China Galaxy Securities: Government subsidies drive significant recovery in downstream demand. We suggest paying attention to companies like Oppein Home Group Inc. (603833.SH).

China Galaxy Securities released a research report stating that by March 2025, downstream demand has significantly recovered under the stimulus of national subsidy policies. The retail sales of furniture reached 16.8 billion yuan, with over 4.9 million electric bicycles being exchanged for new ones. The total retail sales of social consumer goods amounted to 4.094 trillion yuan in 2025, an increase of 5.9% year-on-year. The trend of trend toys is impressive, with POP MART's revenue growing by 105% in 24 years and BLOKS by 156%. The trend of AI technology empowering the toy industry is evident. In the home furnishing sector, the catalytic effect of the national subsidy policies in 2025 on the performance of listed companies is promising. Relevant recommendations are: Oppein Home Group Inc. (603833.SH), Suofeiya Home Collection (002572.SZ), Zbom Home Collection (603801.SH), Goldenhome Living (603180.SH), Guangzhou Shangpin Home Collection (300616.SZ); Jason Furniture (603816.SH), De Rucci Healthy Sleep (001323.SZ), Xilinmen Furniture (603008.SH) in the soft home furnishing sector; Goneo Group (603195.SH) in the civilian electrical engineering sector; ShenZhen YUTO Packaging Technology (002831.SZ), ORG Technology (002701.SZ), Shanghai Ailu Package Co., Ltd. (301062.SZ) in the packaging sector. The toy sector shows high growth potential, with recommendations for BLOKS (00325), Shifeng Cultural Development (002862.SZ). The main points of China Galaxy Securities are as follows: National subsidies driving obvious downstream demand recovery Home furnishing: National subsidies are driving obvious downstream demand recovery. In March 2025, the retail sales of furniture amounted to 1.68 billion yuan, a year-on-year increase of 29.5%, with further growth in the annual growth rate; the cumulative retail sales in the first three months reached 42.9 billion yuan, a year-on-year increase of 18.1%. The national subsidies, coupled with the opening of March, have seen a continuous recovery in retail data. Electric bicycles: The replacement of old with new electric bicycles is accelerating. According to the Ministry of Commerce data, as of March 11, 2025, more than 1.65 million individual consumers have benefited from the policy of exchanging old electric bicycles for new ones, with a cumulative subsidy of 1 billion yuan, averaging around 600 yuan per person. As of April 11, 2025, a total of 3.526 million electric bicycles have been exchanged for new ones nationwide, well surpassing the total for 2024, equivalent to 255.5% of the total in 2024. Since the initiative started in September 2024, a total of 4.906 million electric bicycles have been exchanged for new ones nationwide; as of April 13, the replacement of old with new electric bicycles has driven new sales of 10.12 billion yuan. Packaging: Downstream demand stable, aluminum prices have fallen slightly In March 2025, the total retail sales of social consumer goods in China reached 4.094 trillion yuan, an increase of 5.9% year-on-year; from January to March 2025, the total retail sales of social consumer goods accumulated to 12.467 trillion yuan, an increase of 4.6% year-on-year. Among them, the retail sales of beverages, tobacco and alcohol, cosmetics, and daily necessities of enterprises above the limit in March 2025 increased by -4.4%, +8.5%, +1.1%, and +8.8% year-on-year, respectively, indicating overall growth in downstream demand. From a cost perspective, as of April 17, 2025, the settlement price of aluminum was 2,327.5 yuan/ton, a decrease of 14.3% compared to the previous month, after experiencing a short-term upward fluctuation. Light industry consumption: The toy sector and the grains track are booming, and new trends in toys are emerging. The performance of trend toys represented by POP MART and grains represented by BLOKS in revenue and stock prices is outstanding. The revenue of POP MART increased by 105% year-on-year in 24 years, and BLOKS increased by 156% year-on-year, verifying the development potential of these two tracks. On the other hand, as AI technology matures, the empowerment of AI technology in the toy industry is expected to continue to deepen. Risk Warning: Risks of the real estate market not meeting expectations; risks of downstream demand recovery falling short of expectations; risks of a significant rise in raw material prices; risks of intensifying industry competition.