According to a research report by GLMS SEC, the home appliance sector reported a 2.68% year-on-year revenue increase to RMB 389.7 billion in Q3 2025, with net profit attributable to shareholders rising 4.50% to RMB 32.5 billion. Gross margin improved by 0.66 percentage points (pct), while net profit margin edged up 0.14 pct. The sector demonstrated stable operations, with domestic sales pressure remaining limited for the year. Exports are expected to recover after absorbing short-term fluctuations, and the sector's exposure to the U.S. market may be limited. Emerging categories like robotic vacuum cleaners continue to show strong demand both domestically and overseas. Leading companies benefit from structural upgrades, global production layouts, and high-quality operations with attractive dividends, emphasizing shareholder returns. Investors are advised to focus on the sector's value.

**Key Views by GLMS SEC:**

**White Goods:** Domestic demand slowed sequentially, but profitability remained stable. In Q3 2025, white goods revenue grew 3.83% YoY to RMB 269.7 billion, showing resilience despite weaker domestic demand. Leading players outperformed the industry, with strong growth in emerging overseas markets and reduced tariff impacts, leading to sequential export improvements. Net profit attributable to shareholders rose 3.32% YoY to RMB 25.6 billion, while operating cash flow increased 4.66% to RMB 47 billion, reflecting high operational quality. Net profit margin dipped slightly by 0.05 pct to 9.49%, as cost optimization efforts continued.

**Black Goods:** Sector pressure emerged, but profitability improved significantly. Black goods revenue declined 2.64% YoY to RMB 48.6 billion in Q3, likely due to export uncertainties. However, leading TV manufacturers saw improved domestic product mix and stable LCD panel costs, driving better-than-expected net profit. The sector’s net profit surged 37.21% YoY to RMB 1.5 billion, with enhanced profitability.

**Post-Cycle Appliances:** Weak performance persisted, but leaders fared better. Revenue for post-cycle appliances (kitchen and lighting products) fell 4.09% YoY, in line with expectations. Industry consolidation benefited traditional leaders with diversified strategies and stronger channels, improving revenue resilience. Gross margin rose 0.45 pct, but net profit margin dropped 1.38 pct due to one-off factors like bad debt reversals in the prior year.

**Smart Home Appliances:** Strong growth with diverging profitability. Smart home revenue surged 24.81% YoY to RMB 11.4 billion, driven by robust demand. While Roborock maintained high revenue growth, profitability was impacted by promotional spending. Ecovos sustained rapid growth, leveraging cost efficiency and new product launches to boost earnings. The sector’s net profit jumped 93.18% YoY to RMB 900 million, with net margin up 2.85 pct to 8.05%.

**Traditional Small Appliances:** Export pressure weighed on performance. Revenue for traditional small appliances fell 4.03% YoY, with domestic demand supported by subsidies while exports faced tariff-related volatility. Gross margin rose 0.52 pct due to higher-margin domestic sales, but net margin dropped 1.44 pct as marketing expenses increased.

**Risk Warning:** Potential surges in raw material costs and uncertainties in export demand and tariffs.