Investment Rating - The report maintains a positive outlook on the home appliance sector, particularly recommending leading companies with low valuations, high dividends, and stable growth potential [2][3]. Core Insights - The home appliance industry is experiencing a decline in sales across both air conditioning and kitchen appliances, with significant drops in both online and offline retail volumes [33][34]. - The report highlights three main investment themes: 1. Dividend: Leading white and black appliance companies are characterized by low valuations, high dividends, and stable growth, providing a high margin of safety and elasticity in stock prices. The domestic market is expected to remain stable due to the continued effects of the trade-in policy, while export opportunities are bolstered by global production base layouts and strong demand in emerging markets [2][3]. 2. Technology: Core component manufacturers are diversifying into emerging tech fields such as robotics and data center temperature control, seeking cross-industry transformation [2][3]. 3. Demand Recovery: The report anticipates a recovery in external demand and sustained high demand for new products in the domestic market, particularly for robotic vacuum cleaners [2][3]. Summary by Sections Sales Data - Air conditioning sales saw a significant decline in December 2025, with online retail volume down 38.5% year-on-year and offline retail volume down 42.9%. The average price for online sales decreased by 4.2% to 2981 RMB per unit, while offline prices fell by 20.1% to 3801 RMB per unit [33]. - Kitchen appliances also faced declines, with online sales of range hoods down 16.8% and dishwashers down 10.2% year-on-year. The average price for online range hoods increased by 14.4% to 1739 RMB per unit, while offline prices decreased by 14.4% to 3813 RMB per unit [34][38]. Company Dynamics - Major companies such as Haier, Midea, and Gree are recommended for their current low valuations and strong dividend yields. The report also highlights the potential of companies like Dong'an Environment and Huaxiang Co. in emerging tech sectors [2][3]. - The report notes that the home appliance sector outperformed the Shanghai and Shenzhen 300 Index, with companies like Aojiahua and Hisense leading in stock performance [5][8]. Industry Trends - The report indicates that raw material prices for copper and aluminum have risen, with copper prices up 34.79% year-on-year and aluminum prices up 19.36% year-on-year as of January 23, 2026 [12]. - The report also mentions that the sales of rotary compressors decreased by 13.6% year-on-year, while refrigerator compressor sales increased by 7.2% [27][28]. Economic Environment - As of January 23, 2026, the exchange rate of the US dollar to the Chinese yuan has decreased by 0.51% since the beginning of the year [42]. - The report highlights a decline in the sales area of commercial housing, with residential existing homes down 6.33% and new homes down 24.55% year-on-year [44].