Industrial Securities: Attach importance to the bottom reversal investment opportunity in kitchen appliances; optimistic about leading companies' valuation and earnings recovery potential

According to Zhitong Finance APP, Industrial Securities released a research report stating that the demand recovery in kitchen appliances has support, the fundamentals and stock prices are bottoming out, and high dividends provide ample safety margins. They are optimistic about the valuation and performance recovery elasticity of leading kitchen appliance companies. In the short term, under external environmental disturbances, the solid fundamentals and bottom valuations of black and white electrical appliances highlight their defensive attributes. Under high base conditions, the leading air conditioning brands saw good growth in installation cards from January to February, with sufficient demand resilience, and the World Cup catalyzed active overseas stocking in black electrical appliances. The policies from the Two Sessions continue to boost consumption, arranging 250 billion yuan of ultra-long-term special government bonds to support the replacement of consumer goods, encouraging the sinking market and offline consumption, thereby supporting domestic demand in home appliances for 2026.

The main viewpoints of Industrial Securities are as follows:

Focus on Investment Opportunities in Kitchen Appliance Bottom Reversal

1. Real estate data is marginally improving, providing support for the recovery of kitchen appliance demand. According to the National Bureau of Statistics, from January to February 2026, national real estate development investment reached 961.2 billion yuan, a year-on-year decrease of 11.1%, with the decline narrowing significantly by 6.1 percentage points compared to the whole of 2025; among them, residential investment was 728.2 billion yuan, a decrease of 10.7%, with the decline narrowing by 5.6 percentage points. Since the beginning of 2026, core real estate data has shown significant marginal improvement, providing dual support for the warming of kitchen appliance demand.

2. Faced with the dilemma of weak growth in their main businesses, leading integrated stove companies are starting to transform across sectors. According to performance forecasts from four listed integrated stove companies for 2025, the industry as a whole is facing a significant decline in profitability or even losses, with only Zhejiang Meida maintaining profitability, while the other three have turned from profit to loss, leading to an accelerated industry clearance under negative β.

3. Fundamentals and stock prices are bottoming out, and high dividends provide ample safety margins, indicating optimism about the valuation and performance recovery elasticity of leading kitchen appliance companies. During the downturn in the real estate cycle, leading companies such as Boss Electric, Opple Lighting, and Aopu Technology have reinforced their competitive advantages by accelerating market share capture, maintaining stable performance growth, and successfully navigating through the cycle; moreover, the three leading companies have abundant cash on hand, stable operating net cash flow, and an increasing dividend ratio. In 2024, the dividend ratios for Boss Electric, Opple Lighting, and Aopu Technology are expected to be 59.88%/73.80%/108.75%, with current dividend yields of 4.90%/4.87%/7.05%, providing sufficient upward elasticity.

26W12 Copper, Aluminum, and ABS Prices Decrease Month-on-Month, Hot-Rolled Coil Prices Increase Month-on-Month

The average copper price for 26W12 is 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 aluminum price for 26W12 is 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 ABS price for 26W12 is 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 hot-rolled coil price for 26W12 is 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 global average prices for 65"w/55"w/43"w/32"w panels were 175 USD/piece, 126 USD/piece, 66 USD/piece, and 37 USD/piece, respectively, with month-on-month increases of 1.74%/1.61%/1.54%/2.78%.

26W12 RMB Exchange Rate Increases Month-on-Month.

From 2026/3/16 to 2026/3/20, the weekly average exchange rate of the US dollar to the RMB was 6.89, up 0.08% month-on-month, down 4.80% year-on-year. The transaction area of commercial housing in 30 major and medium-sized cities for 26W1230 increased by 23.34% month-on-month. In 25M12, the sales area of commercial housing was 94 million square meters, down 16.57% year-on-year, with a decline narrowing by 1.36 percentage points month-on-month; the completed area of houses was 20.9 million square meters, down 18.35% year-on-year, with a decline narrowing by 7.04 percentage points month-on-month; the new construction area of houses was 5.3 million square meters, down 19.31% year-on-year, with a decline narrowing by 8.42 percentage points month-on-month. The transaction area of commercial housing in 30 major and medium-sized cities for 26W1230 was 2.0096 million square meters, up 23.34% month-on-month.

Investment Recommendations

1. Recommend leading black electrical appliance companies with stable growth and strong alpha attributes such as TCL Electronics (covered by the Hong Kong team) and Hisense Visual; 2) Favor white electrical appliance leaders Midea Group and Haier Smart Home for their defensive attributes; 3) Consider positioning in low-priced stocks like Xgimi Technology and Roborock Technology; 4) Allocate traditional kitchen appliance leaders Boss Electric, Opple Lighting, and Aopu Technology with stable performance and high dividends.

Risk Warning: Significant increases in raw material prices; terminal demand below expectations; intensified industry competition.