CITIC SEC: Q2 light manufacturing profit margin improvement Focus on high dividend leader and structural highlights in cross-border e-commerce

CITIC SEC released a research report stating that in the second quarter of 2026, the cost increases of metal packaging, cardboard, and specialty papers have been successfully passed on, bringing about improvements at the industry's bottom. In the overseas market, cross-border e-commerce, brand expansion overseas, and the operation of localized brands have shown promising performance. In the domestic market, under cost pressures, leading companies with industrial advantages have started to raise prices, while embracing AI technology as a new tool for industry innovation. Actively seizing opportunities with high dividends, low valuations, industry-leading companies with industrial advantages, and the potential to increase efficiency through price hikes. CITIC SEC's main points are as follows: - Furniture and exports: Pressure continues in the second quarter of 2026, with domestic sales stabilizing in the second half of 2026, and cross-border e-commerce for exports will become a highlight. - Customized home furnishings face the most operational pressures, while soft furnishings are relatively limited in direct impact from new home deliveries, but still face the dual pressures of high base numbers from state subsidies and weak consumer demand. Cross-border e-commerce for exports is a structural highlight for the industry. - Light industry essentials: Pressure exists in the domestic market and cost side, with new business and growth contributions from overseas markets. - Paper-based industry chain and packaging: Profit improvements in the second quarter, with trends continuing in the second half. - According to information disclosed by ORG Technology, metal packaging in the second quarter of 2026 continued to raise prices by 2-3 points for two-piece cans, while demand for three-piece cans remained stable, leading to improved profit margins for single cans. ShenZhen YUTO Packaging Technology and Zhejiang Zhongxin Environmental Protection Technology Group in China have seen stable performance, with improvements in profitability domestically and successful release of new production capacity in Thailand. - Tobacco industry chain: Positive signals from policy releases, strengthening of leading advantages. - SMOORE INTL benefits from the reopening of the American compliant flavored atomized cigarette market; CTIHK is affected by the decrease in American tobacco imports and adjustments in the domestic tax-free market business process stages. The category of oral tobacco products from British American Tobacco continues to grow, and the growth of electronic atomized cigarettes in the US exceeds expectations. Risk factors: - Risks of significant increases in raw material, energy, and shipping prices; intensified industry competition risks; risks of downstream demand falling short of expectations; risks of public crisis events.