Guolian Minsheng Securities releases a preview of the first quarter report for the home appliance industry in 2026: Disturbances in the base number, waiting for recovery.

Guolian Minsheng Securities released a preview of the first quarter report of the household appliance industry in 2026, stating that there is still a base effect in the 2026 Q1, and the industry fundamentals are at the bottom range, at the dawn before the dawn. The pressure on the domestic sales base has passed its peak, and there is hope for continuous improvement in exports. Emerging markets are expected to deliver better-than-expected performance, and the overall sector's operating environment is worth looking forward to as it gradually recovers on a month-on-month basis. The dividend narrative orientation provides style support, and the sector's market situation is worth paying attention to. Guolian Minsheng Securities' main points are as follows: White goods: Growth rate improves month-on-month, with headwinds on the cost side. In 2026 Q1, the pressure on the domestic sales base of white goods has eased, with demand weak but stable, showing signs of bottoming out; the repair trend of external washing machines is strong, with the narrowing decline in air conditioners, indicating a possible turning point. With both domestic and external sales driving growth, industry revenue is expected to improve month-on-month. In terms of profitability, copper prices have been rising since Q4 2025, and under the influence of the Middle East geopolitical conflict, plastic and aluminum prices have recently risen. Coupled with exchange rates, tariffs, and overseas competition, profitability is continuing to face headwinds, with the high base effect from the same period last year likely leading to a weaker year-on-year comparison for the quarter. In a rising cost environment, leading white goods companies are operating with resilience, with a high margin of safety in profitability and flexibility in price adjustments. Continuous efficiency improvements and cost reductions are expected to help offset short-term pressure. Black goods: The decline in domestic sales is narrowing, and overseas momentum is strong. In 2026, there are varying performances in the internal and external sales of color TVs. In terms of domestic sales, from January to February 2026, the year-on-year decline in LCD TV domestic sales was -8%, although it was affected by the high base from the previous year, the decline is significantly less compared to the over 20% decline in Q4 2025. With panel prices slightly rising, the penetration rates of RGB-MiniLED and large-screen TVs are increasing, potentially improving the industry's profitability level. On the external sales side, from January to February 2026, the year-on-year increase in LCD TV exports was +13%, turning positive month-on-month. The demand for sports events in 2026 may gradually be released, and considering the continuous optimization of channels and product structures by domestic color TV leaders, overseas market share is steadily increasing, with the performance of leading companies in the overseas market potentially outperforming the industry. Electric cleaning appliances: High domestic demand base, continuous high growth in exports. In terms of electric cleaning appliances, from January to February 2026, the year-on-year retail sales of floor scrubbers decreased by -5%, with the decline narrowing compared to Q4 2025, mainly due to the high subsidy base last year, while the sales of floor washers increased by +8% year-on-year, turning positive compared to Q4 2025. Looking ahead, product innovation is expected to drive industry structure upgrades, but overall base pressure persists. In terms of exports, the combined download volume of overseas leading brands' apps saw a high year-on-year increase, with domestic brand market share continuously increasing. Among them, Chinese brands are performing well in the European market, followed by North America and the Asia-Pacific markets. Considering the superior product structure of Chinese brands, the trend of increasing sales and prices of overseas floor sweepers is expected to continue. Small household appliances: Weak revenue continues, with cost disturbances emerging. The performance of retail sales revenue for kitchen small household appliances in the first quarter remains weak, with pressure expected to decrease month-on-month compared to Q4 2025, and sales performance still stronger than sales volume. Improvements in the structure and upgrade of the market are playing a role, with the first quarter showing particularly strong growth in coffee machines and air fryers; under the disturbance of external demand, the exports of kitchen small household appliances in the first quarter may face pressure. In terms of profitability, the RMB has appreciated slightly in the first quarter, and plastic prices rose in March, which may have a negative impact. However, the increase in average prices domestically, as well as internal efforts to reduce costs and increase efficiency, and the increasing proportion of new high-profit margin businesses, are expected to continue to positively impact profitability performance. Late-cycle: Real estate pressures still exist, with industry expectations remaining flat. The sales area and completion area of commercial housing in the first quarter are still in a downward trend, with late-cycle demand suppression not expected to be relieved. On the other hand, the new round of national subsidy policies in 2026 only includes water heaters in the kitchen appliance category, with base interference present. Despite the resilience growth of dishwashers, steamers, and electric water heaters, their proportion is limited. Therefore, it is expected that the revenue of kitchen appliance companies in the first quarter may still decline, but this is within expectations. An accelerated industry reshuffle is likely to follow, with leading companies demonstrating more prominent operational resilience. In terms of profitability, costs such as cold-rolled sheets in the first quarter are weak, but channel investments are also increasing, with profit margins expected to remain stable. Investment recommendations: Continued recommendations: 1) White goods leaders Midea Group Co., Ltd, HAIER SMARTHOME, Gree Electric Appliances, Inc. of Zhuhai, and Hisense Home Appliances Group, which operate with high quality and outstanding cost performance advantages; 2) Color TV leaders TCL ELECTRONICS and Hisense Visual Technology, which steadily increase their global market share and profitability center; 3) Cleaning appliance leaders Beijing Roborock Technology and Ecovacs Robotics, which lead the industry in prosperity; 4) Companies like Zhejiang Supor, Hangzhou Robam Appliances, and Bear Electric Appliance, which continue to increase their market share and actively expand their growth boundaries. Risk factors: 1) Sharp increase in raw material costs. Raw materials account for more than 80% of the operating costs of major household appliance companies, and the sector's future profit expectations are based on the assumption of overall stability in raw material prices. Recently, there has been an upward trend in the prices of non-ferrous metals, and if this evolves into a general rise in bulk commodity prices, profitability may fall below expectations. 2) Uncertainties in tariffs and external demand. The current U.S. tariff policy still carries uncertainties, and although the demand for household appliances in Europe and the United States as a whole is gradually recovering, it is still affected by factors such as monetary and fiscal policies. Geopolitical risks persist, which may affect the overall recovery of overseas demand and Chinese household appliance exports in the future.