New Subsidies Conducive to China Home Appliance Sales, We Prefer Leading Manufacturers

We are positive about the incremental subsidies to the nationwide home appliance trade-in program revealed by the National Development and Reform Commission, or NDRC, and the Minister of Finance, or MOF, on July 25, 2024. The subsidies will span eight categories, including air conditioners, fridges, and washing machines. Each consumer can enjoy a subsidy for one product per category, with 15%-20% discount on the selling prices of energy-efficient units. Compared with prior subsidies, we are upbeat that more clarity is provided on the funding, which is mostly backed by the issuance of super-long-term government bonds. While the CNY 150 billion in total subsidies also incorporates automobile and consumer electronic products, we expect a material proportion to flow to home appliances.