Guolian Minsheng Securities: The overall performance of the household appliance industry in 2026 is stable, with domestic demand stabilizing and foreign demand showing some improvement.

Guolian Minsheng Securities released a strategy research report stating that the Spring Festival period led to stable growth in domestic and foreign sales in January. The domestic white goods CR2 increased year-on-year, with the online market share of robot vacuum cleaners from Beijing Roborock Technology (688169.SH) and Ecovacs Robotics (603486.SH) on the rise. From January to February, according to industry online estimates, the decline in air conditioner sales both domestically and abroad is expected to narrow, with a positive trend in retail sales of refrigerators in comparison to the fourth quarter of 25Q4, and a steady increase in the average price of color TVs. Looking ahead, the upcoming Two Sessions will focus on boosting consumption, with continued subsidies for core product categories throughout the year. Domestic sales volume and prices have a bottom, improving year-on-year or seasonally. The improvement in foreign tariffs and interest rates is expected to precede that of domestic sales, suggesting a potential turning point. Overall, the sector's domestic and foreign sales are expected to stabilize and improve in 2026. Leading companies demonstrate strong operational resilience, with strong momentum for overseas expansion of their brands and enhanced production capacity in emerging markets. The sector's performance in the weak beta phase is expected to surpass the industry. Current sector relative valuation is at historically low levels, with potential for gradual improvement while the fundamentals remain on the left side, leaving room for valuation to rise. The brokerage predicts that in 2026, the fundamentals of the home appliance sector will see domestic demand consolidation and improvement in foreign demand, with overall stable performance. This transition year for government subsidy policies may limit the flexibility of fundamentals. While fundamental elasticity is generally moderate, historical similar market phases have performed well, characterized by "fundamentals on the left, expectations on the right". Dividend-based narratives provide style support, as seen in 2019 and 2024, with market performance concentrated at the beginning and end of the year. Therefore, the home appliance sector's market performance in 2026 may be promising, with improving fundamentals, easing trade tensions, positive overseas interest rate cuts, potential surprises in the performance of home appliance companies in overseas markets, as well as innovation and expansion into new product categories in the domestic market as focus points. Additionally, after a style shift, the sector has shown resilience. The underperformance in the second half of 2025 has already exceeded that of the technology market in 2014-2015, with the sector's position adjustment adequate. Leading home appliance companies have demonstrated strong competitiveness in terms of dividend yield, valuation, and growth indicators. Regarding specific recommendations, 1. White goods leaders with outstanding cost-effectiveness such as Midea Group Co., Ltd, HAIER SMARTHOME, Hisense Home Appliances Group, and Gree Electric Appliances, Inc. of Zhuhai are recommended. 2. Leading color TV companies with comprehensive strength, steadily increasing market share and profitability such as Hisense Visual Technology, with a focus on TCL ELECTRONICS. 3. Leading companies in the clean appliance sector with strong growth prospects domestically and internationally, such as Beijing Roborock Technology and Ecovacs Robotics. 4. Leading kitchen appliance companies expanding their growth boundaries through product scenario extensions and internationalization efforts, such as Hangzhou Robam Appliances, Zhejiang Supor, and Bear Electric Appliance are recommended.