Green subsidies push up appliance and auto shares

PUBLISHED : Friday, 18 May, 2012, 12:00am
UPDATED : Friday, 18 May, 2012, 12:00am


The share prices of leading appliance and automotive companies rose yesterday on news of mainland government subsidies for energy-efficient cars and home appliances.

However, analysts warned that the outlook was not rosy for the mainland appliance market.

The share price of Skyworth Digital, a Hong Kong-listed television maker, soared 11.4 per cent to HK$3.41 yesterday, while that of Gome, a mainland electronics appliance retailer also listed in Hong Kong, rose 2.4 per cent to HK$1.26.

The surge in Skyworth's stock price was due to other factors besides the new subsidies for energy-efficient home appliances, CIMB Securities analyst Bertram Lai said.

On May 9, Skyworth announced 21 per cent sales volume growth in April from a year earlier. Lai said that was unexpected.

Looking forward, he said: 'We still see a slowdown of Skyworth's sales. The TV industry in China is mature. You won't have volume growth.'

In a State Council decision on Wednesday, the central government earmarked 26.5 billion yuan (HK$32.5 billion) in subsidies for energy-saving home appliances, including flat-screen televisions, air conditioners and refrigerators.

The latest subsidy would not fully compensate for the lost revenue from the ending of two previous subsidies, Lai said. Emperor Securities said: 'The subsidies will drive sales of home appliances on the mainland, which can give a short-term boost to Gome's share price.

'Gome expects a large drop in net profit for the first quarter, but this has been priced in with its previous large share price drop.'

Also on Wednesday, the State Council announced a 6 billion yuan subsidy to promote the use of energy-efficient diesel vehicles with engine sizes below 1.6 litres.

The share prices of car dealers rose yesterday, Zhongsheng climbing 4.6 per cent to HK$13.14 and Baoxin Auto surging 6.9 per cent to HK$6.51. Great Wall Motor and Dongfeng Motor gained 5.8 per cent and 2.3 per cent respectively.

The bulk of government incentives will be for green vehicles such as plug-in hybrid and electric cars.

A buyer could save up to 120,000 yuan on an electric vehicle with government subsidies, but buyers of energy-efficient diesel vehicles are entitled to a maximum of 3,000 yuan in subsidy per vehicle purchased, subject to strict requirements.

The subsidy for small-capacity vehicles is smaller than a similar subsidy implemented in 2009, which amounted to 10 billion yuan.