Orient Securities·2025-05-28 07:12Investment Rating - The report maintains a positive outlook on the home appliance industry, indicating a favorable investment environment with expectations of increased capital expenditure and strong cash flow management among leading companies [8][19]. Core Viewpoints - The home appliance industry is entering a critical phase of globalization, with capital expenditures expected to rise. "Cash cow" companies are likely to leverage their strong cash flow to build competitive barriers [9][19]. - The report highlights the potential for home appliance companies to enhance their market share in emerging markets through aggressive investments and local manufacturing to avoid tariff barriers [9][19]. - The overall cash flow quality of home appliance companies is strong, with many exhibiting a net cash ratio greater than 1, indicating robust operational efficiency and financial stability [11][12]. Summary by Sections Investment Recommendations and Targets - The first quarter results for home appliance companies exceeded expectations, with domestic sales likely to benefit from policy support. The demand for home appliances is anticipated to remain strong in the second quarter, particularly in the air conditioning sector due to high temperatures and low inventory levels [19]. - Recommended companies include: - Midea Group (000333, not rated) - Haier Smart Home (600690, Buy) - Hisense Home Appliances (000921, not rated) - Hisense Visual Technology (600060, Overweight) - Ousheng Electric (301187, Buy) - Stone Technology (688169, Buy) - Bear Electric (002959, Overweight) - Robam Appliances (002508, Buy) - Vatti Corporation (002035, not rated) [19]. Industry Overview - The report notes a steady growth in white goods exports, indicating potential in emerging markets, while disruptions in exports to the U.S. are expected to ease [19]. - The home appliance sector is characterized by a diverse performance across different segments, with high-end and cost-effective products both showing promising results [19]. Financial Metrics - The report emphasizes the strong cash flow management of leading home appliance companies, with many maintaining a high net cash ratio, which is a positive indicator for future global expansion [11][12][16]. - Companies like Midea Group, Haier Smart Home, and Gree Electric Appliances are highlighted for their substantial cash reserves, with cash assets constituting over 20% of total assets [16][19].