CMSC: Domestic demand focuses on high dividends and structural growth, light industrial exports are expected to build a bottom and recover.

CMSC released a research report stating that the overall structure of the light industry is driven by structural growth, export recovery, and differentiated competition in domestic demand. It is recommended to allocate to targets with high domestic demand, safe dividends, or possess structural growth or Alpha attributes, focusing on emerging industry trends and performance realization. Export recovery is expected to bottom out, and the key to subsequent recovery lies in overseas production capacity, customer structure, and non-U.S. market capabilities, focusing on bottom-up stock selection. Key points of CMSC are as follows: New consumer goods in the light industry: focus on industry trends verification and performance realization The penetration rate of smart glasses is increasing, CONANT OPTICAL breaks through the AI/XR lens industry chain for growth. The global market for HNB is expected to reach $41.7 billion by 2025, with room for further penetration. SMOORE INTL and HUABAO INTL benefit from product and channel innovation. Consumption-grade 3D printing consumables continue to expand, Ningbo Homelink Eco-iTech is aligning with overseas demand through platform capabilities, opening up a new growth curve. The electric two-wheeler industry may experience a low-high trend by 2026, focusing on regulatory strength, pace of innovation, and overseas oil-to-electric conversion process Affected by the new national standard policy, there is short-term disruption in the domestic electric two-wheeler market, with stable total volume domestically. Structural growth comes from intelligence and electrification, and overseas acceleration of the oil-to-electric conversion process due to high oil prices. Key focus on YADEA, Aima Technology Group, and Ninebot. Direction of light industry exports, export recovery expected to bottom out, focus on individual stock selection In Q1 26, some light industry export chain companies saw order recovery and revenue growth, but profits did not increase due to exchange rates and cost pressures. In Q2 26, with a low base + easing of disturbances, the key to subsequent recovery lies in overseas production capacity, customer structure, and non-U.S. market capabilities. It is recommended to focus on: 1) segmented leaders with mature overseas production capacity and the ability to take on order transfers such as UE Furniture, Henglin Home Furnishings, HHC Changzhou Corp.; 2) growth targets with a high proportion of non-U.S. or emerging markets and tariff insensitivity, such as SOFTCARE; 3) short-term right-side opportunities suppressed by sudden factors, but with orders already recovered, such as Guangzhou Haoyang Electronic. Upgrading personal care products and channel optimization drive growth Domestic leading companies in subcategories such as Dencare, Perfect Group Corp., Ltd, Chongqing Baiya Sanitary Products have PE valuation percentiles of 0.38%/14.94%/21.54% respectively since listing. The current PE valuation of the leading subcategories of personal care has fallen to a historical low range, with marginal growth and profit quality showing a simultaneous rise, highlighting allocation value. Preferred software leaders in the home sector Software home furnishings show stronger revenue and profit resilience compared to custom home furnishings. Leading companies Jason Furniture/Higold Group/Oppein Home Group Inc. have more favorable allocation value under the logic of low valuation combined with high dividends/high-quality growth. Jason Furniture's PETTM has fallen to about 11x, with a dividend yield of about 5.78%, and a PE valuation percentile of about 2.93% since listing. Higold Group has high growth in functions/basic hardware, cost reduction, and self-production to improve gross profit, multi-channel expansion through distribution+e-commerce+online commerce, and high-quality growth attributes, with valuation falling to about 1.88% percentile since listing. Oppein Home Group Inc. has a dividend yield of about 7%, announcing annual dividends of not less than 1.5 billion yuan from 2024 to 2026, with dividend security assurance. Risk warning: Uncertainty in tariff policies, significant fluctuations in raw material prices, significant fluctuations in exchange rates, significant fluctuations in shipping costs, and intensified industry competition.