China economic policy kicked off 2025 with an expanded consumer stimulus program that analysts expect will benefit a handful of specific stocks. While the country has rejected handing out cash directly to consumers, since late summer it has subsidized some home appliance purchases through a trade-in program. Officials on Wednesday added microwaves, water purifiers, dishwashers and rice cookers to an existing list of eight product categories eligible for subsidies of up to 20% the retail price. “The new measures should mostly benefit leading home appliance manufacturers like Midea , Gree and Haier ,” Morningstar equity analyst Jeff Zhang said in a mid-week note. The companies were the top three air conditioner producers by revenue in China last year. “We lift our 2025-28 revenue forecasts on Midea, Haier and Gree by 2%-5% to reflect higher sales expectations,” Zhang said. He also raised 12-month price targets on all three stocks. Midea’s Hong Kong-listed shares gained nearly 38% last year. Shares could soar about 26% from Friday’s close based on Morningstar’s price target of 96.70 Hong Kong dollars. After gaining 29% last year, Haier’s Hong Kong-listed shares still have nearly 48% upside, measured from Friday’s close to Morningstar’s price target of HKD 38.90. Gree, traded in Shenzhen, saw its shares surge by nearly 50% last year. Morningstar has a price target of 51 yuan, equal to about 10% upside from Friday’s close. Citigroup analysts maintained their buy ratings on the same three Chinese home appliance stocks after Wednesday’s consumer stimulus announcement. Citi has higher price targets than Morningstar on all three: 64.50 yuan for Gree, HKD 50.60 for Haier and HKD 119.30 for Midea. Risks to growth However, Citi cautioned that price wars and further weakness in the real estate market could also weigh on the stock prices. Home appliance prices fell by 3.3% in December from a year ago, according to official data released Thursday. The figures underscored how consumer demand in China has remained lackluster since the pandemic as households stay focused on future income. China is due to release retail sales and full-year GDP numbers on Friday Jan. 17. The latest stimulus policy said consumers who benefited from home appliance subsidies in 2024 can enjoy them again this year. The eight product categories on last year’s list were refrigerators, washing machines, television sets, air conditioners, computers, water heaters, household stoves and range hoods. Officials said Wednesday they already allocated 81 billion yuan ($11.05 billion) to support the trade-in subsidies this year through the Spring Festival, which runs from late January to early February. Subsidies for the full year are due to be announced at an annual parliamentary meeting in early March. In the last several months, China’s major e-commerce platforms have highlighted how they’ve benefited from the trade-in subsidies program. Among the companies, JD.com remains Citi internet analysts’ top pick for playing the consumer stimulus program in the year ahead, according to a Jan. 8 note. “JD.com is relatively better/positioned to benefit from the continuation of this supportive trade-in program especially given its prior experience, prepared system and procedures and strong supply chain capabilities to capture growing demand on this new round of trade-in initiatives,” the Citi analysts said. More electronics, less food Relative to its peers, JD.com tends to sell more electronics and home appliances than clothes or food. But there is increasing product overlap as the e-commerce platforms have grown over the years. Alibaba is Citi’s second favorite e-commerce play on the Chinese consumer stimulus policy. The online shopping giant sells products from large brands on its Tmall platform, and smaller merchants through Taobao. “Thanks to Tmall’s strength with major brands and their large distributors, Baba will also likely benefit from the positive policy,” the analysts said. They expect PDD will benefit less relative to JD and Alibaba. Citi has a price target of $51 on JD’s U.S.-traded American depositary receipts , and $133 on Alibaba ADRs, implying upside of 54% and 65%, respectively, from Friday’s close.
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