GLMS Securities: Home Appliance Sector's Stable Operations Combined with Valuation and Dividend Advantages Recommend Gree Electric Appliances, Inc. of Zhuhai (000651.SZ) and others.

GLMS SEC Securities issued a research report stating that domestic sales are steadily growing on top of excellent external sales performance, with the overall stable operation of the household appliance sector. Looking ahead, based on policy stimuli and a low base, domestic sales may accelerate; the leading companies have rich risk resistance methods, with controllable risks in external sales, and overall stable operation can be expected. Combined with the dividends advantage in the sector valuation, the "stronger than the market" rating is maintained. Recommended stocks include Gree Electric Appliances, Inc. of Zhuhai (000651.SZ), Midea Group Co., Ltd. (000333.SZ), HAIER SMARTHOME (600690.SH), and Hisense Home Appliances Group (000921.SZ). The main views of GLMS SEC Securities are as follows: White goods: Stable revenue growth, continued improvement in profitability With the expectation of policy continuation, the growth rate of domestic sales of air conditioners/refrigerators/washing machines may slow slightly in 2025 Q1; on the export side, based on industry online data and the previous order situation of the leading companies, good growth is expected to be maintained, exceeding expectations. Overall, the white goods sector is expected to achieve stable revenue growth for the season, and the quality indicators of the leading companies' annual financial reports support their subsequent operations. With structural improvements driving the trend, one-time drag reduction, and the potential for continued improvement in profitability. Black appliances: Slight increase in shipments, significant optimization of product structure Based on subsidy policies and the increase in MiniLED penetration, industry online data shows a year-on-year increase of +2.49%/+6.69% in domestic and external sales of the TV industry in January-February 2025. At the same time, the domestic product structure of the TV industry has been significantly optimized. Looking at the TV industry, the operating environment for internal and external sales in 2025 Q1 is still stable. On the profitability side, panel prices increased slightly year-on-year in 2025 Q1, and the bank believes that the leading companies are expected to transmit cost pressures through product structure upgrades, leading to continued improvement in profitability. Late cycles: End demand remains weak, profitability under pressure In the real estate sector, the year-on-year completion area of residential buildings in January-February 2025 decreased by 18%, and demand in late-cycle industries is under pressure. However, the declines in the fourth quarter of 2024 have all narrowed. In terms of the policy of replacing old with new, considering that consumer demand may have been concentrated in the fourth quarter of last year, the drive in the first quarter may be limited. Overall, the bank expects the industry demand in 2025 Q1 to be similar to that of 2024 Q4, still leaning towards weakness. With the sector under pressure, profitability may also be slightly under pressure. Emerging small appliances: High year-on-year growth in domestic sales, strong momentum in overseas markets With the continuation of the policy of replacing old with new and the background of product innovation, the domestic sales of emerging small appliances in 2025 Q1 may continue to grow at a high rate. The sales of floor cleaners are still increasing in both volume and price, the launch of mechanical floor cleaners is driving the release of demand for medium to high-end products, and the sales of floor scrubbers continue to accelerate, indicating an improvement in domestic sales. On the overseas front, considering that domestic brands are still actively expanding overseas and with a positive marketing strategy, the export side may see steady growth. However, considering the fierce industry competition, profitability may come under pressure. Kitchen small appliances: Recovery in domestic sales, steady growth in exports The bank expects the kitchen small appliance industry to continue to recover domestically, with the expected assistance from national subsidies helping to release demand for basic small appliances, while improvements in brand management on the Douyin platform are also beneficial. On the export side, with the recovery of international market sentiment and the short-term rush for exports, exports are likely to maintain steady growth. On the profitability side, with improvements in the Douyin environment, the easing of competition, combined with a slight increase in revenue growth, companies are expected to maintain the trend of improved profitability in 2025. Risk warning: 1) Unfulfilled policy expectations; 2) Significant fluctuations in raw material prices; 3) Uncertainties in tariffs and external demand.