GF Securities: Long-term outlook for household appliance exports is expected to maintain steady growth; We recommend Beijing Roborock Technology (688169.SH) among others.

GF Securities released a research report stating that the replacement of old appliances with new ones will have a significant effect by 2025. It is expected that due to the high base, the growth rate of the household appliance industry will slow down in 2026, and leading companies are expected to outperform the industry based on their channel and brand advantages. In the long term, with the logic of increasing global market share, household appliance exports are also expected to maintain steady growth. White goods performance is steadily growing, with stable ROE and high dividend advantages, and Midea Group Co., Ltd (00300, 000333.SZ) and HAIER SMARTHOME (06690, 600690.SH) are recommended; Leading companies in black appliances will benefit from the increase in global market share and product structure upgrades, and Hisense Visual Technology (600060.SH) and TCL ELECTRONICS (01070) are recommended; From bottom up, companies with increased market share and category expansion such as Ninebot Limited (689009.SH) and Beijing Roborock Technology (688169.SH) are recommended. The main points of GF Securities are as follows: Review of 2025 Overall, the sector had a lower increase, with sector differentiation. (1) Index: According to iFinD data, from the beginning of the year to November 28, 2025, the cumulative increase in the Shanghai household appliance index was 8.1%, ranking 27th in the industry, underperforming the Shanghai and Shenzhen 300 index by 10.4 percentage points. By sector, household appliance components, black appliances, lighting equipment, small household appliances, kitchen appliances, and white goods increased by +64.7%, +12.6%, +11.9%, +9.5%, -0.7%, -1.1% respectively. (2) Fundamentals: According to statistics bureau data, from January to October 2025, the cumulative year-on-year growth rate of household appliances was +20.1%, driven by the policy of replacing old appliances, but the year-on-year growth rate slowed down in September and October due to factors such as high base. According to customs data, from January to October, the cumulative export amount of household appliances in US dollars decreased by -3.4% year-on-year, while the cumulative export amount in RMB decreased by -2.5% year-on-year, mainly due to the impact of the Sino-US trade war since April, but the cumulative decline was controllable, demonstrating resilience in exports and global competitiveness. Outlook for 2026 (1) Demand side: In terms of domestic sales, the effect of replacing old appliances with new ones in 2025 was significant. Due to the high base, the industry growth rate is expected to slow down in 2026. Leading companies are expected to outperform the industry with their channel and brand advantages. In terms of exports, most companies have minimized the impact of extra tariffs since 2018-19 through overseas production capacity layout and other means, accumulating rich experience and strategies in response to fluctuations in trade policies. In the long term, with the support of the logic of increasing global market share, exports are also expected to maintain steady growth. (2) Profit side: Only copper prices have recently increased, sea freight has dropped to normal levels, and the exchange rate has slightly appreciated. Overall cost pressures are manageable, and future profitability is expected to remain stable. (3) Valuation and holdings: As of the close of November 28, 2025, the PE-TTM of the household appliance sector has increased from 15.1x at the beginning of the year to 17.3x, with a historical percentile of 66% since 2016. The percentage allocation of the household appliance industry in public funds' top 25 holdings was 2.5%, down by 1.8 percentage points compared to the previous month, with continuous declines over three consecutive quarters. The percentile of the percentage allocation in top holdings since 2010 is 22%. Subsector Outlook for 2026 (1) White goods: In 2026, facing the high base effect brought by the state subsidy, growth may slow down. Exports show resilience, benefiting from emerging market growth, and leading companies are expected to achieve steady growth. (2) Small household appliances: With continued policy stimulus, the average price of kitchen small appliances is expected to continue to improve. The floor-sweeping machine industry continues to increase its market share overseas, with significant long-term growth potential. (3) Black appliances: Product structure upgrades drive price increases, and profitability is expected to continue to improve. Overseas market share is expected to continue to rise. (4) Two-wheeled vehicles: With the full implementation of new regulations in 2026, the industry is expected to maintain growth. As small manufacturers exit the market, leading companies' market share is expected to continue to increase, and there is vast potential in overseas markets. Risk Warning: Sharp increases in raw material prices; significant fluctuations in exchange rates; drastic changes in trade policies; deterioration of market competition environment.