Summary of Conference Call Notes Industry Overview - The focus is on the home appliance industry, particularly on undervalued stocks following a period of high growth, with expectations that funds will favor these low-value targets in the near term [1] Core Insights and Arguments - **Market Expectations**: The high base from Q4 2025 has been fully digested, leading to a stable outlook for Q1 2026, with production data remaining flat compared to a slight decline in Q4 2025 [1] - **Performance Metrics for Key Companies**: - **Midea A**: Expected net profit growth of +10%, with a Price-to-Earnings (PE) ratio of 11.7X and a dividend yield of 5.9% [1] - **Haier A**: Expected net profit growth of +10%, with a PE ratio of 10.5X and a dividend yield of 5.2% [1] - **Gree**: Net profit expected to remain flat, with a PE ratio of 6.9X and a dividend yield of 7.5% [1] - **AUX**: Assuming a net profit of 2.6 billion for 2026, with a PE ratio of 7.3X and a dividend yield of 10% [1] - **Hisense Home Appliances**: Expected net profit growth of +6%, with a PE ratio of 9.9X and a dividend yield of 5% [1] - **Hisense Visual**: Expected net profit growth of +13%, with a PE ratio of 11.4X and a dividend yield of 4.5% [1] - **TCL Electronics**: Expected net profit growth of +23%, with a PE ratio of 11.2X and a dividend yield of 4.5% [1] - **Yadea**: Expected net profit growth of +15%, with a PE ratio of 10.5X and a dividend yield of 4.8% [1] - **Aima**: Expected net profit growth of +15%, with a PE ratio of 9.9X and a dividend yield of 5% [1] Additional Important Points - The overall sentiment indicates a favorable environment for investment in the home appliance sector, particularly for companies with strong fundamentals and attractive valuations [1]

Summary of Conference Call Notes Industry Overview - The focus is on the home appliance industry, particularly on undervalued stocks following a period of high growth. The market is expected to stabilize in the short term, with a preference for low-valued stocks in the home appliance sector [1] Key Financial Metrics - The fundamental updates indicate that the high base market expectations for Q4 2025 have been fully digested, and the fundamentals for Q1 2026 appear strong. Production data from the industry remains stable, with a slight decline compared to Q4 2025 [1] Company Performance Metrics for 2026 - **Midea A**: - Net profit growth: +10% - Price-to-Earnings (PE) ratio: 11.7X - Dividend yield: 5.9% [1] - **Haier A**: - Net profit growth: +10% - PE ratio: 10.5X - Dividend yield: 5.2% [1] - **Gree**: - Net profit growth: flat - PE ratio: 6.9X - Dividend yield: 7.5% [1] - **AUX**: - Assumed net profit for 2026: 2.6 billion - PE ratio: 7.3X - Dividend yield: 10% [1] - **Hisense Home Appliances**: - Net profit growth: +6% - PE ratio: 9.9X - Dividend yield: 5% [1] - **Hisense Visual**: - Net profit growth: +13% - PE ratio: 11.4X - Dividend yield: 4.5% [1] - **TCL Electronics**: - Net profit growth: +23% - PE ratio: 11.2X - Dividend yield: 4.5% [1] - **Yadea**: - Net profit growth: +15% - PE ratio: 10.5X - Dividend yield: 4.8% [1] - **Aima**: - Net profit growth: +15% - PE ratio: 9.9X - Dividend yield: 5% [1] Additional Insights - The analysis suggests a favorable outlook for the home appliance sector, particularly for companies with strong dividend yields and reasonable PE ratios, indicating potential investment opportunities in undervalued stocks [1]

Core Viewpoint - Hisense has been recognized as the first company in the global television industry to be awarded the title of "Lighthouse Factory" by the World Economic Forum, highlighting its innovative user-centered AI-driven digital transformation in manufacturing [1] Group 1: Digital Transformation and AI Integration - Hisense has developed a user-centered AI manufacturing model that leverages big data and the Xinghai large model to gain deep insights from vast amounts of data in minutes [1] - The company has introduced an intelligent agent for user demand recognition, which categorizes user feedback and identifies pain points, reducing the time to convert user feedback into product features by 62% [1] - In the R&D phase, Hisense has implemented a platform based on large language models (LLM) that has shortened software development cycles by 31% and improved R&D efficiency by 27% [2] Group 2: Manufacturing Efficiency and Quality Improvement - Hisense's Qingdao factory produces an impressive 85-inch television every 20 seconds, showcasing the efficiency of its AI-integrated manufacturing process [2] - The company has created a digital process design model that utilizes over 100,000 pieces of process data, allowing for the automatic generation of comprehensive process plans in just 5 minutes, improving efficiency by 75% [2] - AI has been integrated into the production process, reducing the verification time for production from 10 hours to 19 minutes, achieving "zero-cost" trial and error [3] Group 3: Innovative Production Techniques - Hisense has pioneered a robotic solution for precise panel assembly, which previously required five workers, now achieved with 0.1mm precision through AI and high-precision cameras [4] - This innovation not only enhances production efficiency but also allows workers to focus on more technical tasks, aligning with the company's mission to redefine assembly standards for the large-size era [4] - The AI-driven quality inspection platform has improved detection efficiency by 70.7%, ensuring high-quality standards in production [5] Group 4: Commitment to Advanced Manufacturing - Hisense has established three "Lighthouse Factories," four zero-carbon factories, and 17 national-level green factories, demonstrating its commitment to advanced manufacturing [5] - The company aims to further integrate new technologies such as 5G and AI into manufacturing, contributing to the transformation and upgrading of China's manufacturing industry [5]

Core Insights - The CES 2026 showcased Hisense refrigerators as the official refrigerator for the 2026 World Cup, highlighting AI applications in smart home technology [1] - Hisense's smart screen refrigerator features an AI cooking assistant that provides a full cooking solution, making it user-friendly even for beginners [3] - Hisense refrigerators lead the vacuum preservation market, winning multiple industry awards and setting standards in the field [4] Group 1 - Hisense refrigerators focus on AI integration, offering a comprehensive cooking solution from ingredient pairing to step-by-step visual guidance [3] - The vacuum magnetic preservation technology provides a competitive edge, maintaining food freshness for up to 7 days, outperforming national standards for fresh meat [3] - The innovative magnetic curtain door design combines aesthetics and functionality, winning the 2025 International CMF Design Award [3] Group 2 - Hisense ranks first in sales volume in the vacuum preservation refrigerator segment, establishing itself as a market leader [4] - By mid-2025, Hisense refrigerators achieved top sales in 11 countries, including Canada, France, and Mexico, and maintained leading positions in several Eastern European markets [4] - The company has been recognized with awards such as the AWE Aiplan Innovation Award and has contributed to industry standards, enhancing its technical authority [4]

Core Insights - The traditional growth logic of "price for volume" is becoming unsustainable as market growth slows and consumer behavior becomes more rational, prompting leading brands to focus on technological innovation and strategic transformation in the home appliance industry [1] Group 1: Industry Trends - Key trends reshaping the home appliance industry include AI empowerment, health concepts, high-end positioning, and cross-industry integration [1] - The current monitoring period shows that Midea, GREE, and Panasonic lead the heat index rankings with scores of 1.92, 1.71, and 1.68 respectively [2][3] Group 2: Technological Innovations - Midea has launched a new dual-air outlet central air conditioning system aimed at providing a revolutionary user experience, while GREE focuses on AI and energy-saving technologies with its new product lines [4] - Haier emphasizes comprehensive air solutions and has introduced several innovative products, including the industry's first AI air conditioning group standard [4] Group 3: Strategic Transformations - The slowdown in industry growth has led brands to pursue high-end and cross-industry strategies for counter-cyclical growth, as seen with Skyworth's significant revenue increase driven by its new energy business [5] - High-end brands like Casarte have shown resilience, achieving positive growth in a challenging market, highlighting the importance of differentiated competitive strategies [5]

Core Insights - The Ministry of Industry and Information Technology has announced the ninth batch of manufacturing single champion enterprises, with seven companies from Qingdao included, bringing the total to 45, ranking eighth nationally and fifth among sub-provincial cities [1] - Qingdao has established a systematic cultivation framework for champion enterprises, integrating policies into the "Industrial Empowerment Qingdao, Strong Manufacturing City" strategy, fostering cross-departmental collaboration [1][2] - The city has provided significant financial support, including a one-time reward of 2 million yuan for newly recognized champion enterprises, totaling 61 million yuan disbursed, and 358 million yuan for technological upgrades over the past three years [2] Group 1 - Qingdao's champion enterprises have made significant advancements in their respective fields, with companies like Sailun Group achieving breakthroughs in manufacturing large engineering tires, enhancing safety and load-bearing capabilities [2] - China Shipbuilding Group's engine division has focused on low-carbon and zero-carbon fuel engines, successfully delivering dual-fuel engines that reduce carbon emissions by approximately 24% [1][2] - Hisense Visual has established the world's first "lighthouse factory" in the television industry, integrating AI throughout the production process, achieving a remarkable output of one 85-inch television every 20 seconds [3] Group 2 - The cultivation of champion enterprises is seen as a key strategy for advancing the industry towards mid-to-high-end manufacturing and ensuring the stability of supply chains [2] - Qingdao has built a robust support system consisting of 3,315 specialized small and medium-sized enterprises, 256 "little giant" enterprises, and 128 provincial-level champion enterprises, providing a continuous source of growth for the champion enterprise group [2] - The achievements of these champion enterprises not only enhance Qingdao's manufacturing reputation but also position them competitively on a global scale, marking a new coordinate for Chinese manufacturing [3]

Group 1 - The black home appliance sector experienced a decline of 3.02% on January 26, with Jiulian Technology leading the drop [1] - The Shanghai Composite Index closed at 4132.61, down 0.09%, while the Shenzhen Component Index closed at 14316.64, down 0.85% [1] - Key stocks in the black home appliance sector showed varied performance, with *ST Gauss rising by 4.86% to a closing price of 12.73, while Jiulian Technology fell by 5.41% to 9.61 [1] Group 2 - The net outflow of main funds in the black home appliance sector was 744 million yuan, while retail investors saw a net inflow of 462 million yuan [1] - Detailed fund flow data indicates that major stocks like Sichuan Changhong and Sichuan Jiuzhou experienced significant net outflows of 530 million yuan and 747 million yuan, respectively [2] - Conversely, stocks like *ST Gauss and Sichuan Jiuzhou attracted retail inflows of 286.69 million yuan and 1130.30 million yuan, respectively [2]

Core Viewpoint - A residential land plot in the Shibei District of Qingdao was sold on January 26, with a total area of 21,548.1 square meters, indicating ongoing real estate activity in the region [1] Group 1: Land Sale Details - The land plot has a residential area of 20,798.1 square meters and retail commercial land of 750 square meters [1] - The planned construction area is 43,096.2 square meters, which includes 41,596.2 square meters for residential use and 1,500 square meters for retail [1] - The starting floor price was set at 10,230 yuan per square meter, translating to a starting price of 441 million yuan [1] Group 2: Buyer Information - The plot was acquired by Jinan Zhijin Real Estate Co., Ltd. (Hisense) at the base price, with a final transaction floor price of 10,230 yuan per square meter [1]

Core Viewpoint - The Hisense 100-inch E8S Pro TV is positioned as a leading choice for 2026, emphasizing advanced technology in color accuracy, brightness, and sound quality, catering to the evolving preferences of home theater enthusiasts [8][10][11] Group 1: Display Technology - The E8S Pro utilizes RGB-MiniLed technology with RGB primary color light-emitting chips, allowing for a broader range of natural colors and smoother color transitions [4] - It achieves a peak brightness of 6200 nits, enhancing its ability to display HDR content with exceptional realism [4] - The TV features a 108-bit light and color control precision, ensuring seamless color gradients, which is crucial for a natural viewing experience [4] Group 2: Audio Quality - The E8S Pro is equipped with a 4.2.2 sound system, featuring 10 sound units and a peak power of 270W, eliminating the need for additional sound systems [5][7] - It offers a sound experience comparable to high-end independent audio systems, providing immersive audio that enhances the viewing experience [7] Group 3: Gaming and Future-Proofing - The TV supports 4K at 170Hz refresh rate, preparing for next-generation gaming consoles and high-performance PCs [10] - It is designed to be energy-efficient, consuming 40% less power than QD-OLED TVs, aligning with modern environmental standards [10] Group 4: User Experience - The E8S Pro includes features for high-definition content playback, supporting high bitrate transmission for seamless viewing of large files [7] - Its anti-reflective screen technology enhances the viewing experience in various lighting conditions, making it suitable for a premium home cinema setup [7]

Investment Rating - The report assigns an "Overweight" rating to the home appliance industry [4]. Core Insights - The report highlights a slight decline in fund holdings in the home appliance sector, with a 2.6% allocation in actively managed equity funds for Q4 2025, down 0.2 percentage points from Q3 [2][4]. - December retail sales for home appliances showed a year-on-year decline of 18.7%, indicating ongoing pressure despite a high base in the previous year [2][4]. - The European Union has mandated registration for imports of robotic lawn mowers from China, with potential anti-dumping duties estimated between 21.4% and 57.4% [2][4]. Summary by Sections Investment Recommendations - The report suggests that national subsidies are expected to transition smoothly, and leading companies in both black and white appliances are recommended for their stable operations and high dividends, including Midea Group (13.1X PE), Haier Smart Home (11.4X), TCL Electronics (12.7X), and Hisense Visual (12.7X) [4]. - It emphasizes the core drivers of smart home appliances' overseas expansion, recommending leading robotic vacuum manufacturers Roborock (20.3X) and Ecovacs (22.5X) [4]. - Companies with stable performance and upward potential include Ninebot (19.9X), Anfu Technology (56.8X), Hailong Cold Chain (15.9X), and Beiding Co. (35.3X) [4]. - The report also notes that home appliance companies are diversifying into new areas, recommending Rongtai Health (21.3X) and Wanlong Magnetic Plastic (21.9X) [4]. Market Data - In December 2025, the production of home air conditioners was 14.782 million units, down 18.7% year-on-year, with domestic sales at 5.397 million units, down 26.7% [2][4]. - The total domestic sales for the year reached 10.521 million units, a slight increase of 0.7% year-on-year, while total exports were 9.318 million units, down 3.4% [2][4]. - The overall retail sales for home appliances in December 2025 amounted to 97.1 billion yuan, with a cumulative annual total of 1,169.5 billion yuan, reflecting an 11.0% year-on-year increase [2][4].