GF Securities: Long-term Outlook for Home Appliance Exports Remains Stable, Recommends Roborock (688169.SH) Among Others

Stock News12-05

GF Securities released a research report stating that the replacement policy in 2025 has shown significant effects, but under a high base, the home appliance industry is expected to see slower growth in 2026. Leading companies are likely to outperform the industry due to their channel and brand advantages. In the long run, supported by increasing global market share, home appliance exports are expected to maintain steady growth.

White goods companies have demonstrated stable earnings growth, with advantages in consistent ROE and high dividends. GF Securities recommends Midea Group (000333.SZ) and Haier Smart Home (600690.SH). Black goods leaders benefit from rising global market share and product structure upgrades, with recommendations for Hisense Visual (600060.SH) and TCL Electronics (01070). Bottom-up picks include Segway-Ninebot (689009.SH) and Roborock (688169.SH), which are gaining market share and expanding product categories.

Key insights from GF Securities include: 1. **2025 Sector Performance**: The home appliance sector underperformed, ranking 27th among industries with an 8.1% cumulative gain, lagging behind the CSI 300 by 10.4 percentage points. Sub-sector performance varied, with home appliance components (+64.7%) and black goods (+12.6%) leading, while white goods (-1.1%) and kitchen appliances (-0.7%) declined. 2. **Fundamentals**: From January to October 2025, home appliance retail sales grew 20.1% YoY, driven by replacement policies, but growth slowed in September-October due to a high base. Exports fell 3.4% in USD terms (-2.5% in RMB terms), reflecting resilience despite U.S.-China trade tensions. 3. **2026 Outlook**: - Domestic demand growth may slow, but leaders will outperform. - Exports are expected to remain stable as companies have adapted to trade policy fluctuations since 2018-19. - Cost pressures are manageable, with copper prices rising slightly, shipping costs normalizing, and a stable exchange rate. - Valuation: The sector's PE-TTM rose to 17.3x (66th percentile since 2016), while institutional holdings declined to 2.5% in Q3 2025 (22nd percentile since 2010).

**Sub-sector Projections for 2026**: - **White Goods**: Growth may slow due to high base effects, but exports remain resilient, supporting steady earnings. - **Small Appliances**: Policy stimulus may sustain price improvements. Robotic vacuums continue gaining global market share. - **Black Goods**: Product upgrades and overseas expansion will drive profitability. - **Two-wheelers**: New regulations and market consolidation will benefit leading players.

**Risks**: Rising raw material costs, exchange rate volatility, trade policy shifts, and intensified competition.

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