Morgan Stanley published a report stating that the appliance upgrade and replacement subsidies in the mainland have seen strong utilization since the fourth quarter, with lower penetration rate product categories performing relatively well. Currently, the market focus is on the potential extension of subsidies until 2025, which is a key driver for domestic demand. The firm maintains a 'Shareholding' rating for Midea (00300.HK), Gree Electric Appliances, Inc. of Zhuhai (000651.SZ), and Beijing Roborock Technology (688169.SS), with target prices of 92 HKD, 53 RMB, and 281 RMB, respectively.
In the large appliance segment, the firm prefers Midea, followed by Gree, and lastly HAIER SMARTHOME (06690.HK). The firm states the preference for Midea is due to its dual-engine growth strategy, and like Gree, it is favored for its high exposure in the China Business and attractive valuation. Due to the reasonable valuation of HAIER SMARTHOME (06690.HK), it maintains a 'in line with the market' rating with a target price of 29.7 HKD.
In the cleaning tools segment, there is a bullish outlook for Beijing Roborock Technology due to its global competitiveness and attractive risk-reward profile. Ecovacs Robotics (603486.SH), due to its high market share in China, coupled with strong sales in the fourth quarter and recent surprises in cyclical profit increases, is rated 'in line with the market' with a target price of 61 RMB.