CITIC Construction Investment: Focus on the Long-Term Perspective, Two Main Lines in the Home Appliance Sector

China Securities Construction Investment Research Report states that by 2025, the home appliance sector will be hindered by tariffs increases, fluctuations in the old-for-new policy, and high base effect expectations in the second half of the year, resulting in underperformance relative to the CSI 300. From a long-term perspective, corporate competitiveness will ultimately return to the essence of product innovation and efficiency advantages. Therefore, from an investment point of view, we believe there are two main themes: one is that going overseas continues to be the most important source of growth, and the other is the dividend from transformation.

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CITIC Construction Investment: The Dividend and Transformation Cycle of Home Appliances Going Global

By 2025, the home appliance sector will be hindered by tariffs increases, fluctuations in the old-for-new policy, and high base effect expectations in the second half of the year, resulting in underperformance relative to the CSI 300. From a long-term perspective, corporate competitiveness will ultimately return to the essence of product innovation and efficiency advantages. Therefore, from an investment point of view, we believe there are two main themes: one is that going overseas continues to be the most important source of growth, and the other is the dividend from transformation.

Black Electronics: Domestic demand gradually under pressure, Chinese companies accelerate overseas expansion, and high-end market position improves

Domestic sales stimulation weakens, export expectations improve. According to Loto Technology data, in Q2 and Q3 2025, the shipment volume of brand complete TVs in China decreased by 2.1% and 10.4% year-on-year, respectively. It is forecasted that in Q4, the decline will reach over 15%. Retail market declines are even larger, with total shipments for the full year 2025 expected to decrease by 6.8% year-on-year, and retail sales down about 10%. Looking ahead to 2026, the fundamentals of domestic demand pressure are likely to continue. Loto Technology believes that regardless of whether the “national subsidy” policy is extended, the Chinese TV market will continue to decline. If other forms replace the national subsidy, total shipments in 2026 will decrease by 6.2% year-on-year; if no stimulus policies continue, the decline is likely to exceed 10%. However, 2026 is a big year for sports events, with the US, Canada, and Mexico hosting the World Cup, which will stimulate overseas TV demand and replacement cycles. Strengthening overseas market deployment will be a top priority for Chinese TV companies.

TCL and Hisense increase domestic and international market share, with significant room for growth overseas. According to AVC Revo data, in the first half of 2025, Hisense and TCL shipped over 13 million units globally, with a global market share exceeding 14%, an increase of about 1 percentage point year-on-year. Hisense’s domestic and overseas market shares are 21.1% and 12.7%, respectively, up 1.1 and 0.3 percentage points; TCL’s domestic and overseas market shares are 18.9% and 13.8%, up 0.5 and 1.1 percentage points. Meanwhile, Samsung shipped over 16 million units globally, with a market share close to 18%, a decrease of 0.5 percentage points year-on-year. Its shipments are concentrated in overseas markets, where the market share is about 22%. Chinese brands still have considerable room to catch up.

Domestic dual giants have completed overseas capacity layout, with shipment growth expected in 2025. From a global perspective, as Samsung loses ground in the mid-to-low-end market and exits the LCD panel business, and as other overseas brands like LG and Sony transfer market share, Loto Technology predicts that Chinese brands Hisense and TCL will top the global market within three years. According to AVC Revo, TCL’s aggressive 2025 business plan aims to maintain growth in global market share, while Hisense maintains an active shipment target. It’s worth noting that there’s no need to overly worry about the risk of US tariffs; Hisense and TCL lead in overseas capacity deployment. Brands like ONN and VIZIO, which rely on Chinese mainland OEM factories, face higher tariff risks and subsequent cost pressures. Therefore, the competitive pressure on leading brands may decrease.

The trend of high-endization and large-screen structure upgrades is significant, driving profit margin improvements for brands. Demand for high-end TVs continues to recover. According to DSCC data, in Q2 2025, global high-end TV shipments and sales increased by 40% and 21% year-on-year, marking the fourth consecutive quarter of growth. According to AVC Revo data, in the first half of 2025, global TV shipment area reached 72.2 million square meters, up 3.6% year-on-year. The average shipment size was 53.7 inches, continuing to expand from 53 inches in 2024. The trend of large-screen TVs persists globally. As product structures continue to optimize industry-wide, downstream brands’ profit margins are expected to further improve.

The upheaval in the high-end TV market: Chinese brands actively promote MiniLED TVs. MiniLED’s share in the high-end market is continuously expanding, reducing OLED’s importance in this segment. In 2023, OLED accounted for over 60% of high-end market shipments and sales, but in Q2 2024, MiniLED surpassed OLED. Since then, MiniLED has been gaining market share each quarter. In Q2 2025, MiniLED TV shipments and sales grew by 101% and 66% year-on-year, respectively, while OLED TV shipments remained flat, and sales declined by 7%. The main reason is that MiniLED TVs are more cost-effective and offer better value, leading more consumers to choose MiniLED. Chinese brands actively promoting MiniLED TVs are benefiting the most.

Chinese brands seize high-end market share, with structural upgrades continuing to boost profit margins. In Q2 2025, TCL’s global shipments of 65-inch and larger TVs increased by 26.9% year-on-year, with the share rising 5.2 percentage points to 29.1%. Shipments of 75-inch and larger TVs grew by 20.8%, with the share increasing 2.0 percentage points to 14.7%. In the first half of 2025, TCL’s average global TV size increased by 1.5 inches to 53.4 inches. Shipments of quantum dot and MiniLED TVs increased by 73.7% and 177.7%, respectively. Since Q4 2024, Samsung’s MiniLED shipments have fallen to fourth place, behind Hisense, TCL, and Xiaomi. Chinese TV brands leverage their early advantage in MiniLED technology and cost-performance in LCD to capture the global high-end market. The increased sales of large and mid-to-high-end TVs help optimize product structure and are key to improving profitability for Hisense and TCL.

1. Macroeconomic growth is below expectations; home appliances are durable consumer goods closely linked to household income expectations. If macroeconomic growth slows, it could significantly impact industry sales;

2. Sharp fluctuations in raw material prices: home appliance companies have high raw material costs relative to operating costs. If commodity prices rise again, the sector’s profitability will weaken;

3. Risks in overseas markets: recent years have seen increased uncertainty in the overseas environment. Leading home appliance exporters are highly dependent on external demand, so a decline in foreign demand will impact performance accordingly;

4. Intensified market competition: in a weak market environment, industry competition becomes fiercer. Some companies face risks of losing market share and being dragged down by low-price competition.

(Source: People’s Financial News)