CMSC has released a research report stating that the overall landscape of the light industry is driven by structural growth, export recovery, and differentiated competition in domestic demand. The report suggests allocating to domestic demand targets with high-dividend safety cushions or individual stocks possessing structural growth or sector prosperity α attributes, while paying attention to the validation of industrial trends and performance delivery in emerging directions. Exports are expected to bottom out and recover, with the key to subsequent recovery lying in overseas production capacity, customer structure, and capabilities in non-US markets, emphasizing bottom-up stock selection.

The main views of CMSC are as follows:

New Light Industry Consumption: Focus on Validation of Industrial Trends and Performance Delivery

The penetration rate of smart eyewear is increasing, with Conant Optical achieving growth through breakthroughs in the AI/XR lens industry chain. The global HNB market is expected to reach $41.7 billion by 2025, with room for further penetration growth. Smoore International and China Tobacco International (HK) Company Limited benefit from product and channel innovations. The consumer-grade 3D printing materials market continues to expand. Homey Group leverages its platform capabilities to meet overseas demand, opening up a new growth curve. The electric two-wheeler industry may experience a pattern of lower first and higher later in 2026. Attention should be paid to regulatory intensity, the pace of new product launches, and the overseas oil-to-electric conversion process. Influenced by new national standard policies, the domestic electric two-wheeler market faces short-term cyclical disturbances. Domestic volume is stabilizing, with structural growth coming from intelligentization and electrification of motorcycles. High oil prices are catalyzing an acceleration in the overseas oil-to-electric conversion process. Key focuses include Yadea Group Holdings Ltd, Aima Technology Group Co., Ltd., and Ninebot Ltd..

Light Industry Export Direction: Exports Expected to Bottom Out and Recover, Emphasizing Stock-Specific α Selection

In Q1 2026, some companies in the light industry export chain saw order recovery and revenue growth, but profits remained under pressure due to exchange rates and costs, leading to revenue growth without profit growth. Entering Q2 2026, with the combined effect of a low base and easing disturbances, the key to subsequent recovery lies in overseas production capacity, customer structure, and capabilities in non-US markets. It is recommended to focus on: 1) Segment leaders with mature overseas capacity capable of undertaking order transfers, such as Yongyi Co., Ltd., Healthcare Co., Ltd., and Jiangxin Home Furnishings Co., Ltd.; 2) Growth-oriented targets with high exposure to non-US or emerging markets and low sensitivity to tariffs, such as Lecher Co.; 3) Right-side opportunities where orders have already recovered but are temporarily suppressed by sudden factors, such as Haoyang Co., Ltd..

Personal Care: Product Upgrades and Channel Optimization Drive Growth

For leading domestic companies in segmented categories like Dencare Dental, Beijiajie Group Co., Ltd., and Baiya Shares Co., Ltd., their current P/E valuation percentiles stand at 0.38%, 14.94%, and 21.54% of historical levels since listing, respectively. The P/E valuations for leaders in personal care sub-sectors have retreated to historically low ranges. Coupled with the ongoing realization of three structural drivers—efficacy upgrades, omni-channel layout, and premiumization—the foundation for simultaneous improvement in marginal growth and profit quality is present, highlighting their allocation value.

Home Furnishings Sector: Prefer Soft Furnishing Leaders

Soft furnishings have demonstrated stronger revenue and profit resilience compared to custom home furnishings. Leading companies like Kuka Home, HIGOLD Group, and Oppein Home Group Inc. offer superior allocation value under the logic of low valuation combined with high dividends/high-quality growth. Kuka Home's trailing P/E has fallen to about 11x, with a dividend yield of approximately 5.78%, placing its P/E valuation at the 2.93% historical percentile since listing. HIGOLD Group shows high growth in functional/basic hardware, cost reduction and self-production improving gross margin, and multi-channel expansion (distributors, cloud commerce, e-commerce), giving it higher-quality growth attributes, while its valuation has fallen to the 1.88% historical percentile. Oppein Home Group Inc. has a dividend yield of about 7% and has announced an annual dividend of no less than 1.5 billion yuan from 2024 to 2026, providing stronger dividend security.

Risk Warnings

Uncertainty in tariff policies, significant fluctuations in raw material prices, significant exchange rate fluctuations, significant fluctuations in ocean freight rates, and intensifying industry competition.