Guosen: 618 Home Appliance Categories see good growth, while July's production of white goods remains stable domestically but decreases abroad.

Guosen released a research report stating that according to data from Aowei Cloud Network, during the 618 period (Weeks 20-25), the total retail sales of air conditioners reached 48.5 billion, a year-on-year increase of 16.3%; the retail sales of washing machines reached 15.7 billion, a year-on-year increase of 14.9%; while the growth rate of refrigerator retail sales was relatively slow, with an increase in the proportion of low-end models online. However, in July, domestic sales entered the off-season, the production growth rate of white goods returned to stable, and export sales were under pressure due to tariffs, high base numbers, and overseas inventory. Nevertheless, considering that Chinese white goods companies have sufficient production capacity layout in overseas regions such as Southeast Asia and Latin America, it is expected that the decrease in export production is related to the acceleration of globalization production by Chinese household appliance companies. Guosen's key points are as follows: Various categories of home appliances performed well during the 618 period, with strong growth in air conditioners and small kitchen appliances. According to data from Aowei Cloud Network, during the 618 period (Weeks 20-25), the total retail sales of air conditioners reached 48.5 billion, a year-on-year increase of 16.3%; the retail sales of washing machines reached 15.7 billion, a year-on-year increase of 14.9%; while the growth rate of refrigerator retail sales was relatively slow, with an increase in the proportion of low-end models online. In terms of online retail sales growth, kitchen small appliances/vacuum cleaners/floor scrubbers/shavers/home water appliances grew by 25.2%/34.1%/21.5%/15.0%/22.4% during the 618 period, showing relatively strong growth, with a clear recovery in demand for kitchen small appliances. Categories such as kitchen and bathroom appliances and electric toothbrushes showed relatively steady growth. During the 618 period, the average price of home appliances online was under pressure, with increasing competition: the average price of white goods online decreased by 3.4% year-on-year, kitchen and bathroom appliances decreased by 5.8%, and vacuum cleaners and floor scrubbers also saw a mid-single-digit decline in prices; however, the average prices of kitchen small appliances and home appliances in offline channels still increased, indicating an improvement in the overall situation. White goods production in July declined, with domestic sales stabilizing and exports under pressure. According to data from the industry online, the total production of white goods in China reached 29.6 million units in July, a decrease of 2.6% compared to the same period last year. By category, the production of air conditioners for domestic/export sales in July increased by 8.1%/-16.3% year-on-year, with a total production of 15.8 million units, a decrease of 1.9% compared to the same period last year; the production of refrigerators for domestic/export sales increased by 3.2%/-4.9% year-on-year, with a total production of 7.35 million units, a decrease of 2.4% compared to the same period last year; the production of washing machines for domestic/export sales decreased by 4.6%/-3.8% year-on-year, with a total production of 6.45 million units, a decrease of 4.2% compared to the same period last year. The growth rate of domestic sales for white goods slowed down after entering the off-season, while exports were affected by tariffs and the high base numbers from the same period last year, leading to a decrease in production. However, considering that Chinese white goods companies have sufficient production capacity layout in overseas regions such as Southeast Asia and Latin America, it is expected that the decrease in export production is related to the acceleration of globalization production by Chinese household appliance companies. Stable performance of air conditioner production and sales in May, with domestic sales increasing by 13% and exports declining Industry online data shows that in May, China produced 20.812 million units of air conditioners for household use, a year-on-year decrease of 1.8%; and sold 22.034 million units, a year-on-year increase of 2.3%. Among them, the domestic sales volume was 14.125 million units, a year-on-year increase of 13.4%; while the export volume was 7.909 million units, a year-on-year decrease of 12.8%. With the demand driven by promotions, coupled with the relatively low base number from last year, the delivery growth of domestic air conditioners in May increased significantly; while exports were affected by seasonal differences in overseas stocking, higher base numbers, and pressure from tariffs accelerating the transfer of production capacity overseas. Core investment portfolio recommendations Recommended white goods manufacturers are Gree Electric Appliances, Inc. of Zhuhai (000651.SZ), Midea Group Co., Ltd (000333.SZ), HAIER SMARTHOME (600690.SH), Guangdong TCL Smart Home Appliances (000100.SZ), Hisense Home Appliances Group (000921.SZ); recommended kitchen appliances manufacturer is Hangzhou Robam Appliances (002508.SZ); recommended small home appliance manufacturers are Bear Electric Appliance (002959.SZ), Beijing Roborock Technology (688169.SH), Guangdong Xinbao Electrical Appliances Holdings (002705.SZ). Risk warning Intensified market competition; demand lower than expected; significant increase in raw material prices.