How do traders express their confidence that China’s property market rebound is solid? Other than debt-laden property developers, they can pile into customized furniture and home appliances makers. After all, when Chinese buy new apartments, they tend to purchase everything from furniture to refrigerators too.

Midea Group Co., China’s biggest maker of white goods such as refrigerators, has rebounded 15 percent through Friday’s close since the Shanghai Composite Index dropped to a one-year low in January, almost twice the pace of the benchmark measure. Hangzhou Robam Appliances Co. and Zhejiang Supor Cookware Co. have surged more than 25 percent in the period after touching record highs.

China’s white goods makers recorded an average 14 percent gain in net income in the first quarter, compared with an average 2.5 percent decline for listed companies as a whole, according to Citic Securities Co.

In addition to Hangzhou Robam, Citi Research‘s Mark Li likes customized wardrobe and cabinet maker Suofeiya Home Collection:

Customized wardrobe has been Suofeiya’s major revenue contributor, accounting for 94% of total revenue in 1Q16. Emerging “SCHMIDT” cabinet sales made 6% revenue contribution, and flooring products account for merely 0.3% of Suofeiya’s total revenue in the quarter… Suofeiya’s entire product ordering process lasts 45-60 days, depending on customers’ time needed to make decisions and logistics timespan.

Citi’s 62 yuan price target is based on 43 times their 2016 earnings estimate, the average for the A-share peer group. Citi’s price target implies another 25% upside. Suofeiya has gained 17% this year.

The bank also likes Hangzhou Robam Appliances, giving it a 77 yuan price target, or 33 times its 2016 earnings estimate. “We believe it is warranted given Robam’s exposure to the higher growth market, better profitability expectations, sales network expansion, and increasing exposure to ecommerce.” Citi’s price target implies another 52% upside. This stock has risen 13% this year.

(Source: barrons.com  Author: Shuli Ren)