Core Viewpoint - The outlook for 2026 indicates that high base effects will suppress performance in the first half of the year, with the impact of the real estate sector leading to a situation where external sales may recover before domestic demand [2][4]. Group 1: Industry Performance Overview - As of November 2025, the cumulative growth of the home appliance and light manufacturing industries has not outperformed the CSI 300 index, with light manufacturing showing a notable advantage over home appliances [2][3]. - The domestic demand for durable consumer goods, particularly in home appliances and home furnishings, is expected to weaken due to the continuous decline in housing completion data and diminishing effects of government subsidies [2][4]. Group 2: Domestic Demand and Real Estate Impact - The potential for new rounds of housing purchase restrictions and stimulus policies has increased following a rapid decline in residential sales price indices in October 2025, which may help related sectors achieve valuation recovery [5]. - The total number of second-hand and new housing transactions is projected to decline by 4.8% in 2026, slightly better than the 5.9% drop in 2025, indicating continued pressure on home decoration demand [5][7]. Group 3: Consumer Subsidy Effects - The anticipated effects of the old-for-new subsidy program may lead to a decline in domestic sales of air conditioners, refrigerators, and washing machines by 7.5%, 8.6%, and 9.7% respectively in 2026, due to demand exhaustion and high base effects [10]. - If the subsidy program continues without significant increases in scope or intensity, the positive impact on demand is expected to be weaker than in previous years [10][12]. Group 4: External Trade and Market Dynamics - The external sales performance of home appliances, furniture, and other consumer goods is expected to see a turning point in the second quarter of 2026, driven by low base effects and improved demand in developed markets like the U.S. and Europe [11][12]. - Emerging markets, particularly in Latin America and Southeast Asia, are expected to show stronger demand growth compared to developed economies, with the Middle East facing weaker demand due to declining oil prices [11][12]. Group 5: Strategic Recommendations - The focus for 2026 should be on overseas markets, as companies with a high proportion of external sales and better profitability abroad are likely to outperform domestically [12]. - Companies less affected by domestic demand pressures, such as those in the kitchen small appliance sector, are expected to perform more steadily compared to those closely tied to home decoration demand [12].

Market Overview - On December 10, the Shanghai Composite Index fell by 0.23%, the CSI 300 decreased by 0.14%, the STAR 50 dropped by 0.03%, the CSI 1000 rose by 0.37%, the ChiNext Index decreased by 0.02%, and the Hang Seng Index increased by 0.42% [4][5] - The best-performing industries on December 10 were real estate (+2.53%), retail (+1.97%), social services (+1.22%), telecommunications (+1.21%), and non-ferrous metals (+1.04%). The worst-performing industries were banking (-1.58%), electric equipment (-0.87%), computers (-0.63%), electronics (-0.39%), and oil & petrochemicals (-0.26%) [4][5] - The total trading volume for the A-share market on December 10 was 17,916.34 billion yuan, with a net outflow of 1.019 billion Hong Kong dollars from southbound funds [4][5] Important Recommendations - The report highlights Silver Capital Co., Ltd. (603277) as a leading company in commercial catering equipment, with intelligent products like the French fry robot expected to create new opportunities. The recommendation is based on the expectation of a bull market for overseas expansion in 2025, with the company positioned as a quality player in this space [6] - The company is expected to exceed performance expectations due to its advantages in brand ownership, self-built channels, and overseas production capacity. The revenue forecast for 2025-2027 is 3,026 million yuan, 3,447 million yuan, and 3,940 million yuan, with growth rates of 10%, 14%, and 14% respectively. Net profit is projected to be 610 million yuan, 712 million yuan, and 852 million yuan, with growth rates of 13%, 17%, and 20% respectively [6] Important Insights - The light industry manufacturing sector's annual strategy report emphasizes growth through overseas expansion and selective domestic demand. The market outlook indicates continued pressure on domestic demand and disruptions from overseas tariffs [7] - The report anticipates that the main line of overseas expansion will provide high certainty for performance growth, while traditional domestic demand sectors like metal cans and paper chains may see potential price increases leading to profit turning points. The real estate sector is beginning to stabilize [8] - Key drivers include performance growth from overseas expansion, potential profit turning points in traditional domestic demand, and the value of mid-term growth potential in new consumer sectors [8]