GLMS SEC released a research report stating that the home appliance sector's fundamentals in 2026 are expected to show stable overall performance, with domestic demand consolidating and external demand improving from the bottom. As it is a transition year for national subsidy policies, fundamentals may lack significant elasticity. However, the sector's performance in 2026 appears promising for two main reasons. First, fundamental expectations are likely to improve upward, supported by easing trade friction and positive overseas interest rate cut expectations. Home appliance companies may deliver surprises in overseas expansion, while domestic demand also offers points of interest such as innovation vitality and category expansion. Second, the sector exhibits elasticity after style rotation. The relative underperformance in the second half of 2025 has already exceeded that seen during the technology sector surge from 2014 to the first half of 2015. Currently, sector positioning adjustments are sufficient, and leading home appliance companies demonstrate strong competitiveness in terms of dividend yield, valuation, and growth indicators.
The report noted that domestic sales of home appliances in December continued to face high year-on-year base levels, with overall shipments and sell-through remaining weak and continuing to bottom out. Meanwhile, external sales of refrigerators and washing machines showed significant recovery, with washing machines returning to a prosperous range. The combined market share of the top two players in domestic white goods shipments increased year-on-year, while online average selling prices for refrigerators, washing machines, and color TVs maintained steady growth. Robotic vacuum and mopping products from Roboraw saw a year-on-year increase in market share.
Looking ahead, even assuming a complete withdrawal of policies, domestic sales volume and pricing are expected to have a floor, with potential for gradual quarterly improvement. External sales are likely to benefit from improved tariff and interest rate environments, potentially reaching an inflection point ahead of domestic sales. Overall, the sector's domestic and external sales are expected to bottom out and rise in 2026, with leading companies demonstrating strong operational resilience, robust momentum in brand globalization, and support from emerging market production layouts. Their performance during a weak beta phase may outperform the broader industry.
Currently, the sector's relative valuation remains at historically low percentiles. With the resurgence of value-oriented styles towards year-end and early next year, expectations are gradually improving. While fundamentals are still in a left-side phase, there is room for valuation upside.
In terms of stock recommendations: First, white goods leaders with outstanding cost-performance advantages are recommended, including Midea Group, Haier Smart Home, Hisense Home Appliances, and Gree Electric Appliances. Second, color TV leader Hisense Visual Technology, which boasts comprehensive strength and steadily improving market share and profit margins, is recommended, with TCL Electronics also worth attention. Third, cleaning appliance leaders with strong domestic and international demand, such as Roboraw and Ecovacs, are recommended. Fourth, kitchen appliance leaders expanding their growth boundaries through product scenario extension and internationalization efforts are recommended, including Robam, Supor, and Bear Electric Appliances.