GF SEC: Foreign exchange fluctuations and raw materials pressure Q2; seize the operational resilience of leading home appliance companies.

GF SEC released a research report stating that in Q2 2026, the total operating revenue of the home appliance sector is expected to be 400.5 billion yuan (YoY -0.6%), net profit 34.5 billion yuan (YoY -9.4%), gross profit margin 25.5% (YoY -0.5pct), and net profit margin 8.6% (YoY -0.8pct). The white goods sector shows steady growth, with stable ROE and high dividend advantages, likely to benefit from the old-for-new policy. The leading black goods companies enjoy a triple resonance from product iteration dividends, improved domestic competition landscape, and overseas market share expansion. The competitive landscape for cleaning appliances continues to improve, and there is optimism about the elasticity of profit margin recovery in 2026. The two-wheeler industry is experiencing domestic recovery along with increased capacity in Southeast Asia. GF SEC's main points are as follows: The home appliance sector's revenue year-on-year shows negative growth, facing pressure on the revenue side. In Q1 and Q2 of 2026, revenue decreased by -0.1% and -0.6% respectively. Looking at domestic and foreign sales, retail sales of home appliances declined YoY in Q2 2026, with industry growth affected by last year's high base and diminishing marginal effects of national subsidies. In terms of exports, North American exports showed signs of recovery in Q2 2026, while the overall situation in Asia remains pressured, with significant disparities among sub-sectors. From the profit perspective, the overall net profit margin of the sector is declining. In Q2 2026, gross profit margin and net profit margin of the sector decreased by -0.5pct and -0.8pct YoY, respectively. The decline in profitability is mainly due to rising raw material prices and the appreciation of the renminbi. However, leading enterprises generally offset pressures from raw material costs and high exchange rate bases by controlling their expense ratios, resulting in a less severe decline in net profit margins. White Goods In Q2 2026, revenue and net profit decreased by -1.8% and -9.3% YoY, respectively, with net profit margin down by -0.8pct YoY. The white goods sector still demonstrates resilience, with domestic sales revenue and gross profit margin better than previously pessimistic market expectations, while foreign sales revenue shows a certain degree of differentiation, primarily related to exposure to the U.S. market and the self-owned brand Alpha. The main cost suppression factors are exchange rate effects > raw material costs. It is expected that the impact of raw materials on gross profit margins in H2 will remain controllable, and exchange rate pressures will decrease in H2. Kitchen Appliances In Q2 2026, revenue and net profit respectively decreased by -15.2% and -57.9% YoY, with net profit margin down by -5.0pct. The real estate sector is under pressure, combined with weakened scale effects, leading to poor short-term performance. Small Appliances In Q2 2026, revenue and net profit increased by +5.9% and +6.2% YoY, respectively. The external sales of robotic vacuum cleaners remain quite robust, although gross profit margins are dragged down by cost factors. Black Goods In Q2 2026, the black goods sector saw revenue and net profit increase by +5.0% and decrease by -1.4% YoY, respectively, with net profit margin down by -0.3pct YoY. The domestic industry is seeing reduced volumes but increased prices, with Chinese companies expanding their global market share, and structural improvements driving steady growth for black goods brands. Risk warnings: Significant increases in raw material prices; major fluctuations in exchange rates; weakening industry demand; intensified industry competition, etc.