CMSC has released a research report stating that AI and technology trends dominated the first half of 2026, while the home appliance sector faced overall pressure. This was due to diminishing marginal effects from domestic consumption stimulus subsidies, rising costs constrained by increases in bulk raw material prices, and simultaneous pressure from RMB appreciation. Looking ahead to the second half of the year, the firm recommends a dual-pronged approach: focus on the synergy of technology and growth themes, while using dividend assets as a defensive buffer. CMSC's main views are as follows:
Home Appliance Sector Underperformed the Broader Market in H1 2026
As of June 30, the home appliance sector's gain/loss was +4%, ranking 16th among all industries. The firm attributes this primarily to the resonance of multiple factors: a preference for growth-style investments (increased trading proportion of TMT), the tapering of domestic sales stimulus subsidies (shortage of subsidy funds in some regions post the 2025 618 shopping festival), and the onset of the US-Iran war overseas (driving up bulk raw material prices).
Technology Growth: Focus on Display Glass Substrates, 3D Printing, Two-Wheelers, and Residential Storage
Centered on areas where interim results may exceed expectations, the firm suggests paying attention to display companies like TCL Electronics and Hisense Visual Technology, as well as upstream panel/glass substrate players BOE and TCL Technology, which are positioned at the forefront of AI advanced packaging technology. Customs statistics show 3D printer exports from January to April grew 100% year-on-year. Desktop 3D printers were included in the national "15th Five-Year Plan" for expanding consumption for the first time, indicating a breakthrough moment for consumer 3D printers is arriving. For two-wheelers, export-oriented companies like Taotao and CFMOTO continued to lead industry development in the first half. The domestic market is experiencing a painful transition period with the implementation of new national standards, with acceleration expected from the shift from electric to gasoline-powered models. In residential energy storage, European balcony storage systems are seeing explosive demand, driven by the UK lifting installation restrictions and the phase-out of the Netherlands' net metering policy. The situation in the Strait of Hormuz impacts European household energy bills, potentially accelerating the release of balcony storage potential.
Dividend Assets: Internationalization Enters Harvest Phase, Capital Expenditure Declines, Dividend Willingness Rises
The systemic valuation increase for dividend-yielding home appliance assets essentially trades on improved cash flow (stable competitive landscape, declining capital expenditure), declining long-term risk-free interest rates (increasing willingness to pay dividends), and improved ROE profitability (manufacturing going global). As external conflicts reignite and the technology rally enters a second half with increased volatility, some market funds are expected to shift styles and allocate to dividend assets for defense. The domestic competitive landscape in home appliances is stabilizing, overseas capacity layout is maturing, and large-scale mergers and acquisitions are decreasing. Leading white goods and black goods (consumer electronics) companies are generally entering a cycle of declining capital expenditure, with internationalization entering a harvest period. Supported by improving long-term free cash flow, companies can increase shareholder dividend payments and share buybacks, aligning with the market's pursuit of dividend yield and return certainty.
Investment Recommendations: Seize Opportunities from Strong Interim Results, Anticipate Value Reversion
1) For the technology growth direction, the firm recommends TCL Electronics/Hisense Visual Technology/TCL Technology for the glass substrate theme; 3D printing company Creality, while monitoring SCANTECH and HomeLink; two-wheeler companies Taotao/CFMOTO; and residential storage plays Anker Innovations/Poweroak; tool companies Chervon Holdings/Techtronic Industries/Great Star.
2) For dividend assets, the firm recommends leading white goods companies Midea Group/Gree Electric Appliances/Haier Smart Home, civilian electrical supplier Bull Group, and small appliance maker Supor.
Risk warnings: Rising upstream raw material costs, significant appreciation of the RMB, and export trade frictions.
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