New stock outlook | Helaizhe Appliances, a small and beautiful home appliance company going global: profit flexibility released, but customer stickiness and exchange rate pitfalls are hard to hide.

When the domestic kitchen appliance market is struggling to breathe in the real estate cycle, a group of Chinese companies are moving the kitchen to the European living room HEGE Appliances is one of them. This home appliance company from Shunde is staging an IPO story about the upgrading of Chinese manufacturing going abroad on the Hong Kong stock market. On May 14, Guangdong HEGE Appliances Co., Ltd. (referred to as "HEGE Appliances") submitted its prospectus to the Hong Kong Stock Exchange for the first time, planning to list on the main board of Hong Kong with FIRST SHANGHAI as the exclusive sponsor. This kitchen appliance company, founded in 2011, was listed on the New Third Board in 2020 and voluntarily delisted in 2022, and is now back on the starting line of the capital market. It is neither the largest in scale nor the most well-known, but it happens to be positioned in the most worthy of attention area in the current kitchen appliance industry the strategic window for Chinese kitchen appliance brands going abroad. Now, with HEGE Appliances officially pushing for a Hong Kong IPO, what is its growth potential? Performance breakdown: The elasticity of profit growth is being released According to reports, HEGE Appliances is a kitchen appliance supplier focused on overseas markets, selling its products under its own brand "Ciarra" and through the ODM model. With over 15 years of experience in the kitchen appliance industry, HEGE Appliances mainly operates a range of kitchen and household appliances, including range hoods, stoves, household and small kitchen appliances, and other products. The core of its growth story lies in the "dual-drive" strategy. That is, HEGE Appliances develops its own brand "Ciarra" and ODM dual-track business models in parallel, with range hoods and stoves as the main product categories. In the 2025 fiscal year, these two categories accounted for 92.5% of the revenue, supplemented by household and small kitchen appliances. This is a clever structural design. The ODM business provides order visibility and economies of scale, while the own brand provides margin elasticity and valuation potential. Data from the prospectus shows that from 2023 to 2025, revenue from the own brand business increased from 190 million to 248 million, with a compound annual growth rate of 14.2%, accounting for 50.2% of revenue in 2025; while the ODM business grew at a compound rate of 19.0% during the same period, accounting for 49.8% of revenue in 2025. The two are almost evenly matched, with HEGE Appliances neither being purely an OEM factory nor just creating a brand out of thin air it has achieved a relatively balanced distribution between manufacturing and branding. What is more crucial is that the own brands are not simply distributed offline, but use a typical DTC model. By the end of 2025, HEGE had opened 59 online stores on 24 e-commerce platforms in 16 countries, selling its own brand products through platforms such as Amazon, LeroyMerlin, Darty, and OTTO. This clever business structural design also enables HEGE Appliances to occupy a favorable position in the narrative of Chinese kitchen appliances going abroad according to a Frost & Sullivan report, based on 2025 export sales revenue, the company ranked third among Chinese companies exporting large kitchen appliances to Europe in 2025, with a market share of 1.0%. However, looking at the fundamentals, HEGE Appliances reveals its growth dilemma as revenue growth slows down while profit margins make a breakthrough. According to the prospectus, from 2023 to 2025, the company achieved revenues of 364 million, 448 million, and 494 million respectively, with the growth rate slowing down to 23.1% and 10.3% in the last two years. In contrast, the company's profit growth stands out. Over the same period, the company recorded annual profits of 15.42 million, 36.71 million, and 47.42 million, with growth rates of 138.1% and 29.2%, outperforming revenue growth for two consecutive years. So, where does HEGE Appliances' profit elasticity come from? In reality, the key lies in the gross profit margin. HEGE's gross profit margin increased from 37.0% in 2023 to 41.4% in 2025, driven by economies of scale, lower raw material costs, and an increased proportion of high-margin own brand business. A 41.4% gross profit margin is quite impressive in the home appliance sector, reflecting that HEGE is not simply following the route of OEM manufacturing, but has capitalized on the early dividends of transitioning from manufacturing to branding. However, the flip side of the coin is worth examining: the relatively low proportion of research and development (R&D) investment. From 2023 to 2025, HEGE Appliances' R&D investment accounted for 2.8%, 2.4%, and 2.9%, which is lower than the approximately 5% level of leading home appliance companies in the long term, which may affect long-term innovation capabilities. In the kitchen appliance category that emphasizes design, the insufficient investment in R&D may become a hidden concern for sustaining brand premium. Industry Insights: Benefits of Going Global vs. Three Major Risks From an industry perspective, the track where HEGE Appliances is located can be said to be facing structural opportunities. According to data from the prospectus, the global kitchen appliance market grew from approximately $135.7 billion in 2020 to $173.2 billion in 2025, with a compound annual growth rate of about 5.0% during that period, and is expected to reach approximately $214 billion by 2030, with a compound annual growth rate of about 4.3% from 2025 to 2030. The market growth between 2020 and 2025 reflects continuous product replacement, functionality upgrades, and the gradual adoption of smart and energy-efficient technologies in households. Europe remains the benchmark region, supported by high product penetration rates and strict environmental standards emphasizing energy efficiency and durability. North America maintains stable demand with its mature cooking culture and stable renovation cycles, while the Asia-Pacific region contributes the majority of incremental growth with its expanding and continuing consumer base. Looking at the competitive landscape, Chinese small kitchen appliances going abroad are shifting from "low-price high-volume" to "premium branding". According to a NielsenIQ report, by 2025, the market share of Chinese independent brand home appliances in overseas markets has increased from 2.9% in 2015 to 10.9%, indicating a significant improvement in pricing power. Since the beginning of 2026, the global layout of the Chinese home appliance industry has accelerated, with Chinese companies entering European and North American markets with innovative technologies and localization strategies. At the same time, the sluggish domestic market has highlighted the strategic value of HEGE Appliances in focusing solely on the overseas market. In 2026, the kitchen and bathroom industry is entering a crucial period of reshuffling, with challenges such as weak growth, structural imbalances, and fierce competition faced by the entire industry. By avoiding the fierce competition in the domestic market and focusing on the overseas market, HEGE Appliances can take advantage of the arbitrage space between China's supply chain efficiency and overseas pricing premiums. However, it should be noted that although HEGE Appliances occupies a strong position in the narrative of Chinese kitchen appliance brands going abroad, the pressure of the "three major mountains" cannot be ignored. Firstly, there is insufficient customer stickiness. HEGE Appliances explicitly stated in the prospectus that they have not entered into long-term procurement commitments with any major ODM clients, and any significant deterioration in business relationships or transaction levels may have an adverse impact on the company. The ODM business accounted for 49.8% of total revenue in 2025, and these ODM clients could potentially change suppliers at any time. Secondly, there is the risk of exchange rate fluctuations. With HEGE Appliances' European market revenue accounting for as high as 67.7% in 2025, as an export-oriented enterprise that focuses on Europe as its main battlefield, every fluctuation in the euro exchange rate directly impacts profits. The industry has had lessons learned in 2025, Guangdong Xinbao Electrical Appliances Holdings experienced a reduction of approximately 143 million yuan in exchange gains due to exchange rate fluctuations. Finally, there are trade barriers and compliance costs. In 2026, the EU officially imposed a CBAM carbon tax, which will be expanded to household appliances in 2028; all goods entering the EU will be subject to tariffs. At the same time, starting in April 2026, China cancelled export tax refunds for 248 products, creating new cost pressures for export-oriented home appliance companies. It can be seen that while HEGE's globalization story seems confident, there is a slight imbalance upon closer examination. Being dominant in the European market, lacking long-term contracts with clients, and facing exchange rate risks and policy pressures these three major mountains together form the structural risks that HEGE cannot ignore. Conclusion In summary, it is clear that HEGE Appliances is currently in a golden growth stage where performance is steadily improving, brand acceleration is rising, and production capacity is continuously expanding. The industry dividends and internal growth drivers create a dual resonance, providing ample room for growth imagination. However, investors need to carefully consider the structural risks posed by the three major mountains when positioning themselves. For investors with a higher risk appetite, HEGE provides a valuable window to observe the process of Chinese kitchen appliance brands going abroad; for investors seeking stable returns, they need to carefully weigh its structural risks. After all, the script of Chinese kitchen appliance brands going abroad has already reached the IPO chapter for HEGE, but whether the story is good or not depends on whether its own brands can enter more kitchens in countries beyond the European living room.