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

CITIC Construction Investment Research reports that in 2025, the home appliance sector will be hindered by tariffs increases, fluctuations in the replacement policy, and high base effects 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 standpoint, CITIC Construction Investment believes there are two main themes: first, overseas expansion will continue to be the most important source of growth; second, the benefits of transformation.

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CITIC Construction Investment: The Benefits of Overseas Expansion and Transformation Cycles in Home Appliances

In 2025, the home appliance sector faces disruptions from tariff hikes, fluctuations in the old-for-new policy, and high base effects in the second half, leading to overall underperformance compared to the CSI 300. Looking at the long-term, corporate competitiveness will ultimately revert to the core of product innovation and efficiency advantages. From an investment perspective, we see two main themes: continued overseas expansion as the primary growth driver and the benefits of transformation.

Black Electric: 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 appliances in the Chinese TV market declined by 2.1% and 10.4% year-over-year, respectively. Forecasts for Q4 project a decline of over 15%, with retail market drops even larger. Total shipments for 2025 are expected to decrease by 6.8% year-over-year, with retail sales down about 10%. Looking ahead to 2026, the fundamentals of domestic demand are likely to remain under pressure. Regardless of whether the national subsidy policy continues, the Chinese TV market will continue to decline. If other forms replace the subsidy, total shipments in 2026 could decrease by 6.2% year-over-year; if no stimulus policies persist, the decline could exceed 10%. However, 2026 is a big year for sports events, with the World Cup in the US, Canada, and Mexico expected to boost overseas TV demand and replacement cycles. Strengthening overseas market presence 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, each holding over 14% of the market share, with an increase of about 1 percentage point year-over-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 are 18.9% and 13.8%, up 0.5 and 1.1 percentage points. Meanwhile, Samsung shipped over 16 million units globally, with nearly 18% market share, a slight decrease of 0.5 percentage points. Its shipments are concentrated overseas, where its market share is about 22%. Chinese brands still have considerable room to catch up.

Domestic brands with overseas capacity expansion plans are expected to see shipment growth in 2025. Globally, as Samsung loses ground in the mid-to-low-end market and exits the LCD panel business, and as 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 BP strategy aims to maintain growth in global market share, while Hisense pursues active shipment targets. It’s worth noting that concerns over U.S. tariffs are somewhat exaggerated; Hisense and TCL’s overseas capacity layouts are leading, and reliance on mainland China OEM brands like ONN and VIZIO faces higher tariff and cost risks. Therefore, the competitive pressure on top brands may decrease.

The trend of high-end and large-screen upgrades significantly boosts brand profitability. Demand for high-end TVs continues to recover. According to DSCC data, in Q2 2025, global high-end TV shipments and revenue grew by 40% and 21% year-over-year, marking the fourth consecutive quarter of growth. AVC Revo data shows that in the first half of 2025, global TV shipment area reached 72.2 million square meters, up 3.6% year-over-year, with an average screen size of 53.7 inches, continuing to expand from 53 inches in 2024. The trend toward larger screens persists. As product structures optimize industry-wide, downstream brands’ profit margins are expected to further improve.

The landscape of the high-end TV market is changing, with Chinese brands actively promoting MiniLED TVs. MiniLED’s share in the high-end market is steadily increasing, reducing OLED’s dominance. In 2023, OLED accounted for over 60% of high-end market shipments and revenue, but in Q2 2024, MiniLED surpassed OLED, consistently gaining market share each quarter. In Q2 2025, MiniLED TV shipments and revenue grew by 101% and 66% year-over-year, respectively, while OLED TV shipments remained flat, and revenue declined by 7%. The higher cost-effectiveness of MiniLEDs makes them increasingly popular among consumers, benefiting Chinese brands that actively promote MiniLED technology.

Chinese brands are capturing high-end market share, with structural upgrades continuing to drive profit margins. In Q2 2025, TCL’s global shipments of 65-inch and larger TVs increased by 26.9% year-over-year, with their share rising 5.2 percentage points to 29.1%. Shipments of 75-inch and larger TVs grew by 20.8%, with 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. Quantum dot and MiniLED TV shipments grew 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 brands like Hisense and TCL.

1. Macroeconomic growth is below expectations; home appliances are durable consumer goods closely linked to household income expectations. Slower macro growth could significantly impact industry sales;
2. Sharp fluctuations in raw material prices: home appliance companies have high raw material costs, and further increases could weaken sector profitability;
3. Overseas market risks: recent geopolitical uncertainties have increased, and since leading home appliance brands rely heavily on exports, a decline in external demand could impact performance;
4. Intensified market competition: in a weak market environment, competition becomes fiercer, and some companies face risks of market share loss and low-price competition dragging down profits.

(Source: People’s Financial News)