Fangzheng Securities: Clean up supply in the kitchen appliance industry, focus on leading valuation repair opportunities

The Zhitong Finance App learned that Fangzheng Securities released a research report saying that the strongest player in the home appliance industry, kitchen appliance leaders continue to benefit from supply-side structural clean-up and policy-side low-end production capacity clearance. Leading companies use their production and channel advantages to consolidate their share and wait for performance elasticity after demand picks up. Currently, there is still a gap in the concentration of kitchen appliances compared to white electricity, and there is plenty of room to increase the share of the head.

Fangzheng Securities's main views are as follows:

Supply side: Accelerated clearance, greatly increased the concentration of kitchen appliances

In 2020-2025, CR2's share of offline sales of range hoods/gas stoves increased by 17.7 pct/21.4 pct, and CR5 increased by 14.3 pct/16.7 pct. As of July 2026, the number of medium and large kitchen appliance companies was only 90% or 86% of the 2023 high; the clearance rate of newly established enterprises in 2013-2023 increased from 5.8% to 8.8% within three years. In 2026, new national standards for gas stoves and range hoods will be implemented, and the clearance of low-end companies will be further accelerated.

Demand side: The industry has bottomed out and stabilized, and a major refurbishment cycle is coming

Second-hand housing prices in first-tier cities will be the first to pick up in 2026. Referring to the 12-year kitchen renovation cycle, the last round corresponding to the peak of commercial housing delivery in 2013 (10.6 million units, +15.1%) was released in 2025 under the influence of national supplements. A new major cycle of rotation is expected to begin in 2028.

Will kitchen appliances replicate the trend of consumer building materials at the end of last year?

From 25Q4 to 26Q1, the other decorative materials and other structural materials sector, which mainly focuses on consumer building materials, rose by 12.2% and 23.3%. The similarities between consumer building materials and kitchen appliances are:

1) The supply side is clear, and the number of manufacturing enterprises has dropped sharply. The number of plywood companies dropped from 12,550 to 5010 in 2021-2025, a decrease of 60.1%.

2) After the pattern improved, leading companies switched to price stabilization and poly profits and collectively resumed prices many times, and the anti-domestic market became an industry consensus.

3) Valuation is at a historically low level. As of July 20, the PE of Boss Electric and Vantage Co., Ltd. is only 12.1 times or 13.7 times, in the ten-year valuation range; the average PB for kitchen appliances is already below the level before the 25Q4 rise in consumer building materials, and the PB of companies such as Sunrise Oriental, Wanhe Electric, and Vantage Co., Ltd. is close to breaking down and is in a value depression.

Risk warning: Market competition increases risk, risk of demand falling short of expectations, risk of rising raw material costs, and risk of macroeconomic policy fluctuations.