Industrial: Focus on kitchen appliances and look for investment opportunities in bottom reversal. Optimistic about the leading company's valuation and performance recovery flexibility.

Industrial released a research report stating that the recovery of kitchen appliances demand has support, with the fundamentals and stock prices forming a bottom, and the addition of high dividends providing sufficient safety margin. It is optimistic about the valuation and performance recovery elasticity of the kitchen appliances industry leaders. In the short term, fundamentals of white goods and black goods remain solid, with strong defensive attributes at the bottom of valuation. Leading air conditioning brands have seen good growth in installation cards in January and February, with sufficient demand resilience, and active overseas stocking of black goods under the catalysis of the World Cup. The two sessions will continue to increase consumer policies, allocate 250 billion yuan of special long-term treasury bonds to support the consumption of old for new goods, encourage sinking markets and offline consumption, and support the 26-year domestic demand for household appliances. Key points by Industrial are as follows: Focus on the investment opportunity for the bottom reversal of kitchen appliances 1) The marginal improvement in real estate data provides support for the recovery of kitchen appliances demand. According to the National Bureau of Statistics, in January and February 2026, the national real estate development investment was 961.2 billion yuan, a year-on-year decrease of 11.1%, a decrease 5.6 percentage points narrower than the full year of 2025; among which residential investment was 728.2 billion yuan, a decrease of 10.7%, a decrease 5.6 percentage points narrower. Since the beginning of 2026, the marginal improvement in core real estate data has provided a double support for the recovery of kitchen appliances demand. 2) Faced with the dilemma of weak growth in the main business, leading integrated stove companies have embarked on a cross-border transformation journey. According to the performance forecast of four listed integrated stove companies in 2025, the industry as a whole has fallen into a situation of significant profit decline or even losses, with only Zhejiang Meida Industrial maintaining profitability, and the other three have changed from profit to loss. With a negative beta, the industry is accelerating its clearance. 3) The fundamentals and stock prices have formed a bottom, and high dividends provide sufficient safety margin. It is optimistic about the valuation and performance recovery elasticity of the kitchen appliances industry leaders. In the downtrend of the real estate cycle, leading firms in various industries such as Hangzhou Robam Appliances, Opple Lighting, and AUPU Intelligent Technology Corporation have strengthened their moats, and maintained stable performance growth by accelerating market share acquisition, successfully crossing the cycle; and the three leading companies have ample cash in hand, with stable operating net cash flow, steadily increasing dividend ratio. In 2024, the dividend ratios of Hangzhou Robam Appliances, Opple Lighting, and AUPU Intelligent Technology Corporation were 59.88%, 73.80%, and 108.75%, respectively, with current dividend yields of 4.90%, 4.87%, and 7.05%, showing sufficient upside potential. In the 26th week of 2021, copper, aluminum, and ABS prices decreased month-on-month, while hot rolled coil prices increased month-on-month. The average price of copper in the 26th week of 2021 was 98,073 yuan/ton, down 2.86% month-on-month, up 21.24% year-on-year, and up 34.85% compared to the same period in 2024; the average price of aluminum in the 26th week of 2021 was 24,547 yuan/ton, down 1.89% month-on-month, up 18.27% year-on-year, and up 27.36% compared to the same period in 2024; the average price of ABS in the 26th week of 2021 was 11,393 yuan/ton, down 9.75% month-on-month, down 0.06% year-on-year, and down 6.32% compared to the same period in 2024; the average price of hot rolled coil in the 26th week of 2021 was 3,367 yuan/ton, up 0.64% month-on-month, down 2.91% year-on-year, and down 14.02% compared to the same period in 2024. Panel prices increased month-on-month. In early March 2026, the average global prices for 65"w/55"w/43"w/32"w panels were 175 USD/panel, 126 USD/panel, 66 USD/panel, and 37 USD/panel, respectively, up by 1.74%, 1.61%, 1.54%, and 2.78% month-on-month. The exchange rate of RMB against the US dollar increased month-on-month. From March 16, 2026 to March 20, 2026, the weekly average exchange rate of USD to RMB was 6.89, up by 0.08% month-on-month and down by 4.80% year-on-year. The transaction area of commercial housing in 30 major cities in the 26th week of 2021 increased by 23.34% month-on-month. The sales area of commercial housing in 2025 was 94 million square meters, down by 16.57% year-on-year, with the decline narrowing by 1.36 percentage points month-on-month; the completed area of housing was 209 million square meters, down by 18.35% year-on-year, with the decline narrowing by 7.04 percentage points month-on-month; the newly started area of housing was 53 million square meters, down by 19.31% year-on-year, with the decline narrowing by 8.42 percentage points month-on-month. The transaction area of commercial housing in 30 major cities was 20.96 million square meters in the 26th week of 2021, up by 23.34% month-on-month. Investment recommendations 1) Recommend stable growth, strong alpha property black electric appliance leaders TCL ELECTRONICS (covered by the Hong Kong team), Hisense Visual Technology; 2) Optimistic about the defensive attributes of white goods leaders Midea Group Co., Ltd, HAIER SMARTHOME; 3) Left-side arrangement of XGIMI Tech Co., Ltd, Beijing Roborock Technology with low stock prices; 4) Configuration of traditional kitchen appliance leaders Hangzhou Robam Appliances, Opple Lighting, AUPU Intelligent Technology Corporation with stable performance and high dividends. Risk warning: Sharp increase in raw material prices; Demand falling short of expectations; intensifying industry competition.