Shenwan Hongyuan Securities·2025-10-12 10:12Investment Rating - The report maintains a positive outlook on the home appliance industry, particularly in the white goods sector, highlighting its undervalued status, high dividends, and stable growth potential [4]. Core Insights - The report emphasizes the impact of the fourth batch of government subsidies amounting to 69 billion yuan, which is expected to stimulate consumer demand for home appliances through a trade-in program [10][74]. - The production of air conditioners, refrigerators, and washing machines in October 2025 is projected to decline by 9.9% compared to the previous year, indicating potential challenges in the market [11][3]. - The report identifies three main investment themes: white goods benefiting from favorable real estate policies, export opportunities driven by large customer orders, and core component manufacturers experiencing increased demand due to the overall industry growth [4]. Data Observations - In August 2025, the air conditioning sector saw a production increase of 9.4% year-on-year, with total sales declining by 1.0%. Domestic sales rose by 1.2%, while exports fell by 4.2% [34]. - The refrigerator sector reported a production increase of 3.4% and a sales increase of 2.1%, with domestic sales up by 5.9% and exports down by 0.8% [38]. - The washing machine sector experienced a production increase of 5.8% and a sales increase of 6.6%, with domestic sales growing by 0.6% and exports rising by 12.1% [39]. Industry Dynamics - The home appliance sector's performance is aligned with the broader market, as the home appliance index fell by 0.5%, mirroring the decline in the CSI 300 index [3][5]. - The report highlights the competitive landscape, with companies like Midea leading the air conditioning market with a 26.5% market share, followed by Gree and Haier [36]. - The report notes that the prices of key raw materials such as copper and aluminum have increased, while stainless steel prices have decreased, impacting production costs [13][18]. Company Developments - The report mentions significant movements in the stock market for key companies, with notable gains for companies like Biyu and Huaxiang, while others like Yitian and Sanhua experienced declines [7][5]. - Companies are actively engaging in share buyback programs, with Midea and other firms announcing substantial repurchase plans to enhance shareholder value [61][57]. Future Outlook - The washing machine market is projected to grow significantly, with expectations of reaching a market size of 30 billion yuan within five years, driven by increasing consumer awareness and government support [75]. - The report suggests that the home appliance industry is at a critical juncture, with potential for rapid growth as consumer preferences shift towards more advanced and efficient products [64][69].