Core Viewpoint - The investment outlook for the home appliance sector is driven by the stability of company performance, increasing dividend rates, and the upward trend in valuations due to declining risk-free interest rates [1] Industry Review - The home appliance industry is expected to achieve absolute and relative returns in 2023 and 2024, with the SW home appliance index rising by 3.8%, 25.40%, and 1.939% for the years 2023, 2024, and 2025 YTD respectively [1] - Domestic sales benefit from the durable necessity of major appliances and the competitive landscape, with the market also receiving a boost from the old-for-new subsidy policy since Q4 2024 [1] - The global market is benefiting from China's competitive advantage in the home appliance sector, leading to an increase in global market share and penetration in emerging markets [1] - Leading companies in the home appliance sector are steadily increasing their dividend rates, while the decline in China's risk-free interest rates is driving up valuations for these leading firms [2] Industry Outlook - Short-term pressures exist in the industry, with domestic sales potentially experiencing demand exhaustion due to the lack of seamless integration of national subsidies, and intensified competition in the online air conditioning market [2] - Concerns remain regarding U.S. tariff risks and potential negative impacts on the global economy [2] - The industry's certainty stems from its global competitive advantages and the ability to navigate U.S. tariff risks through a globally integrated supply chain, with no significant loss of U.S. customers reported [2] - The durable necessity of major appliances underpins long-term domestic demand stability, and the decline in China's risk-free interest rates is expected to continue driving up valuations for high-dividend leading companies [2] Expectations for Subsidy Policies - Consumer goods are expected to benefit from long-term special government bonds of 150 billion and 300 billion yuan in 2024 and 2025 respectively, with the number of appliance categories benefiting from subsidies expanding from 8 to 12 by 2025 [3] - The current subsidy amount is anticipated to support the market until early Q3, with provinces likely to adopt varying policies to extend the subsidy period [3] - The most benefited appliances from subsidies are air conditioners and cleaning appliances, leading to intense competition in the online market to capture current subsidy benefits [3] New Supply Landscape Overseas - U.S. tariff policy risks since April 2025 have negatively impacted exports, although a phased agreement reached in Geneva in May has alleviated some export pressures [4] - According to customs statistics, China's home appliance exports are expected to grow by 3.8% and 14.1% in 2023 and 2024 respectively, with air conditioner exports significantly exceeding expectations in 2024 [4] - Exports are projected to decline starting April 2025, with production output for air conditioners showing a year-on-year decrease from May to August [4] - Only industry leaders are establishing overseas supply chains, leading to a higher concentration of demand orders in the U.S. market by 2026, while smaller companies are likely to be absent [4]

Core Viewpoint - The domestic passenger car market in May continued its recovery trend, with retail sales increasing by 13% year-on-year to 1.93 million units, and the penetration rate of new energy vehicles rising to 47.3% [1] Sales Tracking - In May, the retail sales of passenger cars reached 1.93 million units, a 13% increase compared to May last year, and a 10% increase from the previous month. Cumulatively, retail sales for the year reached 8.802 million units, up 9% year-on-year [1] - Wholesale figures for May showed 2.329 million units, a 14% year-on-year increase and a 6% month-on-month increase, with cumulative wholesale sales for the year at 10.797 million units, up 12% year-on-year [1] - Insurance data indicated that 1.7086 million new passenger cars were registered in May, a 12.5% increase year-on-year, with new energy vehicles accounting for 911,700 units, up 23.9% year-on-year [1] Market Performance - In May, the CS automotive sector rose by 1.88%, with the CS passenger car index increasing by 1.12%. The CS automotive parts index rose by 2.52%, and the CS automotive sales and service index increased by 3.26% [2] - From the beginning of 2025 to date, the automotive sector has increased by 29.05%, outperforming the CSI 300 index, which rose by 11.92% [2] Cost Tracking - As of the end of May 2025, prices for float glass, aluminum ingots, and zinc ingots decreased by 24%, 3.2%, and 7.6% year-on-year, respectively [3] Inventory - The inventory warning index for Chinese automotive dealers in May was 52.7%, a decrease of 5.5 percentage points year-on-year and 7.1 percentage points month-on-month, indicating an improvement in the automotive circulation industry's prosperity [4] Market Focus - Developments in autonomous driving include companies like WeRide and Baidu expanding their robotaxi plans, with Tesla set to launch its robotaxi in June. Additionally, companies are accelerating the deployment of unmanned logistics vehicles [5] - A new 7 billion yuan industrial fund has been established in Shenzhen focusing on AI and embodied robotics [5] - New vehicle models include the Sea Lion 06EV, the Star Era ET facelift, and the Hongqi H6 facelift [5]