China’s economic policy began in 2025 with an expanded consumer stimulus program that analysts expect will benefit some specific stocks. The country refuses to hand out cash directly to consumers, but has been subsidizing the purchase of some home appliances through a trade-in program since late summer. Authorities on Wednesday added microwave ovens, water purifiers, dishwashers and rice cookers to the existing list of eight product categories eligible for subsidies of up to 20% of retail prices. “The new measures should primarily benefit large consumer electronics manufacturers such as Midea, Geli and Haier,” Morningstar equity analyst Jeff Zhang said in a midweek note. Last year, the two companies became the top three air conditioner manufacturers in China by sales. “Reflecting the rising sales expectations, we are raising the 2025-2028 sales forecasts for Midea, Haier and Geli by 2-5%,” Zhang said. He also raised his 12-month price targets for all three stocks. Midea’s Hong Kong-listed shares rose nearly 38% last year. Based on Morningstar’s price target of HK$96.70, the stock could rise about 26% from Friday’s closing price. Haier’s Hong Kong-listed shares have risen 29% in the last year, but still have room for nearly 48% upside, as measured from Friday’s closing price to Morningstar’s price target of HK$38.90. Gree, which trades in Shenzhen, saw its stock price soar nearly 50% last year. Morningstar’s price target is 51 yuan, up about 10% from Friday’s closing price. Citigroup analysts maintained buy ratings on the same three Chinese consumer electronics stocks after Wednesday’s announcement of consumer stimulus. Citi has higher price targets than Morningstar’s for all three companies, with Gel at 64.50 yuan, Haier at HK$50.60, and Midea at HK$119.30. Risks to growth However, Citi warned that price wars and further weakness in the property market could also weigh on share prices. Home appliance prices fell 3.3% year-on-year in December, according to official data released on Thursday. The numbers underscored how weak consumer demand in China has been since the pandemic, as households continue to focus on future income. China is scheduled to release its retail sales and full-year GDP on Friday, January 17th. The latest stimulus package states that consumers who benefited from home appliance subsidies in 2024 will continue to receive subsidies this year. The eight product categories on last year’s list were refrigerators, washing machines, televisions, air conditioners, computers, water heaters, home stoves, and range hoods. Officials announced Wednesday that they have already allocated 81 billion yuan ($11.05 billion) to support this year’s trade-in subsidies through the Spring Festival, which runs from late January to early February. Full-year subsidies are expected to be announced at the annual council meeting in early March. In recent months, China’s major e-commerce platforms have highlighted how they are benefiting from trade-in subsidy programs. According to a Jan. 8 memo, JD.com remains the top company cited by Citi Internet analysts for consumer stimulus efforts over the next year. “JD.com will benefit from the continuation of this supportive trade-in program, especially given our previous experience, systems and procedures in place, and strong supply chain capabilities to capture the growing demand in this new trade-in initiative. ”, Citi analysts said. More electronics, less food Compared to its competitors, JD.com tends to sell more electronics and home appliances than clothing and food. However, as e-commerce platforms have grown over the years, product duplication has increased. Alibaba is Citi’s second favorite company in the e-commerce sector for China’s consumer stimulus package. The online shopping giant sells products from big brands on its Tmall platform and smaller retailers on Taobao. “Due to Tmall’s strength over big brands and their big distributors, Baba is also likely to benefit from this forward-looking policy,” analysts said. They expect PDD to benefit less than JD and Alibaba. Citi’s price targets are $51 for JD’s US-traded American Depositary Receipts and $133 for Alibaba ADRs, implying upside of 54% and 65%, respectively, from Friday’s closing price.
