. 3. Relying on historical heritage, seize the integrated stove cake. The company has been deeply engaged in kitchen appliances for many years and has established a complete R&D system and related technical reserves; its marketing methods are mature and its funds are strong; its rich terminal channel network provides support for shipments, helping the company gain share in the 10 billion integrated stove market.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Small home appliances: Structural opportunities, focus on new product development and channel integration

Local epidemics have repeatedly hindered sales of small home appliances, and demand in the second half of the year is improving. The epidemic in many places recurred at the beginning of the year. Compared with the outbreak centered on in central China in 2020, the center of this outbreak was more scattered. Starting in early March, Shanghai, Shenzhen, Dongguan , Changchun City, and Jilin City have all taken measures to lock down the city. Unlike the lockdown period in 2020, most logistics remained unblocked, this epidemic has hindered the supply chain in East China and stagnated Shanghai express delivery, difficulty in shipment and difficulty in reaching and other problems have a great impact on the small appliance industry that mainly relies on online sales. During the epidemic in 2020, the sales of small appliances in the Shanghai region experienced an outbreak, and the demands for this epidemic are mainly vegetables, meat and other agricultural and sideline products, resulting in small appliances not benefiting from this epidemic. In March 2022, the sales of small appliances in online Taobao series were the lowest in the past two years, reaching -26.4%. With the recovery of domestic supply chain and transportation capacity, the sales of kitchen appliances are expected to recover significantly, and demand is expected to improve in the second half of the year.

Short-term online sales are under pressure, and the industry is transforming towards profit-oriented.In terms of categories of urgent needs, the sales of Tao series online rice cooker/ electric pressure cooker /electric kettle/induction cooker were -16.9%/ -15.6%/ -21.1%/ -15.2% year-on-year, with a relatively small decline; in terms of categories of non-first needs, the sales of wall breaker /soy milk machine/multi-function pot/ health pot was -23.6%/ -28.1%/ -39.4%/ -30.3% year-on-year. air fryer and emerging categories such as coffee machines still maintain positive growth, reaching 133.6%/26.1% respectively. Objectively speaking, this round of local epidemic has not spawned a surge in demand for kitchen appliances as in 2020. Instead, it has impacted most categories due to demand overdraft and logistics obstructions. The industry has shifted from scale-oriented to profit-oriented, and increasing the average price has become the industry's choice.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

However, we believe that the small appliance industry is becoming more and more rational, and the explosive growth opportunities in the industry may decrease. From a product perspective, traditional kitchen small appliances have entered the mature stage and the sales have stabilized in the latter stage. In the future, the industry needs to take the initiative to seize the incremental opportunities. We believe that new incremental opportunities are divided into two types: the price increase brought by quality and health demands to existing categories and the volume increase brought by emerging categories. Emerging categories with convenient attributes and targeting segmented groups are growing rapidly; with the improvement of people's lives and the increase in concern for healthy life, new products that can meet the demands of quality life and health have ushered in a high growth. The popularity of coffee machines, air fryers and other single products at this stage also well confirms this view. In summary, we believe that the incremental growth of the kitchen appliance industry will gradually move towards a path similar to the supply of cleaning appliances to create demand, and the industry will further test the company's ability to grasp consumer pain points, solve the needs of segmented groups and meet health demands.

channels are becoming increasingly fragmented, and the enterprise channel integration capabilities will be further tested in the future. After years of evolution, small home appliance channels have gradually changed from offline KA and other online traditional e-commerce, mainly based on platform e-commerce and professional e-commerce. Now traditional e-commerce platforms are facing problems such as increasing customer acquisition costs, traffic hits the top and weakening user stickiness. Traffic has gradually been diluted by emerging channels represented by Douyin and Pinduoduo with lower customer acquisition costs and more interesting gameplay. This round of local epidemic has driven the rise of live e-commerce. Data from Aowei Cloud Network shows that e-commerce sales in emerging small home appliances account for 30% in 2022Q1. In this era of increasingly fragmented traffic, leading small home appliance companies that have the ability to integrate channels and are good at grasping the new marketing to turn "sales" into "recommendations", and leading small home appliance companies that form private traffic may benefit more.

Machinery: The industry's prosperity is improving, the growth cycle has opportunities, and the growth cycle is both opportunities

Lithium battery equipment: domestic and foreign battery factories accelerate production expansion, and the business performance of equipment factories continues to increase

2021 New energy vehicle production and sales continue to be high, and it is expected to maintain a high growth rate in 2022. Since the impact of the epidemic slowed down in 2020, the industry's high prosperity continued in 2021. In 2021, the sales of new energy vehicles reached 3.507 million units, a year-on-year +165%. In Q1 2022, new energy vehicles continued to achieve rapid growth, a year-on-year growth of 143%. Although the automobile supply chain has been disturbed by local epidemics since April, the logic behind the continuous increase in penetration rate of new energy vehicles remains unabated. We believe that after the epidemic is controlled in various places, the resumption of production and work in various industries, and the recovery of residents' consumption willingness, new energy vehicle consumption will continue to grow rapidly in Q3 to Q4 2022. It is expected that the sales of new energy passenger cars in 2022 will reach 5.7 million units, a year-on-year increase of +71.5%.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Domestic demand: Power batteries enter the TWh era, and energy storage demand ushers in explosive growth. With the high downstream demand, since 2021, the power battery leaders represented by CATL have raised funds and expanded production. The overall capacity construction progress of foreign giants such as LG, Samsung, SK and Panasonic has begun to accelerate to enter the centralized bidding stage in 20Q4-21Q3. According to the forecast of the new energy vehicle group of CITIC Securities Research Department, the global demand for power and energy storage lithium batteries in 2025 is close to 1.9TWh, the demand for power in 2027 is close to 3.2T, with a compound growth of 43% from 2021 to 27; Power field: The global demand for power batteries for new energy vehicles is expected to reach 1,380GWh in 2025, and the industry will enter the TWh era; Energy storage field: by 2025, the global demand for energy storage batteries will be about 500GWh, and the industry will enter a period of explosive growth, with a significant growth rate.

Starting from 2021, equipment manufacturers' orders increased significantly, and the performance in the first quarter of 2022 began to be gradually realized. The expansion wave of lithium batteries in 2021 brings a new round of economic cycle of equipment demand, and domestic leading companies will become the biggest beneficiaries of domestic and overseas production expansion. Due to the booming demand in the industry, the first-tier lithium battery equipment Pioneer Intelligent has a full order. In 2021, Pioneer Intelligent Intelligent signed a new order of 18.7 billion yuan, a year-on-year increase of 70%. In 2021, new orders signed by Liyuanheng, Haimuxing, Lianying Laser, Hangke Technology and other companies all increased significantly. In the first quarter of 2022, the revenue and profits of core lithium battery equipment companies such as Pioneer, Liyuanheng , Haimuxing, Lianying Laser, and Hangke all grew rapidly, and their performance began to be realized. We believe that in the next two years, lithium battery equipment manufacturers are expected to maintain high growth trend in this round of production expansion.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Photovoltaic equipment: technological changes continue to deepen, leading manufacturers have broad prospects

" carbon neutrality ", from 2022 to 2025, the annual installed capacity of the global photovoltaic may reach 232-286GW, with a high prosperity. As the impact of the Russian-Ukrainian war on energy gradually emerges, the importance of reserved green energy has also been increasing, and the implementation of my country's "14th Five-Year Plan" is expected to enter a high prosperity growth. China Photovoltaic Industry Association predicts that from 2022 to 2025, the global average annual installed capacity will reach 232-286GW. In May 2022, the EU announced the REPowerEU plan, which aims to improve energy independence through measures such as improving energy efficiency, natural gas centralized procurement, and expanding the scale of local photovoltaics. Previously, the "Fit for 55" package had an overall target of renewable energy in 2030 of 40%, and the REPowerEU increased it to 45%, with the goal of adding new photovoltaic power generation installed capacity to exceed 320GW by 2025 (more than twice the current level), and close to 600GW by 2030.

HJT equipment demand is growing rapidly, and the HJT equipment space may be nearly 30 billion yuan in 2025. As the equipment accelerates domestic production and gradually improves technology, new manufacturers such as Huasheng, King Kong Glass and Mingyang Intelligent have entered the heterojunction GW-level mass production line. For PERC leading battery manufacturers, Tongwei Co., Ltd. , Longi Co., Ltd. , etc. start GW-level heterojunction battery production lines. Overseas, overseas battery manufacturers such as Meyerberg and REC have also accelerated their layout of HJT battery mass production lines. With the further cost reduction and process improvement of equipment and key materials, it is expected that the pace of mass production of HJT will be further accelerated. According to the power equipment and new energy group of the Research Department of CITIC Securities, the new/total capacity of HJT batteries in 2025 will be 106/306GW, respectively, corresponding to the five-year CAGR of the new capacity is 123.5%. If the equipment investment forecast per GW HJT equipment production line is approximately RMB 250 million, the equipment space in 2025 will reach RMB 26.6 billion.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Laser technology is an important auxiliary technology in the photovoltaic industry. It can improve the conversion efficiency of batteries and help reduce costs, improve quality and increase efficiency. As the leader in photovoltaic laser equipment, Dier Laser currently has its main products including PERC laser ablation equipment, SE laser doping equipment, MWT series laser equipment, LID/R laser repair equipment, fully automatic high-speed laser lossless scribing/cracking machine, laser boron expansion equipment, etc. Among them, most of the PERC field (except laser printing equipment) are in the mass production stage, while most of the new technology fields such as TOPCon, HJT, and IBC are in the small-scale trial production or R&D stage.

laser is expected to continue to play an important role in the N-type battery era.1. TOPCon: In its production process, due to the slow boron diffusion rate, low solid solubility in silicon, and difficult doping, Dier's boron doping technology has achieved technical characteristics such as low damage and strong doping ability, which can be used to form selective emitters of TOPCon batteries; 2. HJT: Dier laser laser repair technology can make the radiation uniformity of the entire laser surface reach within 5%, satisfy the high-light intensity radiation of cells with sizes below 230mm, improve the passivation effect of amorphous silicon, improve the open circuit voltage of the battery Voc, and improve the contact between silver paste and the substrate, greatly improve the filling factor FF, and improve the conversion efficiency; 3. IBC: Large-size lossless ablation technology can be applied to the IBC back passivation layer opening film to realize the back P\N Accurate ablation of the passivation film layer replaces the traditional route and greatly reduces production costs; 4. Laser printing technology: Improve the high-efficiency solar cell fine grid printing process through non-contact laser printing technology (PTP), and print ultra-fine grid lines with a larger aspect ratio on the battery silicon wafer can be used in PERC, TOPCon, and HJT. It can alleviate the pain points of excessive consumption of double-sided silver paste and high silver cost in the current industry (can greatly save slurry consumption by more than 20%), promote the rapid decline in battery costs and accelerate the large-scale industrialization of N-type batteries.

Integrated die casting: Tesla leads the tide of integrated die casting, and the die casting machine industry will usher in a ten-year high growth

Following Tesla, other car manufacturers have quickly followed up. Integrated die casting technology has become a major development trend in the body manufacturing industry. After Tesla successfully used integrated die-cast mass production of ModelY rear axle body structural parts, other domestic and foreign car manufacturers also began to follow up quickly. Among foreign-funded companies, BMW , Volkswagen, Mercedes-Benz , Volvo , and Ford have begun researching and developing integrated die-cast structural parts on some models. Domestic enterprises are the most active in making new cars. NIO cooperates with die-casting parts companies such as Wencan, Xiaopeng and Hongtu to adopt integrated die-cast structural parts on the next generation of models. Xiaopeng Motors purchases its own ultra-large die-casting machine for research and development and production of integrated die-cast body structural parts. In the future, private car companies such as Great Wall and Gely are expected to follow up quickly. At present, the direction of integrated die-casting technology has become a consensus in the automotive industry. We expect that except for Tesla, other car manufacturers are expected to purchase die-casting machines in large quantities starting from 2023, and the industry will continue to grow at a high rate.

CTC chassis three major structural components: front axle, rear axle, and battery box are expected to introduce integrated die-casting technology in 2022. The tonnage of the die-casting machine's mold locking force depends on the projection area of ​​the die-cast material. At present, many car companies mainly focus on introducing integrated die-casting body structural parts of Tesla. According to the relevant information released on Tesla Battery Day in 2020 and the CTC chassis technical route, the chassis is divided into three die castings: front axle, battery box and rear axle. In 2021, the integrated die-cast rear axle structural parts have been successfully mass-produced on Model Y, and the front axle integrated die-casting parts have also been successfully trial-made. Both are produced using a 7,000-ton die-casting machine. The integrated die-casting battery box that can be used as a body bearing structural parts requires a 12,000-ton die-casting machine. In January 2022, Lijin Technology has signed a 12,000-ton die-casting machine purchase contract with Guangdong Hongtu . Lijin Technology is expected to be delivered in Q3 2022, and it is expected to use integrated die-casting technology to produce CTC chassis battery boxes.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

super-large die-casting machine efficiency has been improved, and the single-machine production capacity is expected to increase from 120,000 pieces per year to 180,000 pieces per year. When Tesla first introduced integrated die-casting to produce Model Y rear axles in 2021, the single working cycle of the die-casting machine was about 180s. If calculated based on 20 hours of production per day and 300 days of work per year, the production capacity of a single die-casting machine is 120,000 pieces per year. At present, ultra-large die-casting machines optimize production processes by improving work efficiency, and a single working cycle is expected to be increased to about 120 seconds. It is still calculated based on 20 hours of production per day and 300 days of work per year. After the die-casting machine is improved, the production capacity of a single quarter will be increased to 180,000 pieces per year. The efficiency improvement of die-casting machine will further improve the economy of integrated die-casting and will be expected to replace traditional stamped welded structural parts faster.

According to the analysis of the three stages of integrated die-casting in the body structural parts, the investment amount of die-casting equipment with an annual capacity of 100,000/10 million/50 million vehicles in the first and second stages is a total investment amount of 440 million yuan/43.6 billion yuan/218.1 billion yuan. If the body structural parts in the three stages adopt die-casting process, the investment amount of die-casting equipment with an annual capacity of 100,000/10 million/50 million vehicles in the corresponding annual capacity of 100,000/10 million/50 million vehicles in the total investment amount of die-casting equipment with an annual capacity of 750 million yuan/75 billion yuan/375.2 billion yuan. According to the progress of penetration of integrated die-casting in body structural parts, we roughly divide the penetration of die-casting in body structural parts into three stages. The first phase: Mainly based on the technical route announced by Tesla's 2020 Battery Day, including the front and rear axles, battery box, front subframes, motor and electric drive housings that have been mass-produced by die-casting processes. The first phase of related die-casting equipment is calculated based on the capacity/production margin of 30%, and the investment amount of die-casting island composed of die-casting machines and peripheral equipment corresponding to an annual production capacity of 100,000 vehicles is about 200 million yuan, and the investment amount of equipment with a corresponding production capacity of 10 million yuan/year and 50 million yuan/year is about 19.8 billion yuan/98.9 billion yuan. The second stage: mainly includes battery case cover plate, center console skeleton, rear subframe, door, tailgate, etc., which can technically adopt die-casting process, and there are related components that have been developed by car companies and parts manufacturers. The second phase of the die-cast island investment with an annual production capacity of 100,000 vehicles was approximately RMB 240 million, and the corresponding equipment investment with an annual production capacity of 10 million/year and 50 million/year was approximately RMB 23.8 billion/119.2 billion. The third stage: mainly includes A/B/C column side circumference, roof, battery replacement battery compartment, seat structural parts, etc. Although the above structural parts can be manufactured by die-casting process, no car companies and parts manufacturers have yet to clearly introduce them. The investment in die-cast islands with an annual production capacity of 100,000 vehicles in the third stage is about 310 million yuan, and the investment in equipment with a corresponding production capacity of 10 million/year and 50 million/year is about 31.4 billion/157.1 billion yuan. The penetration of the press casting process in the above three stages is high. We believe that the first and second stages of components are likely to eventually adopt the die-casting process, and there is uncertainty as to whether the third stage will eventually adopt the die-casting process.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Apple has driven the mobile phone case to change from plastic to metal, and it took about 7 years to increase the penetration rate of metal case to 90%. In 2010, Apple started using metal case from the iPhone4 and successfully led the industry trend. In 2013, HTC was the first to use aluminum alloy shells. In 2014, domestic smartphone brands such as Xiaomi and Huawei began to gradually adopt metal shells in high-end models. By 2017, the proportion of mobile phones made of metal as the main structural material has reached 90%, and it took roughly 7 years to metallize the case in the mobile phone industry.

We expect that it will take about 10 to 15 years to increase the penetration rate of integrated die-casting in the automotive industry to 90%. We compare the transformation of automobiles' integrated die-casting with the metallization of mobile phone shells. In 2020, Tesla began to introduce integrated die-casting body similar to Apple's iPhone 4 in 2010, and other companies in the industry began to explore and follow up. The mobile phone industry has increased the penetration rate of metal machine shells to about 90% in about 7 years. Considering that the product iteration speed in the automotive industry is about 1 times slower than that in the mobile phone industry, we expect that it will take about 10 to 15 years to increase the penetration rate of integrated die-casting body in the automotive industry to 90%. When the industry generally forms a consensus, the penetration rate increase may accelerate.

is expected to increase the global die-casting machine and related equipment market size from 8.5 billion in 2021 to 71.3 billion yuan by 2030. Integrated die-casting will continue to grow at a high rate of growth in the global die-casting machine market. According to relevant research and analysis of Lijin Technology, the market size of integrated pressure casting related die casting machine systems in 2021 will be around 1 billion yuan. Assuming that the industry's growth rate will grow linearly in the next ten years, the new demand for integrated die-casting body structural parts will be around 60 billion yuan by 2030, corresponding to a CAGR of 58% from 2021 to 2030. According to the global traditional die-casting machine market of 7.5 billion yuan per year, and the compound growth rate of industry demand in the next ten years is 5%, it is estimated that the global die-casting machine and related equipment market size will be approximately 71.3 billion yuan by 2030; among which the proportion of integrated die-casting will increase from 12% in 2021 to 84% in 2030. The demand for integrated die-casting will enable the global die-casting machine market to continue to grow high in the next ten years.(Report source: Future Think Tank)

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

MRO & FA: The domestic market started late, with a broad market

MRO. It involves a wide range of industries, has many application scenarios, and has a broad market

Market size: The Forward-looking Industry Research Institute expects that the global MRO market size will reach US$718.7 billion in 2025, and the China Industrial and Industrial Association expects that the annual procurement of domestic MRO industrial products can reach 2.8 trillion yuan in 2025. my country's MRO market is still in the transition stage from traditional scattered procurement to intensive procurement, and the downstream involves many fields such as power grids, railways, and urban rail transit. Foresight The Institute of Industry expects that domestic electricity demand will reach 9.5 trillion watt-hours in 2025, State Grid plans to invest 2.2 trillion yuan during the 14th Five-Year Plan period, and South Grid plans to invest 670 billion yuan; the scale of China's power operation, maintenance and management industry will reach 114.2 billion yuan in 2025; the domestic subway operating mileage will reach 12,947 kilometers in 2026, corresponding to a CAGR of 11.7% from 2021 to 2026. According to the "Medium- and Long-term Railway Plan", the domestic light rail operating mileage will reach 306 kilometers in 2026; the domestic railway operating mileage will reach 300,000 kilometers in 2030, and the high-speed rail operating mileage will reach 45,000 kilometers.

Segmented Products: MarketsandMarkets It is estimated that the global digital multimeter market size will reach US$1.05 billion in 2024, corresponding to CAGR 4.3% from 2020 to 2024. Forward-looking industry research predicts that the market size of China's smart marking industry will reach 40 billion in 2030, corresponding to a CAGR of 9.9% from 2021 to 2030; Fortune Business Insights and Coherent Market Insights respectively expect the global power tool market size to reach 33.05 billion in 2028, and the global hand tool market will reach 21.93 billion in 2027. ReportLinker and Research and Markets respectively estimate that the scale of China's manual tools and accessories industry will reach US$3.1 billion in 2027, and the total scale of China's power tools and hand tools markets will reach US$12.25 billion in 2028. Downstream industries and products have good growth potential.

"Produce infrastructure investment moderately and ahead of schedule", and the industry's incremental growth is expected to be released ahead of schedule. Based on the outline of the 14th Five-Year Plan, improving the modernization level of industrial chain and supply chain and coordinating infrastructure construction have been clearly written into the forefront. With the development of moderately advanced infrastructure investment, it is expected that MROs that focus on providing services to infrastructure construction will benefit from this round of dividends.

Factory Automation (FA) Parts Industry Focuses on Service Manufacturing

Market Size: Data Bridge estimates that the global FA market will reach US$442.49 billion in 2027. Industrial Control Network expects that the market size of the domestic automation industry will reach 253.2 billion yuan in 2023. According to research on industry leader Yiheda and related experts, the company estimates that non-core parts currently account for about 40% of the automation equipment. The current market size of the domestic FA parts industry exceeds 200 billion yuan, and the industry has continuous growth potential. Competitive landscape: Domestic one-stop suppliers of FA parts started late, the domestic FA parts industry is currently moderately concentrated, and the CR2 market share is less than 5%. Foreign-invested brands rely on traditional industries with a high proportion of foreign capital, such as the automobile industry, to explore the market in the domestic market, and domestic brands use domestic substitution and emerging industries with rapid development in China, such as photovoltaic lithium batteries, as breakthroughs. Trend: Given the high short-term prosperity of the industry's downstream photovoltaics, lithium batteries, semiconductors, medical and other industries, the short-term situation of the domestic FA parts industry is still good. In the long run, there is a precedent for the transformation of FA parts one-stop suppliers to MRO suppliers, and such companies are still in good growth for the long term.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

E-commerce in industrial products brings new opportunities in the industry

E-commerce in MRO and FA companies. Intensive procurement can provide unified procurement and unified after-sales service, greatly simplifying the procurement process and saving a lot of manpower, material resources and time costs. E-commerce can further break regional barriers and accelerate information circulation. According to iResearch Consulting, in 2020, the size of the B2B e-commerce market in China's industrial products was about 470 billion yuan, with an online penetration rate of 4.5%. It is expected that the annual compound growth rate of the B2B e-commerce market in the next five years will be 30%. In 2025, the size of the B2B e-commerce market in China will reach about 1.75 trillion yuan. It is worth noting that the valuation model of general industrial e-commerce platforms such as JD.com Products Shopping and companies that provide professional solutions for specialized industries such as Xianheng International need to be distinguished.The capital-driven utility of general MRO industrial e-commerce platforms is more obvious, the e-commerce dividend is also more obvious, and the e-commerce dividend effect of professional MRO enterprises is relatively weak. The To Engineers model of FA parts companies are directly affected by the e-commerce dividends between general and professional MRO companies. Therefore, in the short term, e-commerce has played a great role in promoting the digital transformation of enterprises, which is conducive to the rapid growth of the company. General MRO enterprises have the most profits of e-commerce, followed by FA parts companies, and once again professional MRO enterprises.

Home Robots: Sweeping Robots continue the technological dividend period. The household robot categories have ranged from 1 to N

Since 2022, leading companies in sweeping robots have paid more attention to product cost-effectiveness while they are iterating their technology. Review the development history of the sweeping robot industry. In the period of technological iteration, the penetration rate of sweeping robots has accelerated. The previous two rounds of technical iteration period were the "random + sweeping" period around 2002, and the "planning + sweeping" period around 2016. Starting from 2020, the industry has entered the third round of technological iteration, representing technology as "obstacle avoidance + sweeping and dragging + base station". Since 2022, this round of technological iteration trend of sweeping robots has been continued. Ecovacs launched two sweeping robots in the T10 series this year. While retaining the core functions of the X1 series, the product price has dropped by about 15%, significantly improving the cost-effectiveness. Shitou Technology launched the G10S series this year, which has upgraded functions such as independent obstacle avoidance and all-around base stations based on the G10, and at the same time, the pricing is more attractive. Judging from the product layout of the two top companies this year, technology iteration and cost-effective improvement are simultaneously promoted.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Under the catalysis of innovative points such as "obstacle avoidance + sweeping and mopping + base station", the domestic sweeping robot industry is still developing rapidly. In 1Q22, Ecovacs and Stone Technology's domestic sweeping robot businesses increased by 50+% and 100+% year-on-year respectively. Kovos' domestic floor scrubber business increased by 100+% year-on-year in 1Q22. After April, both companies were affected to a certain extent due to the impact of the local epidemic. At present, with the improvement of the epidemic situation and the "Video Conference on Stabilizing the Economic Market" pointed out that it has promoted the continuous recovery of residents' consumption, the macro factors that suppressed the ground cleaning electrical industry in the early stage have been eliminated. Judging from the situation of 618, the floor cleaning electrical industry has begun to fully recover. The floor cleaning appliance industry this year is similar to that in 2020. 1H20 Due to the impact of the epidemic, the industry performed sluggishly. However, due to the fact that consumers pay more attention to home hygiene after the epidemic and the suppressed demand during the epidemic has been released, the industry has experienced a high prosperity in 2H20.

Enters 2022, Ecovacs and Stone Technology have rich product matrix, and the domestic two strongest pattern is re-established. Before 1H21, there were only a few products such as Yunjing J1 and Ecovac N9+ that had mop self-cleaning function. After entering 2H21, many companies have launched sweeping robots with mop self-cleaning function and have made many innovations in the functions of base stations, and the industry has entered a stage of blooming flowers. Entering 2022, Ecovacs has formed a product matrix of X1 Omni, X1 Turbo, T10 Omni, and T10 Turbo in the high-end market of over 3,500 yuan. At the same time, Ecovacs also launched the Yeedi brand sweeping robot, focusing on cost-effective products below 3,000 yuan. Stone Technology has launched a variety of products such as G10S Pro, G10S, G10, and G10 for over 3,500 yuan. At the same time, Stone Technology has also launched the T8 series of sweeping robots that focus on cost-effectiveness. So far, both leading companies have completed the layout of base station sweeping robots for each price range of 2,000-6,000 yuan. In addition, the two companies have also successfully launched high-end products to overseas markets this year. The X1 Omni from Ecovacs is priced at US$1,550 overseas and the S7 MaxV Ultra from Stone Technology is priced at US$1,399 overseas, both of which are currently the highest-end products on the global market. Since 2022, in the competition for self-cleaning sweeping robots, Ecovacs and Stone Technology have been faster in iteration and upgrading, and their current product strength has surpassed the original leader in cleaning products. We expect the domestic ground cleaning appliance industry to return to the two strongest patterns.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

The market potential of the new generation of mowing robots is worth looking forward to.Currently, the number of private lawns worldwide is about 250 million, and according to our estimates, the penetration rate of global mowing robots is less than 5%. According to Markets and Markets and Data Bridge, the global mowing robot market is currently about 1 million units per year. Traditional mowing robots require manual wiring on the lawn boundary before use. Not only is the preparation work cumbersome before use, but the cost is also high. The new generation of mowing robots adopts RTK and machine vision technology to achieve boundary-free and planned mowing, greatly improving the product usage experience. The new generation of lawn mowers is expected to replicate the success of lidar sweeping robots. In September 2021, Nine Company released the mowing robot product Segway Navimow, which took the lead in market competition. At the same time, many leading service robot companies and startups have strategic plans to enter the grass mowing robots.

Inspection robot: From inspection to operation, from power to rail transit

From inspection to operation, the functions of the power robot continue to innovate. Before 2020, power robots will mainly complete inspections of substations and distribution stations. According to our calculations, every 1 percentage point increase in the penetration rate of inspection robots will drive the market size of inspection robots of about 1.5 billion yuan. After 2020, driven by leading companies such as Yijiahe and Shenhao Technology, the functions of power robots began to develop rapidly. In 2020, Yijiahe's live-operated operation robots entered the batch application stage. We estimate that every 1 percentage point increase in the penetration rate of live-operated operation robots will bring about a market size of about 150 million yuan. In 2021, Yijiahe and Shenhao Technology launched integrated indoor inspection and operation robots. In 2021, operating robots has become the main source of robot revenue for the two leading companies. In addition to operating robots, Yijiahe has also launched fire fighting and fire extinguishing robots, further enriching the functions of power robots. We believe that in the context of State Grid and South Grid promoting smart grid investment, Yijiahe and Shenhao Technology continue to launch new functions of power robots, and the industry cycle and product cycle are expected to resonate.

From power to rail transit, the long-term growth space for leading enterprises has been opened. In addition to robots used in the power field, Yijiahe and Shenhao Technology are all planning robot products used in other fields. In 2021, Shen Hao launched rail transit line inspection robots and under-vehicle inspection robots to solve problems such as heavy tasks, difficulty in detection, and missed inspections encountered in traditional manual inspection in the field of rail transit. According to our calculations, the current market space for rail transit robots is about 20 billion yuan. In February 2022, Shen Hao harvested the first order of the rail transit robot, and there were also multiple potential orders being promoted in an orderly manner. We expect small batches of orders for rail transit robots to be implemented this year, and orders will be gradually implemented starting next year.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Industrial Robot: The trend of replacing people in manufacturing machines continues, the rise of domestic brands

The trend of replacing people in manufacturing machines continues, and the industry is expected to usher in a turning point in the next year. Starting from 2H21, the year-on-year growth rate of domestic industrial robot industry production has begun to slow down. 1H22. Due to the impact of local epidemics, the industry's growth rate has not improved yet. The current industry growth slowdown has been going on for 4 quarters. Referring to the previous cycle of the industrial robot industry, the slowdown in growth lasted for about 6 quarters. We believe that the epidemic has provided market education for domestic manufacturing enterprises, which has stimulated the demand for manufacturing enterprises to replace machines. The domestic industrial robot density reached 246 units per 10,000 in 2020, exceeding the global average, but there is still a gap with manufacturing powerhouses such as the United States, Japan, Germany and South Korea. In January 2022, the Ministry of Industry and Information Technology and 15 other departments issued the "14th Five-Year Plan for the Development of Robot Industry". The goals of the "14th Five-Year Plan" include doubling the density of robots in the manufacturing industry and the average annual growth rate of the robot industry's operating income exceeds 20%. We are optimistic about the development prospects of the industrial robot industry during the 14th Five-Year Plan period.

Construction machinery: Domestic decline narrows + exports are increasing. It is expected that the monthly year-on-year data of excavators will meet the turning point in the second half of the year

The monthly sales data of excavators have continued to decline in the past year, and the epidemic has worsened since 2022.Since April 2021, due to the high base and the decline in demand caused by real estate control, the monthly sales growth rate of construction machinery with excavators as the core has continued to decline. In 2021, the excavator industry's cumulative sales volume was 343,000 units, a year-on-year increase of 5%, but since May, the monthly sales data of excavators have continued to turn negative. Since 2022, due to the impact of local epidemics, construction has been delayed in various places, and the decline in excavators has intensified. In the first quarter of 2022, my country's excavator sales were 102,000 units, a year-on-year decrease of 41%, but since May, the year-on-year decline in excavator sales has narrowed.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

excavator exports have increased significantly, and the global competitiveness of China's construction machinery products has been significantly improved. Compared with the sluggish domestic engineering machinery demand, the overseas epidemic gradually recovered in 2021, and the demand for engineering machinery is booming. At the same time, the performance of excavator products of Chinese enterprises has increased significantly in recent years and the global competitiveness has been rapidly improved. Since 2018, China's excavator export sales have maintained rapid growth. In 2021, my country's excavator exports have reached 68,000 units, an increase of nearly 100% year-on-year. Since May 2021, the proportion of excavator exports in domestic monthly sales has continued to rise. By May 2022, the proportion of excavator exports in a single month has reached 41% of the total monthly sales. The high increase in excavator exports effectively hedges the decline of the domestic industry.

The year-on-year decline in domestic sales narrowed + exports continued to increase, and the monthly year-on-year data of excavators is expected to turn positive in the second half of this year. Since Q2 this year, with the continuous introduction of national policies to stabilize growth, infrastructure investment is expected to continue to develop in the second half of the year. At the same time, relevant real estate policies have been continuously relaxed. It is expected that the decline in the area of ​​new real estate construction in the second half of the year is expected to narrow, and domestic demand for construction machinery will continue to improve in the second half of the year. Just considering the domestic demand cycle of construction machinery, it is expected that the trend of monthly sales of excavators will turn positive in 2023. However, due to the significant increase in export proportion since 2021, the continued high growth in exports has increased the monthly sales of excavators, and the year-on-year data is expected to advance to the second half of this year. Assuming that excavator exports will grow by 40% in 2022 and the annual utilization hours will decline by 4%. According to the sensitivity analysis and forecast of our excavator earthwork forecast model, we believe that the growth rate of infrastructure investment in 2022 will increase by 7% year-on-year and the area of ​​newly started real estate will decline by 12%. Under this circumstance, it is expected that the annual excavator sales will be about 304,000 units, a year-on-year decrease of about 11%. Considering that excavator sales have declined by 39% from January to May 2022, excavator sales are expected to show a flip trend in the second half of the year, monthly sales are expected to turn positive, and the industry is gradually turning to a prosperous trend. Construction machinery OEMs first promote Sany Heavy Industry, which has the highest excavator market share and high export growth, and Hengli Hydraulic, which has a high excavator business share, an increase in pump and valve penetration rate, and a long-term growth logic for industrial hydraulic parts.

Aerial operation platform: The domestic market is still in youth, and demand for overseas markets remains unabated

The average wage of employed people in my country continues to grow, and the number of urban employment in the construction and manufacturing industries has declined significantly in recent years. The reduction in employment in the construction and manufacturing industries will lead to a further increase in employment costs. The efficiency and cost advantages of aerial working platforms will be more prominent. According to Maximize Market Research, the CAGR of the North American market from 2022 to 2027 will be about 12%, the CAGR of the European market will be about 22%, and the overseas market will be in an incremental prosperity. Guanyan report expects that the number of high-altitude operation platforms in China will reach 805,000 units in 2025, corresponding to 2021-2025 CAGR 20.3%. According to data from IPAF and Huajing Industrial Research Institute, the number of high-altitude operating platforms used for leasing in China is only about 20% in North America and 40% in Europe, and the per capita ownership of high-altitude operating platforms in China is only about 10% in North America and 20% in Europe. The total demand potential of China's market is huge. In addition, the proportion of differentiated operating platforms in my country's market is much lower than that of mature markets. At present, the proportion of scissors, arm trucks, spider trucks, and telescopic fork loading combinations in mature markets is about 7:3:1:1. The proportion of scissors, arm trucks, spider trucks, and telescopic fork loading trucks in my country is about 9:1:0:0. The demand for differentiated high-altitude operating platforms is expected to usher in growth.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

domestic forces are rapidly rising with market dividends. According to data from the China Economic Industry Research Institute, the global market share of the top five manufacturers in 2020 was about 50%, while Dingli, XCMG and Lingong led the global market share of China's brands was about 14%.Access international list of "Top 20 Global Aerial Operation Platform Manufacturing Enterprises in 2021", Dingli, XCMG, Lingong and China Unicom ranked 3, 5, 7 and 9 respectively. The US "double anti-double anti-double" investigation has a negative impact on domestic manufacturers going overseas in the United States, but the "double anti-double anti-double anti-double" product categories are limited, and the tax rate must be borne by US importers. Domestic and European demand is still strong, and Chinese companies can still rely on non-US markets and non-"double-anti-anti-double-anti-"restricted products to continue to expand their markets. In the short term, there is a possibility of a "price war" in the domestic low-end product market, and the proportion of overseas brands in the high-end market is still relatively high. Product differentiation and reliability have become the key to whether they can win.

Oil service equipment: domestic and overseas prosperity resonance, new fracturing transformation and upgrading is in progress

domestic and foreign prosperity resonance. 1. Domestic: According to the 2021 annual report of Sinopec and China Petroleum Corporation, Sinopec will spend 198 billion yuan (+18% year-on-year), of which the capital expenditure of the exploration and development sector is 81.5 billion yuan (+19.7% year-on-year), and in 2022, CNPC will plan capital expenditure of the exploration and production sector is 181.2 billion yuan (+1.6% year-on-year). CNPC will promote the construction of shale oil demonstration zones such as Qingcheng, Jimusar, and Gulong with high standards, and will fully organize the stable production and production of shale gas in southern Sichuan. In 2021, the domestic shale gas and shale oil production will be 23 billion cubic meters and 2.4 million tons, accounting for 11.2% and 1.2% of the natural gas and crude oil production that year, respectively, and there is still broad room for improvement. It is expected that unconventional oil and gas will play a more prominent role in increasing reserves and production in the future. 2. Overseas: According to Primary Vision, the number of active fracturing fleets in North America reached 284 (data on June 17, 2022), compared with 235 in the same period last year. According to Baker Hughes, the number of active rigs in North America continued to climb to 740, basically returning to the level before the oil price plummeted in early March 2020. Spears & Associates predicts that the global oil and gas fracturing market is expected to reach US$17.9 billion in 2022 (the market size in 2021 is US$14.5 billion, YoY+23.4%), and the recovery momentum continues.

downstream applications of new fracturing continue to increase in volume. In the domestic market, according to China Petroleum Tendering Network, CNPC has officially tendered and purchased electric drive fracturing equipment since 2021. In September 2021, CNPC released a collaborative procurement project for electric drive and fracturing equipment, bidding for 12 sets of 5000 electric drive and fracturing pry (used for Weiyuan, Sichuan, Great Wall Drilling) and 4 sets of 7000 electric drive and fracturing pry (used for Karamay, Xinjiang, western drilling). According to China Petroleum Network, the 7000 high-power fracturing pier works well in the western region. One can replace 3 conventional 2500 oil-drive fracturing trucks. The well site area can be reduced by more than 30%, the electric drive energy consumption is reduced by more than 20% compared to oil-drive, and the overall noise is reduced by more than 22%.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Digital printing equipment: The trend of industrial transformation is clear, large-scale production promotes cost reduction and efficiency

Domestic digital transfer printing is relatively mature, and digital direct injection is on the eve of the explosion. Digital transfer printing technology is relatively mature, with short process flow, little investment and low site requirements, making it a choice for many companies to purchase. The digital direct injection printing technology has a high content, long process flow, high requirements for supporting facilities, and higher unit price of equipment. As the cost continues to decline in the future, it will bring higher cost performance, and it is expected to replicate the path of rapid increase in the penetration rate of transfer equipment.

Honghua Digital Technology, as the leader, continues to expand production, is expected to strengthen the scale effect, integrate new markets and strengthen comprehensive competitiveness. 1. The proposed fundraising will not exceed 1 billion yuan: On April 12, Honghua Digital Technology issued a plan for a private placement, intending to raise no more than 1 billion yuan, and will be used for an annual production of 3,520 sets of industrial digital printing equipment intelligent production line projects (the total investment is 886 million yuan, and the planned investment is 700 million yuan), and the remaining 300 million yuan is planned to supplement working capital. The intelligent production line project will introduce domestic leading vertical machining centers, CNC welding systems, integrated plastic spraying equipment and assembly automation assembly lines, etc., and will be equipped with automatic testing equipment. 2. Vertical extension: Upstream, Honghua Digital Technology will have the ability to produce 5,000 tons of digital printing ink annually through its IPO fundraising project. In addition, the company also announced that it plans to expand its own ink production capacity by acquiring 67% of the equity of Tianjin Jingli. Jingli achieved revenue of RMB 72 million and net profit of RMB 15 million in 2021. Downstream, the company has built a flexible fast-reverse demonstration platform through Huzhou joint venture.3. Horizontal expansion: In 2021, digital printing will have a market share of less than 1% in corrugated cardboard, and its domestic penetration rate in the field of labels and book printing is less than 5%. The rapid development of e-commerce will effectively promote the development trend of multiple varieties and small batches in the field of packaging and printing. In the fields of book packaging and printing, decoration and building materials in pan-industry, the company is expected to export core technical capabilities and have broad growth prospects. (Report source: Future Think Tank)

Firefighting Electronics: The Matthew effect continues, and the growth potential of the pan-industrial track is strong

Industry clearance and transformation and upgrading are in progress, Qingbird actively expands production capacity and takes advantage of the trend. According to the investor relations activity record list (March 31, 2022), there were more than 400 fire alarm companies nationwide in 2018. With the advancement of industry standards, the market has concentrated in the top. Currently, there are about 150 companies in the market, but from the civilian side, the total market volume is about 30 billion, with an average volume of only 200 million. In the future, the trend of clearing out the industry's brands and concentrating the head will continue. Qingniao Firefighting is expected to gradually form four major production capacity bases with the support of endogenous development, external mergers and acquisitions and private placement funds with the Yangtze River Delta Base (Anhui Ma'anshan), Beijing-Tianjin-Hebei Base (Hebei Zhuolu), Southwest Base (Sichuan Mianyang), and Pearl River Delta Base (Guangdong Zhongshan) as the core, and leverage its comprehensive advantages in R&D, brand, channels, funds, etc. to accelerate the clearing of the industry.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

company has made multiple dimensions and made efforts to embark on a new journey in the pan-industry. With the rapid growth of business volume, the company introduced industry veterans such as former Nanfei CEO Qiu Zhiheng and Tyco Sales Director Hu Xiaohui to lay a solid talent foundation for subsequent expansion. In 2021, the company's industrial fire alarm product revenue was approximately RMB 36 million (YoY+225.7%). In 2022, the company's industrial scenario will further focus on the four major areas of steel and petrochemical, high-end manufacturing, subway rail transit and power energy storage, and continue to make efforts. Among them, in the field of energy storage, the company's products include front-end detection and back-end fire extinguishing. The company has a series of detector products (linear cable type, small smoke sensor, aspirated type, etc.) for different applicable scenarios (cabin level, cluster level, pack level). According to the company's announcement of investor relations activity record (March 31, 2022), traditional energy storage fire protection projects currently account for about 3% of the energy storage cost, ranging from 20,000 to 40,000 yuan per megawatt. The company expects that the proportion may reach 5% to 7% in the future.

Power equipment and new energy: Looking for prosperity trends and seeking technological changes

Photovoltaics: Pay attention to the two main lines of supply and demand mismatch and technology upgrade

Installation demand slightly exceeded expectations, and the ground markets in the United States and domestic in the second half of the year may be recovering. Domestic: distributed markets are booming, ground power stations are expected to accelerate, and the annual installed capacity may reach 80GW. According to statistics from the National Energy Administration, the domestic photovoltaic installed capacity in January-April reached 16.88GW, an increase of 138.4% year-on-year, of which distributed accounted for nearly 70%. As the prices of main and auxiliary materials continue to rise, domestic distributed photovoltaics have strong growth momentum due to relatively low cost and high returns. The ground power plant market is subject to the pressure of short-term yield of the project, and growth has still slowed down phasedly. However, as the ground power plant market enters the peak season for construction in the second half of the year, some central enterprises have relatively clear pressure on the construction task within the year. At the same time, through secondary order consultations with component suppliers with quantity exchange rates, it is expected that the installed capacity of ground power plant in the second half of the year is expected to accelerate.

Global: Europe's growth exceeded expectations, the United States' installed capacity is expected to recover, and the global installed capacity is expected to reach 230GW in 2022. Europe: In the context of the rapid rise in traditional energy prices such as oil and gas, and the Russian-Ukrainian conflict, Europe has seen a significant acceleration in its demand for photovoltaics. China's export of photovoltaic modules to Europe from January to April may exceed 20GW, a year-on-year increase of 130%. We expect the EU photovoltaic installed capacity in 2022 is expected to reach 50GW. United States: The White House plans to not impose any new tariffs on solar energy imports within two years, and provide a 24-month exemption period for import tariffs on photovoltaic cell modules in four Southeast Asian countries (Thailand, Malaysia, Cambodia, and Vietnam).If this policy change is officially launched, it will cause some Chinese Southeast Asian manufacturers who were previously worried about the uncertainty of tariff traceability to accelerate the recovery of product exports to the United States, and promote the recovery of US market installation capacity, and may see certain retaliatory rush purchases and warehouse demand within two years. We expect that the installed capacity demand in the US market in 2022H2 will usher in a significant recovery. Others: Benefiting from the normalization of the epidemic and the promotion of the "dual carbon" strategy by various countries, overseas photovoltaic installed capacity continues to grow in a diversified manner.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Silicon material continues to be tight, and the price profit exceeds expectations

Silicon material prices are expected to remain strong in the third quarter. According to the company's announcements of production expansion plans, we expect that Tongwei Co., Ltd., Xinte Energy and Poly GCL will have new capacity releases at the end of the quarter in 2022Q3, but the continuous and stable production and operation of single crystal materials requires a capacity climbing period of 1-2 quarters. It is expected that the actual supply release of relevant production capacity in the third quarter will be very limited. In addition, the new forces in silicon wafers have expanded production beyond expectations, and the production capacity has climbed rapidly. Currently, profits have also increased to a relatively high level. The demand for silicon material procurement is very full. At the same time, related companies are also planning a new round of production expansion plans, which has amplified the actual demand for silicon material. From the perspective of terminal demand, photovoltaic demand and production scheduling were relatively strong in the third quarter of previous years. With the continued improvement of distributed photovoltaic demand and some ground power stations are expected to start, it is expected that demand will achieve month-on-month growth in 2022Q3. We expect silicon material prices to remain high in the third quarter, and even break through the previous high, and it is difficult to see a substantial decline.

silicon wafer expansion wave brings incremental demand for supporting consumables and slice OEM services

monocrystalline silicon wafer industry ushers in a wave of expansion. With the acceleration of large-size upgrades and the industry's technology and cost curves tend to flatten, the monocrystalline silicon wafer link has ushered in an accelerated expansion wave since 2022. It is expected that the industry's new production capacity will reach about 200GW throughout the year, and the total production capacity may be close to 600GW by the end of 2022. Among the new expansion capacity, in addition to traditional leaders such as Longi, Zhonghuan, Jinko Solar, and Jinko Ao, more than 100GW of new additions come from new silicon wafer forces such as Shangji CNC, Beijing Yuntong, Gaojing Solar Energy, and Shuangliang Energy Saving.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

silicon wafer thinning + large size trend ushers in acceleration. With the high cost of silicon materials, the progress of silicon wafer thinning has accelerated, and the cost of raw materials for every 10um thinning is correspondingly reduced by 2.5%. Since 2022, the mainstream thickness of P-type and TOPCon single-crystal silicon wafers has dropped rapidly to below 160μm and 155μm respectively. At the same time, large-size silicon wafers can also help increase production and reduce costs, dilute non-silicon costs and increase component power; Zhonghuan Co., Ltd. estimates that 210 saves 12% of BOS costs in the power station construction process 2166. According to PVinfoLink statistics, the large-sized M10 and G12 products will be increased to more than 40% in 2021, and PVinfoLink is expected to further increase to about 80% in 2022.

TOPCon battery starts its first year of industrialization, and equipment demand continues to increase

TOPCon battery has significant advantages and multiple process routes are progressing simultaneously. The advantages of TOPCon batteries are reflected in three aspects: excellent surface selective passivation capability improves battery conversion efficiency. The current industry's mass production efficiency is 24.5%-25%, and there is a higher room for improvement in future industrialization efficiency; it has the advantages of low attenuation, high double-sided rate, low temperature coefficient, etc., to improve the gain of component power generation; TOPCon is compatible with PERC production lines, equipment transformation and upgrading can achieve the purpose of cost reduction, and the silver paste brought by the ultra-fine gate process can give TOPCon a greater competitive advantage. TOPCon manufacturing has three core processes, including interface oxide growth, intrinsic polysilicon deposition and polysilicon doping. The core equipment technical routes include LPCVD, PECVD and ALD routes. LP is currently the mainstream. The latter two have performed well in recent industrial verification data, and there is room for further cost reduction and efficiency improvement.

battery cost continues to be optimized, and the premium for component bidding is clear. From the cost side, the cost of TOPCon integrated components is 0.03 yuan/W, and the cost of silicon wafers and battery links is 0.06 yuan/W higher than that of PERC. The improvement in component efficiency has brought about a decrease of 0.03 yuan/W for non-silicon costs. From the price point of view, combined with the advantages of improving conversion efficiency, low attenuation, low temperature coefficient and high double-sided rate, we estimate that the TOPCon component can bring a premium of over 0.13 yuan/W, and has strong market competitiveness.It can be seen from the bidding for domestic ground power plant projects in the first half of 2022 that the average premium of N-type TOPCon components exceeds 0.11 yuan/W, further verifying the market's recognition of N-type components. With the continuous improvement of TOPCon battery conversion efficiency, it is expected to further enhance the market competitiveness of components.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Wind power: Demand is expected to improve at an accelerated speed, and profits of parts may be at the turning point of repair

Wind fans bidding scale exceeds expectations, and bidding prices are expected to stabilize. According to statistics from Caizhao.com and other statistics, the domestic air turbine bidding volume from January to May 2022 reached about 45GW, an increase of 105% year-on-year, of which the offshore wind turbine bidding volume was about 7GW. We expect the annual fan bidding scale to reach more than 80GW, of which the offshore wind turbine bidding volume will reach about 20GW. With the trend of large-scale development and intensified industry competition, the average bidding price of fans has steadily dropped to 1,800-1,900 yuan/kW since the beginning of the year. At present, most onshore wind power projects in China can achieve IRR of more than 8%. Under the background of high yields driving demand growth, while the overall profit of the whole machine factory is under general pressure, and project owners pay more attention to fan performance and safety. It is expected that there is little room for further decline in fan prices in the future, and it is expected that the stabilization and recovery will drive profit recovery.

The second batch of large-scale base projects of Fengguang are about to be launched, and the filing system is conducive to accelerating the implementation of decentralized wind power. On May 31, 2022, the State Council issued the "Planning Policy Measures to Solidly Stabilize the Economy", proposing to accelerate the construction of large-scale wind power photovoltaic bases with focus on deserts, Gobi and desert areas, and speed up the launch of the second batch of large base projects. Under the tone of stable growth, the construction of wind power projects is expected to accelerate, and pre-applications may lead to about 50GW of installed capacity increase. At the same time, the National Development and Reform Commission and the Energy Bureau mentioned in the "Implementation Plan for Promoting the High-Quality Development of New Energy in the New Era" that promoting the adjustment of wind power projects from the approval system to the filing system will help simplify the development process of wind power projects and shorten the development cycle of wind power projects. The pace of project resource reserves, approvals, construction and grid connections is expected to accelerate. Through the "Thousand Countryside and Ten Thousand Villages Wind Control Plan", the National Energy Administration has clearly stated that the total installed capacity of decentralized wind power during the 14th Five-Year Plan period must reach 50GW. Due to factors such as long approval cycle and complex procedures, as of the end of 2020, the cumulative installed capacity of decentralized wind power in China was less than 2GW, accounting for less than 1% of the total installed capacity of wind power. We expect that the wind power filing system is expected to be implemented first in the field of decentralized power, which may accelerate the growth of decentralized wind power installed capacity and is expected to be gradually implemented in some centralized projects.

is expected to reach more than 50GW in 2022, corresponding to the CAGR of about 16% in the next four years. From January to May 2022, the wind power grid-connected capacity was about 10.74GW, an increase of about 37.9% year-on-year. Due to the delay in the time when the existing projects are connected to the grid, the growth rate may be distorted due to the delay of the New Year factors. However, due to the local epidemic, delayed project approval progress, and model upgrades, the delivery scale of newly started projects and wind power equipment was lower than expected, and the new installed capacity in April and May fell by 19.8%/36.8% month-on-month respectively. As external adverse factors are gradually eliminated, preparations and plans are switched in place, and the yield of wind power projects has increased significantly, it is expected that wind power installed capacity will be significantly improved in the second half of the year, and equipment companies may usher in a significant rebound in production and shipments. It is expected that the domestic wind power installed capacity will reach more than 50GW in 2022. During the 14th Five-Year Plan period, domestic wind power projects have increased significantly, and installed capacity demand is expected to usher in accelerated development. It is expected that the average annual installed capacity will further increase to around 65GW, and the new installed capacity may exceed 80GW by 2025, corresponding to the CAGR of about 16% from 2022 to 2025.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

wind power equipment raw material cost declines. The cost of raw materials in wind power equipment manufacturing basically ranges from about 50% to 90%, and the raw materials are mostly bulk commodities such as pig iron and steel. Most of the profits of parts companies are sensitive to raw material prices. Since May, the prices of products such as pig iron, scrap steel, medium and thick plates, commonly used raw materials for wind power components have begun to fall, and have accelerated downward in June. As of June 24, the decline from the high of early May has generally ranged from 5%-15%. The cost pressure on wind power components is expected to gradually ease.

Pay attention to the "iron-smashing" parts companies in the second half of the year benefiting from the profit restoration elasticity of raw materials price reduction.We estimate that the price sensitivity coefficients of the core products of representative companies in the main links such as castings, spindles, towers, bearings, etc. are -4.04/-1.08/-4.77/-0.97 respectively, that is, every 10% decrease in the price of major raw materials, the corresponding gross profit is expected to increase by 40.4%/10.8%/47.7%/9.7% respectively. Therefore, from the perspective of profit sensitivity to raw material fluctuation, theoretically, tower > castings > spindles > bearings. However, considering that the tower is mainly a raw material cost bonus and a pricing model with project bidding, while other parts are mostly a pricing model for annual order negotiation, the actual profit elasticity of the tower link may be less than the calculation results. In summary, considering that wind power component companies have normal raw material inventory for about one month, and inventory turnover accelerates during the stage of raw material price reduction, it is expected that the gross profit margin in Q3 is expected to continue to improve marginally.

Energy storage industry: policy and economy drive, the energy storage industry will usher in an explosion

Policy drives the demand for energy storage allocation, and the domestic energy storage industry will usher in an explosion. From a domestic perspective, in the past two years, the development of the energy storage industry has been supported by policy measures such as improving the electricity price mechanism, prioritizing grid connection and optimizing cost reduction. Local energy storage policies have further clarified the energy storage specifications, allocation and market requirements, and have continuously explored new energy storage development models. In the medium and long term, in accordance with the requirements of the policy documents and the development of domestic new energy installed capacity, we expect that the domestic energy storage capacity will reach 80GWh by 2025. The main increase comes from the mandatory allocation ratio of wind and light power generation side policies. The proportion of energy storage allocation on the industrial and commercial and grid side is relatively low, but the overall economic performance is acceptable. We expect that with the gradual launch of the Fengguang Base project, domestic power generation side energy storage configuration projects will be implemented one after another in the second half of 2022, but short-term economics are also the main issue affecting the installed power.

wind and light installation capacity is accelerating, and the overseas energy storage industry is driven by economy. From an overseas perspective, after the Russian-Ukrainian War, traditional energy led to an increase in electricity costs, electricity prices in developed countries such as Europe and the United States continued to rise, and the economic efficiency of new energy power generation and energy storage allocation was further improved. As the importance of energy storage in new power systems gradually increases, domestic and foreign policies are increasing and system costs are gradually declining, we expect overseas energy storage installed capacity in 2025 is expected to be close to 200GWh. Among them, Europe and the United States are the main incremental installed energy storage capacity market, and the European and American market structures are also significantly different. The US pre-balance sheet market occupies a major position, and the market after the table of contents is relatively low. The high proportion of household photovoltaic installed capacity in Europe leads to more than half of the energy storage allocation ratio. Especially in the second half of 2022, it is expected that the installed capacity of energy storage in Europe and the United States will show an explosive growth trend as the photovoltaic installation capacity increases rapidly.

New power system: The expectation of strong infrastructure implementation has increased, and intelligence and regionalization resonance

After experiencing the strong policy expectations on the left from the third and fourth quarters of 2021, the construction of new power system and related industrial targets have entered the switching stage of "the left expectation accelerates the implementation of the right". Driven by the "dual carbon" transformation and electricity substitution, the main difficulties in building new power systems are concentrated in the hedging of the supply-side impact caused by the incorporation of large proportion of new wind and solar energy into the system, and the fitting of the electricity consumption of the whole society on the demand side with the continuous growth and expansion of fluctuations. On this basis, we propose a starting point for the integrated solution of "source, grid, load and storage" to improve the system friendliness. The key conclusions include: 1. After a large-scale growth cycle of electricity consumption, it is easy to catalyze the power supply and grid investment construction cycle (and in this round, considering the increase in instability of power supply, the coordination of the landing rhythm of power supply and grid investment is expected to increase).

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

2. The total investment in the power grid is steadily improving, and the proportion of investment structure has increased rapidly. Focusing on the three major directions of the main grid of the power grid - large cross-regional transmission channels (ultra-high voltage projects), pumped storage, and cross-regional scheduling systems; the three major directions of the regional power grid - capacity expansion, intelligent and safe and stable operation, and digitalization.(Report source: Future Think Tank)

Industrial Control and Low Voltage Electrical Appliances: After the midstream sentiment in manufacturing is repaired, pay attention to the breakthrough capability of the industry's "α"

. With the improvement of industrial automation demand in the first quarter, the large-scale epidemic prevention and control in the second quarter is expected to have a certain short-term impact on the release of industry demand. Considering the impact of the same period in 2021, it is expected that the year-on-year accelerated release of demand in the post-epidemic stage will be concentrated in the fourth quarter of 2022. In this process, downstream companies such as new energy, lithium batteries, power grids, and large-scale infrastructure projects are expected to become the main growth contribution directions, further reflecting the structured prosperity of downstream demand. Therefore, high-quality domestic enterprises with strong market share and influence and high degree of compatibility with downstream revenue structure are expected to surpass industry growth in the second half of the year.

Military Industry: Select a long track, layout long repair

investment logic switch, "fundamental" drive is the dominant

In the past few years, the long-term impression of the military industry has usually given the market "speculation on themes and concepts". Compared with other industries, the military industry is still a "young" industry. Its core assets were listed after 2018, and the information is not very public. The impact of the pain of the initial military reform in the 13th Five-Year Plan has led to the guidance of the market by themes such as asset securitization and geopolitics, which are far more important than fundamentals. After the logic of "reform of institutes and asset injection" was falsified in 2015, the industry fell into a five-year adjustment, and the market's impression of it has been stuck in "speculating on themes and concepts".

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Military industry investment is returning to normal industries, and tends to be "performance is king". As the industry trends gradually become clearer in the past two years, the growth and long-term development of the military industry are continuing to be verified, and its main investment line has begun to turn to performance-driven and growth-driven under the expectations of the development of the "14th Five-Year Plan". From the perspective of the upstream and downstream relationship of the military industry chain, the more it tends to be downstream, the higher the status of the industry chain of the enterprise, the stronger the bargaining power, and it is usually scarce or even monopoly; while the more it tends to be upstream, the weaker the bargaining power and the more intense the competitive landscape, but it is usually more market-oriented. But from an investment perspective, after the sector surged in July 2020, the stock price trend of downstream OEMs with the highest position in the industrial chain was far less than that of upstream stocks, and even their market value and valuation showed a significant "inversion". This phenomenon shows that the market's investment philosophy for military industry is shifting from "event-driven" to "subsidized by fundamentals."

's performance continues to be realized, and growth under the "strong plan" highlights the planned attributes of

military industry, and the overall growth is limited by external interference. The military industry has "strong planning", and the pace of order issuance obeys national defense strategy and equipment planning, which is less affected by macroeconomic fluctuations and less affected by local epidemics in the short term. According to the "2022 Central Fiscal Budget", my country's defense expenditure budget in 2022 was 1450.45 billion yuan, a year-on-year increase of 7.1%, and the growth rate increased by 0.3pct year-on-year, maintaining steady growth. Moreover, compared with other military powers' military expenditure in GDP in the past three years, the United States maintained about 3.5% and India maintained about 2.5%. In addition, according to Xinhuanet News, Germany announced at the end of February that it would significantly increase its defense expenditure and increase its proportion of defense expenditure to more than 2% in the future.

Core military-industrial enterprises have grown by 20%+ for four consecutive years, and their performance in 22Q1 increased by 32% year-on-year. We have counted 52 core military-industrial enterprises, with a total operating income of 288.694 billion yuan in 2021, a year-on-year increase of 18.08%; net profit attributable to shareholders was 29.071 billion yuan, a year-on-year increase of 40.17%, the overall growth rate hit a new high in the past five years, and has reached more than 20% for four consecutive years; core military-industrial enterprises achieved net profit attributable to shareholders of 6.841 billion yuan, a year-on-year increase of 29.58%, ranking 6th in the CITIC first-level industry index. The core military-industrial enterprises continue to release their performance, indicating that the industry's prosperity remains at a high level.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

pre-payment and related transactions have increased significantly, and the long-term development of the industry has been clear. According to the analysis of the first quarter report of the military industry sector in 2022, the contract liabilities of the industrial chain increased by 139.60% year-on-year, among which the contract liabilities of the five major sectors, aviation parts (+455.58%), mainframe factories (+147.35%), new materials (+119.95%), sub-systems (+93.69%) and military electronics (+78.53%), all increased significantly.At the same time, the significant increase in related transactions of downstream OEMs may indicate that the company's orders are relatively full and its business maintains a high level of prosperity. AVIC Shenfei announced that it expects daily related transactions to be 59.978 billion yuan in 2022, of which 26.346 billion yuan were purchased for goods and received services, an increase of 42.00% from the actual amount in 2021. The significant increase in pre-receipts from core OEMs and branch systems companies has ensured the continued growth of the military industry sector in the next few years, and its valuation system has the basis for switching to the forward.

"Three-year Reform of State-owned Enterprises" is concluded at the end of the period, and sector sentiment is expected to boost

Military Industry Group has always been a core participant in the military industry and has the vast majority of core assets. Therefore, "mixing reform of state-owned enterprises" has an "immediate impact" on improving the asset quality and overall profitability of the military industry sector. 2022 is the year when the "Three-Year Action for State-owned Enterprise Reform" is concluded. Peng Huagang, member of the Party Committee and Secretary-General of the State-owned Assets Supervision and Administration Commission of the State Council, said, "Ensure that more than 70% of the three-year reform tasks are completed by the end of 2021 and basically completed before the "July 1st" in 2022." At present, the "mixed reform" of the military industry group is accelerating its advancement in many aspects including asset securitization, employee shareholding and equity incentives, the introduction of industrial funds or private strategic investors.

There is huge room for asset securitization, and the military industry group has accelerated significantly

Military industry group's asset securitization rate still has room for obvious improvement. As of the end of 2021, the asset-to-security ratio of most military-industrial groups was still relatively low. Based on the net asset level, except for Electronic Information Group (77%), China Shipbuilding Group (65%), Aviation Industry Group (58%) and Ordnance Equipment Group (45%), other military-industry groups are still less than one-third; based on the total profit level, except Electronic Information Group (242%) and Aviation Industry Group (100%), the other military-industry groups also have a lot of room for improvement. (Note: Aerospace Science and Technology Corporation and Aerospace Engine Group did not announce the 2021 annual report, so it is vacant)

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Aviation Industry and Electric Technology Group's capital operation has accelerated. In 2021, the asset securitization operation of the military industry has become active, and the capital operation of the electronic technology group has accelerated, such as the listing of Zhongci Electronics. At the same time, the Aviation Industry Group is the first to operate the military industry group. Since 2021, it has promoted the IPO of Chengfei drone, AVIC absorption and merger of AVIC Mechanical and Electrical, etc., and it is still expected to continue to promote the "combination punch" of capital operation to further boost sector sentiment.

Equity incentives have accelerated, stimulating the development vitality of state-owned enterprises

Central enterprises have received government policy support for the implementation of equity incentives. The "State-owned Assets Supervision and Administration Commission of the State Council (2019 Edition)" clearly states that "support central enterprises to carry out various forms of equity incentives in their affiliated enterprises that meet the conditions. The actual income level of equity incentives is not linked to the total personal salary level of employees, and is not included in the base of total salary of the unit." The "Guidelines for the Implementation of Equity Incentives by Listed Companies in Central Enterprises" clearly states that "the actual income obtained by equity incentive objects is investment income, and no longer set up regulation upper limits." The equity incentive policy shows a trend of relaxing the restrictions on total salary, and the enthusiasm of corporate employees to participate in equity incentives is expected to increase, and the equity incentives of military-industrial central enterprises and state-owned enterprises are expected to accelerate.

Equity incentives are accelerated, and state-owned enterprises have released huge potential. Under the guidance of policy, equity incentives for military-industrial enterprises have been significantly accelerated. From 2016 to the present, listed companies in the sector have promoted 84 equity incentives, of which more than half have been accounted for since 2020. The implementation of equity incentives has stimulated the development potential of state-owned enterprises. For example, the profitability of AVIC Heavy Machinery and Zhenhua Technology was significantly weaker before implementing equity incentives. Under the positive industry trend, the compound growth rate of net profit attributable to shareholders in the first three years of implementation of equity incentives was 4.32%/13.63%, while the year-on-year growth rate of performance in 2020/2021/2022Q1 reached 24.9%/159.1%/174.9% and 103.5%/146.2%/146.2% respectively.

The "new normal" of prosperity, and the layout of the long track and high prosperity field

With the increasing market disturbance factors and the risk preferences are still being repaired, the sustainability of performance growth will become the core consideration of current stock selection. We believe that the prosperity of the military industry will return to the normal growth rate of the "14th Five-Year Plan" in 2022 and enter the "new normal" of growth. It is recommended to give priority to long tracks and high prosperity directions.The best military investment direction must be that it has the characteristics of long slope track, high entry barriers, and continuous high growth. It is also best to expand into the civilian field. We roughly split different fields based on 4 characteristics, including long track = at least 5-10 years of development space, high barriers = high entry and high technical barriers, and high prosperity = high short-term high growth. Based on this, during the golden development period of the 14th Five-Year Plan industry, we recommend giving priority to the four industrial chain directions of aviation engines, military informatization, missiles, and military aircraft.

Manufacturing: Focus on resumption of work and production, inflation benefits, and high prosperity New Energy

Although most A-share manufacturing companies have rebounded significantly since the end of April, some individual stocks still have gained weaker than the market under the general rise. Currently, the valuation levels of most of the sub-sectors of the manufacturing industry are below the historical average. In terms of static valuation, as of June 10, 2022, only the static valuation of automotive parts and electrical equipment was above the 50% quarter point in the past five years (May 26, 2017-June 10, 2022). After some economic sectors experienced a correction at the beginning of the year, the current static valuation level has returned to a reasonable range, among which the static valuations of photovoltaics, wind power, batteries, and industrial automation are at the historical levels of 44.7%/41.6%/37.2%/38.7%, respectively. In addition, the three sectors including engineering machinery, home appliances, and military information technology are currently valued at the bottom of the previous round.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

new energy tracks such as photovoltaics and batteries are still expected to maintain a high prosperity in the second half of 2022. The performance growth of military industry, wind power and other sectors in the next two years is expected to be realized. It is expected that automation, engineering machinery, transportation equipment, home appliances, etc. will bottom out and rebound throughout the year. Specifically, as of June 10, 2022, according to Wind's consistent expectations, the net profit growth rate of the electrical equipment, batteries, photovoltaics and military sectors in 2022 was forecast at the highest, reaching 103.5%/79.2%/65.6%/52.4% respectively. From the revenue side, the economy of the new energy track remains high. Driven by overseas demand exceeding expectations, the revenue growth rate of the battery and photovoltaic sectors in 2022 further increased, reaching 72.7%/56.6%, respectively, up 0.8/0.4pct from Wind's consistent expected growth rate on May 20, 2020.

Industrial enterprises are also expected to continue to fall, and the pressure on raw material prices is expected to ease, and the resumption of work and production is expected to promote the accelerated release of corporate performance. In April 2022, affected by the spread of the epidemic in the Yangtze River Delta and the three eastern provinces, the inventory of industrial enterprises rebounded, and the value of manufacturing inventory in March increased by 18.0% year-on-year, up 0.9pct from March. Among them, the inventory of general equipment and special equipment has improved significantly. Although the inventory value in April was +15.2%/+16.0% year-on-year, it fell by 1.3/0.3pcts compared with March. We judge that with the continuous restoration of the supply chain and the easing of upstream raw materials pressure, the profitability of related industries is expected to further improve in the second half of the year.

Resumption of work and production continues to promote

The number of cases in the previous epidemic has gradually been cleared, and the impact on the economy has gradually emerged. In addition to Beijing, the number of cases in the early epidemic has gradually been cleared in areas mainly affected by the epidemic. Shanghai has maintained a low growth rate of more than a month. The epidemic in Beijing has continued to be within a controllable range. The epidemic prevention and control has achieved phased victory, and the resumption of work and production has continued to advance. Considering the impact of the epidemic on industry, the Wuhan epidemic has affected up to 22 provinces and regions, and the GDP of related industries accounts for 87% of the country's 31.2 trillion yuan of industrial GDP in 2019, while the previous local epidemic has affected up to 16 provinces and regions, and the GDP of related industries accounts for 67%. Currently, the number of provincial units affected by the epidemic and related industries have been close to zero, and it is expected to be all cleared by the end of the second quarter.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Transportation and logistics have been restored to most of the time, and urban traffic has recovered faster than industrial logistics. From the perspective of urban transportation, among the main lockdown cities in the first half of the year, Shenzhen and Changchun have returned to normal levels, Shanghai and Beijing have already crossed the valley bottom and have begun to recover gradually, and are expected to be normal at the end of the second quarter. From the perspective of industrial logistics, most of the country has recovered from the worst of the epidemic; by region, only Beijing and Shanghai are below normal levels, while other regions have basically recovered. Beijing Industrial Logistics has been operating at a low level since the outbreak of the epidemic. Shanghai has gradually recovered from a complete lockdown. According to this trend, it is expected to recover fully at the end of the second quarter.

power generation has continued to rebound for a month, and PMI also began to rebound last month. Judging from the average daily coal consumption of the six major power generation groups, the national power generation level has continued to rise for one month in early June, reaching the same period last year. Although power generation has risen year by year, it is rare to maintain the level of last year under the impact of the epidemic. Caixin Manufacturing PMI in May was 48.1%, and the result was an increase from the lowest value of 46.0% in April, indicating that as the resumption of work and production progressed, the manufacturing industry's prosperity bottomed out and rebounded.

In the first half of this year, the impact of the epidemic is in the main industrial zones in my country, and three of the four traditional industrial zones are affected. Based on the growth rate and benchmark growth rate of industrial added value in March and April, Jilin, Shanghai, Jiangsu and Beijing have the greatest impact. In April 2022, industrial added value was almost halved, followed by Liaoning, Anhui and Zhejiang. The above provinces and cities are mainly located in or around the Yangtze River Delta, Liaoning Central and Southern Industrial Zone and Beijing-Tianjin-Hebei Industrial Zone. The four traditional industrial zones in my country are less affected by the Pearl River Delta.

Summary: The most important midstream manufacturing industries in areas severely affected by the epidemic include other transportation equipment, automobiles, general equipment and instruments, and the main products are ships, automobiles, machine tools, excavators, motorcycles, etc. Among the major industries in the region affected by the epidemic from January to May 2022, other transportation equipment has the special characteristics of closed production, while instrument output value is small, and the most severely damaged are automobiles and general equipment. The areas that the epidemic mainly affects are the major automobile production bases in my country. The seven most serious provinces and cities have accumulated more than 60% of the national proportion, and engines account for more than 45% of the national proportion. The automobile industry has been severely damaged, and some products in general equipment have been severely affected, such as machine tools.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Overseas policies further stimulate new energy demand, and the new energy track (photovoltaic, lithium battery, automation, wind power, etc.) is expected to usher in domestic and foreign demand resonance

"dual carbon" policy is accelerated, and the transformation of clean energy is accelerated. Since 2018, the proportion of investment in renewable energy (wind power, photovoltaic, hydropower, nuclear power) in my country has been increasing. From January to April 2022, the investment in my country's power supply infrastructure construction was 117.3 billion yuan. Although the investment side was lagging behind due to the local epidemic, it still increased by 5.1% year-on-year compared with the same period in 2021, of which the investment in wind power, photovoltaics and other, hydropower and nuclear power accounted for 28.3%/44.6%/18.9%/11.8% respectively. From January to April 2022, the national installed power generation capacity was approximately 2.41 billion kilowatts, an increase of 7.9% year-on-year. Among them, the new installed capacity of photovoltaic was 3.67GW, a year-on-year increase of 110%, and the installed capacity of wind power was about 340 million kilowatts, a year-on-year increase of 17.7%; the installed capacity of solar power was about 320 million kilowatts, a year-on-year increase of 23.6%. Further, since the second quarter of this year, power and new energy equipment have been relatively prosperous overall, and traditional power generation equipment has been greatly affected, while new energy equipment production areas are mostly non-epidemic areas, which are less affected.

After the Russian-Ukrainian War, the transformation of Europe's energy structure accelerated, and the prosperity of photovoltaic and wind power exports increased. 1. Photovoltaics: According to PV InfoLink statistics, China exported 37.2GW of photovoltaic modules in 2022Q1, an increase of 112% year-on-year. Among them, exports to Europe were 16.7GW, an increase of 145% year-on-year. 2. Wind power: In 2021, European countries added 17.4GW of installed capacity in wind power, an increase of 18% year-on-year, of which 14.0/3.4GW of installed capacity were added respectively. PV InfoLink predicts that under the conservative assumption, global non-China photovoltaic module demand will be 140-150GW in 2022, and under the optimistic assumption, it is expected to exceed 160GW. Domestic, provinces and cities plan to add 200GW+ wind power during the 14th Five-Year Plan period and 320GW+ photovoltaics add 320GW+. (Report source: Future Think Tank)

Traditional energy prices are running at a high level. Under the background of high inflation, oil and gas equipment is expected to benefit from upstream CAPEX speedup

Under high oil prices, global oil and gas companies have a strong willingness to expand production, and downstream oil service companies have a certain lag effect. Geopolitics, supply and demand mismatch, combined with carbon neutrality policies and other factors have jointly pushed up this round of oil prices. As of June 10, 2022, the settlement price of Brent crude oil futures reached US$122 per barrel, an increase of 52.1% from the beginning of the year. Against the backdrop of high oil prices, oil and gas companies' performance has improved significantly, global oil and gas capital expenditure has increased, and downstream equipment companies' prosperity has rebounded rapidly.In 2022, global oil giants significantly raised their capital expenditure plans. The current capital expenditure plans of Saudi Aramco, PetroChina, Sinopec, Shell and ExxonMobil in 2022 are US$450/380/310/250/22.5 billion respectively. Against this background, the industry's prosperity is expected to further increase.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

Combination of policies for stabilizing growth continues to be implemented. The construction machinery and home appliance fields pay attention to exchange rates and marginal changes in tariffs

Infrastructure and real estate determine the "big market" of the domestic economy and are also the main direction for the policy of stabilizing growth. Since the beginning of the year, the repeated epidemic situation in some areas has led to delaying the pace of start-up and sales. The cumulative year-on-year growth rate of infrastructure investment from January to April 2022 was only 6.3%. The 11th meeting of the Central Financial and Economic Commission and the Politburo meeting held recently further confirmed that infrastructure will become the main logic for stabilizing growth this year. The real estate group of CITIC Securities Research Department expects infrastructure growth to become an important source of contribution to countercyclical adjustment of the macro economy in 2022. It is expected that under the active fiscal front, the annual infrastructure investment growth rate is expected to achieve a growth of more than 10%.

overseas starts a cycle of interest rate hikes, and it is expected that export-oriented enterprises will benefit from the depreciation of the RMB and pay attention to export opportunities in industries such as engineering machinery and home appliances. Since late April 2022, the RMB exchange rate has fallen rapidly. As of June 24, 2022, the US dollar against the RMB has fallen to around 6.70. From the perspective of driving factors, high inflation has continued to accelerate since March and the Federal Reserve has started a currency tightening cycle. The Federal Reserve meeting in March and May raised interest rates by 50BP, and the Federal Reserve's interest rate agenda meeting in June decided to raise interest rates by 75BP. The US CPI hit a new high in May. According to the overseas macro group of CITIC Securities Research Department, high oil prices and food prices, surge in summer travel demand and unabated growth rate of residential projects may lead to the year-on-year growth rate of US CPI in June still at a high of around 8.5%, and US inflation may still be in the process of top-up in the third quarter. With inflation rising beyond expectations, the Federal Reserve may continue to maintain a 50bps interest rate hike rhythm at the September interest rate meeting. There is no possibility of suspending interest rate hikes this year. The differentiation of China-US economic cycle and policy cycles will further intensify, which will support the US dollar exchange rate to remain strong this year.

China-US trade frictions may usher in a new turning point, and the cancellation of tariffs will further benefit export-oriented manufacturing. The current high inflation level in the United States further strengthens the possibility of suppressing inflation by cutting tariffs. On March 23, 2022, the Office of the U.S. Trade Representative stated that it would restore tariff exemptions on some Chinese imported goods, which involved 352 of the previous 549 pending products. On May 3, the office further announced that it would initiate a review process for the additional tariffs on China. On May 23, US President Biden said that he was considering revoking some of the additional tariffs on China. According to HS classification, the highest cumulative value of China's exports to the United States since 2019 are motors and electrical equipment, mechanical equipment, parts and furniture, etc., reaching US$3958, 3317, and 108.7 billion respectively.

As of June 12, 2022, the home appliance sector performed relatively weakly, falling 21% since the beginning of the year. CITIC Classification ranked low in 30 first-level industries, underperforming the Shanghai and Shenzhen 300 Index 6pcts. - DayDayNews

(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)

selected report source: [Future Think Tank]. Future Think Tank - Official Website

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