According to a research report from China Merchants Securities (CMSC), the home appliance sector underperformed the broader market in 2025. This was primarily due to a confluence of factors including a market preference for growth-style stocks, the phase-out of domestic subsidy incentives, and overseas trade disruptions from Trump-era tariffs. Looking ahead to 2026, the firm recommends a barbell strategy for domestic demand, focusing on high-dividend value leaders and turnaround plays, while for exports, it favors technology-driven global expansion, the export supply chain, and AI end-side applications.
The home appliance sector underperformed the broader market in 2025. As of December 30th, the sector achieved a positive return of 9% for the year, ranking 22nd among all industries. CMSC attributes this performance to the resonance of multiple factors: a market preference for growth-style stocks (increased TMT trading volume), the tapering of domestic subsidy stimulus (shortages in subsidy funds in some regions after the 2025 618 shopping festival), and overseas trade disruptions from Trump tariffs (passive destocking in the US and Europe).
For domestic sales in 2026, with the national subsidy program for replacing old appliances set for renewal, CMSC recommends a barbell strategy combining high-dividend value leaders and turnaround opportunities. A Ministry of Finance meeting held on December 28th confirmed that funds will continue to be allocated in 2026 to support the replacement of consumer goods, with adjustments and optimizations to the subsidy scope and standards. Reviewing the 2025 subsidy pool of 300 billion yuan, the bank estimates allocations of 110 billion for automobiles, 80 billion for home appliances, 70 billion for home decoration and kitchen/bathroom fixtures, 10 billion for two-wheelers, and 30 billion for 3C digital products. Based on estimates from Luotu Technology, the 2026 subsidy pool may remain between 250-300 billion yuan, with continued subsidies for six major home appliance categories and the addition of AI glasses to the 3C product list, focusing primarily on Tier-1 energy efficiency products.
For exports, CMSC is optimistic about the directions of technology-driven global expansion, the export supply chain, and AI end-side applications. Leading domestic companies in areas like 3C consumer goods/consumer robotics/portable power storage/3D printing are leveraging supply chain advantages, an engineering talent dividend, and technological innovation to build world-class brand influence globally. The firm sees opportunities in the tech export wave, the tool export chain, and hardware innovation driven by AI end-side applications.
Specific investment recommendations are as follows: 1) Value Leaders: In major appliances, Midea Group and Haier Smart Home are top picks, with attention on Gree Electric Appliances, Aux Electric, Hisense Home Appliances, and TCL Smart Home. In TV/appliances, TCL Electronics and Hisense Visual Technology are key recommendations. 2) Turnaround Plays: For projectors, Xgimi Technology is a top pick, with attention on domestic supply-side consolidation, reduced losses in automotive segments, and overseas expansion opportunities. For two-wheelers, Ninebot Limited is a key recommendation, emphasizing its electric motorcycle strategy and industry reshuffling opportunities from new national standard transitions. 3) Tech Exports: Top picks include Anker Innovations (Consumer Electronics) and Ugreen Group (Electronics), with 3D printing recommendation Huina Technology and consumer robotics recommendations Roborock and Ecovacs, while monitoring opportunities from industry consolidation among leaders due to EU anti-dumping investigations on robotic lawn mowers. 4) Tool Export Chain: Top recommendations are Great Star Industrial and Chervon Holdings (Machinery), optimistic that continued Fed rate cuts will drive a resonance of North American real estate, restocking, and consumer cycles, boosting downstream tool demand. 5) AI End-Side Applications: Monitor the rollout of hardware like AI glasses, with a key recommendation for Appotronics and attention on Biyi Shares.
Risk warnings include weaker-than-expected demand from the replacement program, rising upstream raw material costs, significant appreciation of the Renminbi, and export trade frictions.
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