Intelligent Wealth APP has learned that Haitong Securities has released a research report stating that under the disturbance of Sino-US trade relations, home appliances, automobiles, and machinery may perform relatively steadily due to supply advantages and demand hedging. From the bottom up, Chinese home appliance, automobile, and machinery companies have technological and cost advantages, and overseas demand has a broader space. In terms of investment, the valuations of A-share home appliance, automobile and machinery sectors are relatively low, and their fundamental performance is significantly superior, with a highlighted investment cost-effectiveness.

The main points of Haitong Securities are as follows:

Pay attention to opportunities in the home appliance, automobile and machinery sectors under the disturbance of Sino-US trade.

Haitong Securities stated that it is evaluating which manufacturing industries are more stable and worth paying attention to under the disturbance of Sino-US trade, and measures the degree of disturbance to various industries by measuring China's dependence on exports to the United States and the United States' dependence on imports from China. The industries with the greatest and significant disturbance are screened out, and the trade low and dependence perspectives are analyzed in detail to explore whether these industries can seek buffering in the European Union, ASEAN, and the Middle East, and achieve trade substitution. The results show that the disturbances to home appliances and automobiles are relatively small, and the disturbance to machinery is relatively large. However, home appliances, automobiles, and machinery can all find a certain amount of buffering space in other regions of the world.

Home appliances: Leading technology and cost advantages, with broad space in emerging markets.

From the supply side, the leading home appliance has a global market share lead, and the proportion of national home appliance technology patents accounts for over half of global patents. The industry leader deploys the industrial chain and supply chain globally through acquisitions and integration, and independent construction, which allows for an advantageous gross margin relative to international leaders. From the demand side, the developed countries have a higher level of household appliance popularization, and incremental changes mainly come from equipment updates. In the medium and long-term dimensions, the market space in emerging countries is more extensive, as consumption upgrades are taking place. Industry leaders are expected to gain momentum in emerging markets with technological and cost advantages. In terms of investment cost-effectiveness, affected by the downturn in real estate, home appliance industry valuations have already reached a low level. Since 2024, the improvement of external demand coupled with the policy of replacement of the old with the new has significantly improved fundamental performance, making it a high-value investment option.

Automobiles: Absolute advantages of electric cars are evident, and penetration rate is still increasing.

The global sales volume of China's top auto manufacturers has steadily increased over the past three years, and the new energy industry chain has gradually been improved. Core components have gradually taken the lead, the cost-end sales expansion has generated economies of scale, and sales gross margin of top companies has significantly improved. From the demand side, the penetration rate of new energy vehicles in emerging markets with a relatively high proportion of developing countries is still low, and sales growth rates are high. Under the promotion of the RCEP trade framework and preferential tax policies for some countries’ imports, top companies are expected to leverage the advantages of technological costs in tariff-friendly, low-penetrated, and high-growth areas. Since 2021, factors such as subsidy decline and trade frictions have led to a decline in the valuation of the automobile industry, which has already reached a low level. Under the stimulus of the steady growth program and export trade policies at the beginning of the year, the fundamental performance of the auto industry has improved somewhat, and the investment cost-effectiveness has increased.

Machinery: Technological levels continue to improve, and overseas incremental space has opened up.

The domestic market share of manufacturing companies in the construction machinery sector has improved significantly compared to Japan and South Korea. The absolute advantage of industrial robot installation has been demonstrated as a beneficiary of the rise of the lithium battery industry. The products of leading companies are delivered timely, and after-sales services are comprehensive, indicating strong competitive trade force. In regions undergoing global industrial chain reconstruction, such as North America and Europe, industrial equipment updates and demand for capital imports are increasing. Emerging countries undergoing rapid industrialization and consumption upgrades, such as ASEAN and the Middle East, have high capital demands. In the future, domestic manufacturers may benefit from stronger external demand and use technological service advantages to accelerate international expansion. From an investment perspective, affected by the impact of rising costs and slowing infrastructure growth since 2021, the stocks of the machinery industry have been volatile and have fallen. However, recent large-scale renewal policies and the high-quality construction policy of the Belt and Road Initiative have relatively improved the fundamental performance of the machinery industry, and investment cost-effectiveness has rebounded.

Risk reminder: Sino-US relations may deteriorate beyond expectations, and the overseas trade environment may deteriorate beyond expectations.