China Securities Co., Ltd: The white goods sector still has a good outlook, with obvious trends in the upgrade of domestic and foreign black goods structures.

China Securities Co., Ltd. released a research report stating that in the first half of 2025, the household appliances sector will be plagued by disturbances from tariff increases, fluctuations in the old-for-new policy, and high base expectations for the second half of the year, resulting in an overall underperformance compared to the Shanghai and Shenzhen 300 indexes. Looking ahead to the second half of 2025, adjustments to national subsidy policies in various regions are aimed at addressing the previous issues of pacing imbalances and fund allocation, with the impact of overdraft on annual sales being limited. While the impact of tariff increases on exports exists, China's household appliance exports still show resilience, and the outlook for the white goods sector remains positive. There is a noticeable trend towards structural upgrades in the domestic and international market for consumer electronics, and domestic industry leaders are expected to seize market share in the high-end segment in order to upgrade product structures and increase profit margins. The long-term growth potential of clean appliances is significant, and attention should be paid to the turning point in leading profitability. The main points of China Securities Co., Ltd. are as follows: Mid-term Review of the Household Appliances Sector in 2025 As of June 13, 2025, the annual growth of the household appliances sector is -3.16%, underperforming the Shanghai and Shenzhen 300 Index by 1.37 percentage points, showing mediocre performance mainly due to disturbances from tariff increases, fluctuations in the old-for-new policy, and expectations of high base in the second half of the year. From a stock perspective, motorcycles, consumer electronics, and some small household appliance companies have performed well, including Zhejiang Taotao Vehicles, Zhejiang CFMOTO Power, , TCL ELECTRONICS, Xgimi Technology, JS GLOBAL LIFE, Shenzhen Breo Technology, and Shenzhen Crastal Technology. White Goods Sector 1) Under the normalization of national subsidies, the divergence of demand between peak and off-peak seasons has increased, with a rapid recovery in the second quarter of 2025. 2) Overseas exports are expected to continue to grow in 2025, with China maintaining its dominant position in global production capacity, and short-term external shocks are unlikely to alter the long-term export growth trend. 3) Adjustments to national subsidy policies are generally made to address the pacing imbalances and fund allocation issues exposed in the past, with some overdraft effects but limited impact on annual sales, expected to gradually dissipate in the coming years by low single-digit percentages. 4) Stable economic conditions in emerging countries are expected to bring continued incremental markets for white goods exports. Cconsumer Electronics Sector 1) Solid domestic and international demand, with a significant trend towards large-size and MiniLED structural upgrades, domestic industry leaders maintaining global market shares, steady panel prices benefiting downstream brand profitability. 2) National subsidies in 2025 will continue to drive domestic demand growth, with rapid penetration of MiniLED technology, Hisense Visual Technology, and TCL ELECTRONICS perfecting their overseas production layouts, indicating growth in shipments in 2025 and rapid increase in market share in high-end segments, enhancing competitive advantages. Clean Appliances Sector 1) As one of the categories benefiting most from national subsidies, a high level of prosperity is expected to continue in 2025, with attention to the turning point in profitability for Beijing Roborock Technology. 2) Overall overseas markets are still in a prosperity cycle, with industry leaders expanding investments to seize market opportunities. 3) High demand growth under national subsidies indicates growth potential, with the shift from optional to essential consumer attributes being the core logic for robotic vacuums to become major products. In the long term, the domestic market for robotic vacuums has huge development potential. In summary, the main investment opportunities in the household appliances sector in 2025 lie in 1) the solid foundation of the white goods industry; and 2) the improvement in profitability for consumer electronics and robotic vacuums. Risk warning Slower than expected macroeconomic growth; significant fluctuations in raw material prices; risks in overseas markets; intensifying market competition.