According to the Zhitong Finance APP, Ping An Securities released a research report stating that referring to the home appliance replacement subsidy policies in various provinces and regions for 2024, it is expected that the subsidy policies and methods will continue in 2025. Leading home furnishing companies are likely to leverage their brand advantages and management capabilities to gain a broader market share as the home furnishing subsidy policies are gradually released, continuously increasing their brand market share.

Event: To fully implement the spirit of the 20th National Congress of the Communist Party and the second and third plenary sessions of the 20th Central Committee, and to earnestly implement the deployment of the Central Economic Work Conference, on January 8, the National Development and Reform Commission and the Ministry of Finance issued a notice on the "Action Plan for Promoting Large-Scale Equipment Updates and Consumer Goods Replacement."

Main viewpoints of Ping An Securities are as follows:

Actively support the replacement of consumer goods

According to the notice issued by the National Development and Reform Commission and the Ministry of Finance on the "Action Plan for Promoting Large-Scale Equipment Updates and Consumer Goods Replacement" (hereinafter referred to as the "Notice"), it is pointed out that there is active support for the replacement of home decoration consumer goods. The subsidy for personal consumers in the process of renovating old houses, partial renovations such as kitchens and bathrooms, and home modifications for the elderly will be increased, actively promoting smart home consumption, etc. The types, standards, limits, and implementation methods of subsidies will be reasonably determined by relevant departments in conjunction with local conditions.

2024 home furnishing subsidies effectively stimulate terminal sales levels

To activate terminal consumer demand, various provinces will successively implement home furnishing replacement and subsidy plans in 2024. Specifically:

1. The categories of subsidies vary by province. The categories typically covered by subsidies include finished furniture, customized furniture (such as custom cabinets, sofas, mattresses, and tables and chairs), home decoration (bathrooms, doors and windows, etc.), and smart home products (smart door locks, smart toilets, functional sofas, etc.).

2. The subsidy amount is mainly based on proportional subsidies. Home furnishing product subsidies generally range from 15% to 20% of the actual transaction price, with individual subsidy limits usually between 2,000 to 3,000 yuan. For home decoration, it is generally 20% of the total contract price or tiered subsidies based on price segments, with specific subsidy ratio details still to be released in some provinces.

3. The requirements for subsidy participants vary by province, generally including distributors, brand operators, or home furnishing markets. This round of home furnishing replacement subsidy policies is expected to activate market consumption and drive a recovery in terminal sales.

Investment recommendations:

From the perspective of home furnishing brands, it is recommended to focus on leading companies with improved market share and stable performance, such as OPPEIN (603833.SH) and KUKA Home (603816.SH).

Risk warnings: 1) Risk of channel inventory backlog. The consumer environment still has uncertainties; if the transaction rate of goods in the current season is insufficient, it may lead to inventory backlog in terminal channels, posing certain operational risks to the company's healthy development. 2) Impact of raw material price fluctuations. If raw material prices rise sharply, and the costs of finished products cannot be smoothly passed on to downstream, it may negatively affect the profitability of listed companies