Summary of Key Points from the Conference Call Industry Overview - The home appliance industry is experiencing a shift in competition dynamics, particularly in the white goods sector, with a notable increase in the proportion of mid-to-high-end consumption driven by national subsidies [1][2][4] - Price competition for flow models has eased, returning to levels seen in April, likely due to the seasonal decline in air conditioning demand [1][2][4] - Consumer demand is currently weak, with a notable impact from the expiration of subsidies in various regions, particularly in the southwest and eastern areas of China [2][3] Company Performance Midea Group - Midea's revenue growth is expected to be in the high single digits, around 10%, but profit growth may lag due to the consolidation of assets [1][6] - The company demonstrates strong operational resilience, effectively managing inventory to adjust to market conditions [6] Haier - Haier's revenue growth is projected at 7%-8%, with double-digit profit growth anticipated due to channel reforms and reduced expense ratios [1][7] - The Casarte brand continues to perform well under national subsidy policies, contributing positively to profitability [7] Hisense - Hisense is expected to see slight increases in both revenue and profit, although its central air conditioning business faces challenges [1][8] - The company has experienced a rebound in installation card growth since July, indicating a stabilization in price competition [2][4] TCL - TCL's revenue is expected to remain flat compared to last year, with profit also stabilizing due to high base effects from the previous year [1][9] Hailong Cold Chain - Hailong Cold Chain's revenue is expected to match the first half of 2025, with strong growth in refrigeration and exports [1][10] Market Dynamics Mini LED Technology - The penetration rate of Mini LED technology has slightly decreased, influenced by subsidy reductions and cost adjustments in electronic modules [1][11] - Despite this, product iterations are expected to support higher selling prices [11] Small Appliances - The small appliance sector is witnessing significant growth, particularly in cleaning devices like robotic vacuums, with companies like Stone Technology reporting an 80% revenue growth and a 50% profit increase [1][14] - The kitchen small appliance market remains stable, with companies like Bear Electric projecting a 13% revenue increase, while New Bao is expected to face negative growth [1][15][16] Export Market - The export market is experiencing volatility, particularly in Europe and Latin America, with the latter entering its peak air conditioning sales season [3][5] - Chinese companies are shifting production to countries like Egypt and Thailand to mitigate tariff pressures [3][5] Future Outlook - The small appliance industry is expected to continue evolving, focusing on cost control and innovation to drive growth [1][17] - New product categories, such as washing robots, are anticipated to become significant growth drivers [17]

Market Overview - The small home appliance sector experienced a decline of 2.16% on October 17, with BeiYikang leading the drop [1] - The Shanghai Composite Index closed at 3839.76, down 1.95%, while the Shenzhen Component Index closed at 12688.94, down 3.04% [1] Stock Performance - Notable stock performances included: - Rainbow Group (003023) rose by 9.99% to a closing price of 24.00, with a trading volume of 103,000 shares and a turnover of 240 million [1] - BeiYikang (6610ZG) fell by 7.39% to a closing price of 35.72, with a trading volume of 24,600 shares and a turnover of approximately 90.78 million [2] - Other companies like Supor (002032) and Joyoung (002242) showed minimal changes, with slight declines of 0.02% and 1.58% respectively [1][2] Capital Flow - The small home appliance sector saw a net outflow of 79.06 million from institutional investors, while retail investors contributed a net inflow of 66.28 million [2] - The capital flow for specific stocks indicated: - Rainbow Group had a net inflow of 81.11 million from institutional investors, while it faced a net outflow of 37.75 million from retail investors [3] - Other companies like Lek Electric (603355) and ST Dehao (002005) also experienced mixed capital flows, with varying degrees of institutional and retail investor activity [3]

Core Viewpoint - The company, Xinbao Co., Ltd. (002705), primarily utilizes the FOB trading model for its products exported to the United States, where the buyer is responsible for customs clearance and tax payments [1] Group 1 - The company answered investor inquiries on October 16 regarding its export practices [1] - The FOB trading model indicates that the responsibility for customs clearance lies with the buyer [1] - This trading model may impact the company's pricing strategy and competitiveness in the U.S. market [1]

Market Overview - The small home appliance sector experienced a decline of 1.29% on October 16, with Biyi Co., Ltd. leading the losses [1] - The Shanghai Composite Index closed at 3916.23, up 0.1%, while the Shenzhen Component Index closed at 13086.41, down 0.25% [1] Stock Performance - Notable gainers in the small home appliance sector included: - Dechang Co., Ltd. (605555) with a closing price of 17.22, up 4.30% and a trading volume of 128,700 shares [1] - ST Dehao (002005) closed at 2.38, up 2.15% with a trading volume of 102,700 shares [1] - Key decliners included: - Biyi Co., Ltd. (603215) closed at 20.70, down 4.43% with a trading volume of 82,200 shares [2] - Stone Technology (688169) closed at 179.00, down 2.92% with a trading volume of 40,900 shares [2] Capital Flow - The small home appliance sector saw a net outflow of 121 million yuan from main funds, while retail investors contributed a net inflow of 106 million yuan [2] - The detailed capital flow for selected stocks showed: - Dechang Co., Ltd. had a main fund net inflow of 23.91 million yuan, while retail investors had a net outflow of 20.03 million yuan [3] - Leike Electric (603355) experienced a main fund net inflow of 6.84 million yuan, with retail investors also seeing a net outflow of 10.12 million yuan [3]

Group 1 - The 138th Canton Fair has gathered 32,000 enterprises showcasing cutting-edge products across 155,000 square meters with 74,600 booths, attracting buyers from 217 countries and regions [1] - Chinese exhibitors have adapted to changing trade dynamics, enhancing their capabilities in overseas manufacturing, brand export, and high-end product innovation, demonstrating increased confidence in global markets [1] - Ningbo Daye Garden Equipment Co., Ltd. has transformed from OEM to a brand leader, with 98% of its business in exports, particularly in North America and Europe, where it holds a significant market share [1] Group 2 - Xinbao Co., Ltd. has seen a strong turnout at its booth, with a 2.49% year-on-year increase in overseas market revenue, reaching over 6.07 billion yuan in the first half of the year, particularly thriving in emerging markets like the Middle East, Africa, and Latin America [2] - The company is transitioning from a small appliance manufacturer to a globally recognized electrical enterprise, expanding its product range and enhancing its overseas production capacity, particularly in Indonesia [2] - Xinbao's strategy includes establishing research institutes in Shenzhen to support its growth and innovation in the electrical manufacturing sector [2]

Market Overview - The small home appliance sector increased by 0.44% on October 15, with BeiYikang leading the gains [1] - The Shanghai Composite Index closed at 3912.21, up 1.22%, while the Shenzhen Component Index closed at 13118.75, up 1.73% [1] Stock Performance - BeiYikang (code: 6610Z6) closed at 38.15, rising by 4.72% with a trading volume of 26,900 lots and a transaction value of 102 million yuan [1] - Other notable performers include: - Aishida (code: 002403) at 14.57, up 3.26% [1] - Ousheng Electric (code: 301187) at 26.48, up 2.20% [1] - Kaineng Health (code: 300272) at 6.56, up 2.18% [1] - Delma (code: 301332) at 9.88, up 1.96% [1] Capital Flow - The small home appliance sector experienced a net outflow of 115 million yuan from institutional investors, while retail investors saw a net inflow of 94.22 million yuan [2] - The capital flow for specific stocks includes: - Xinbao (code: 002705) with a net inflow of 12.21% from institutional investors [3] - Feike Electric (code: 603868) with a net inflow of 18.64% from retail investors [3] - Kaineng Health (code: 300272) with a net outflow of 1.35% from retail investors [3]

Market Overview - The small home appliance sector experienced a decline of 3.15% on October 13, with Bei Yi Co. leading the drop [1] - The Shanghai Composite Index closed at 3889.5, down 0.19%, while the Shenzhen Component Index closed at 13231.47, down 0.93% [1] Stock Performance - Key stocks in the small home appliance sector showed varied performance, with Bei Yi Co. closing at 22.88, down 5.26%, and Kewo Si at 97.49, also down 5.26% [2] - Other notable declines included Stone Technology at 187.50, down 5.20%, and Xin Bao Co. at 15.42, down 3.81% [2] Trading Volume and Capital Flow - The small home appliance sector saw a net outflow of 139 million yuan from main funds, while retail investors contributed a net inflow of 97.90 million yuan [2] - The trading volume for key stocks included 136,200 shares for Bei Yi Co. and 51,400 shares for Kewo Si, indicating significant trading activity despite the overall decline [2] Individual Stock Capital Flow - Among individual stocks, Jiu Yang Co. had a main fund net inflow of 3.68 million yuan, while Fu Jia Co. experienced a net outflow of 1.32 million yuan from main funds [3] - Retail investors showed a preference for stocks like Su Po Er, which had a net inflow of 4.19 million yuan from retail investors, despite a net outflow from main funds [3]

Investment Rating - The report maintains a positive outlook on the home appliance industry, particularly for the white goods sector, indicating a "Buy" recommendation for key players like Midea, Haier, and Gree [4][8]. Core Insights - The home appliance sector is benefiting from real estate policies and the "trade-in" program, leading to a sustained growth trend in domestic sales [6][14]. - The report highlights three main investment themes: white goods, export opportunities, and core components, with a focus on companies that are expected to outperform in these areas [8][17]. Summary by Sections 1. Domestic Sales Growth - From January to August 2025, the air conditioning industry produced 149.32 million units, a 6% year-on-year increase, with sales reaching 152.57 million units, up 7%, and domestic sales growing by 9% [6][14]. - The refrigerator and washing machine sectors also saw domestic sales growth of 4% and 6%, respectively, during the same period [6][14]. 2. White Goods and Components - The report notes that the average price of white goods is increasing due to the trade-in program, with air conditioning prices expected to rise further [27]. - Key companies are projected to show varied performance in Q3 2025, with Midea expected to see a 3% revenue increase and an 8% rise in profits, while Gree anticipates flat revenue and profit [28][29]. 3. Kitchen Appliances - The kitchen appliance sector is experiencing a recovery driven by real estate and trade-in policies, with significant growth in online sales for range hoods and gas stoves [6][14]. - Major players like Robam and Vatti are expected to see mixed results, with Robam projecting a 2% revenue increase but a 7% decline in profits [6][14]. 4. Small Appliances - The small appliance sector is benefiting from domestic trade-in policies, with companies like Supor and Joyoung expected to see revenue growth of 3% and a profit turnaround, respectively [6][14]. - The report highlights significant growth for companies like Stone Technology, which anticipates an 80% revenue increase [6][14]. 5. New Displays and Lighting - The emerging display sector is at a turning point, with companies like Hisense and Xiaomi expected to report revenue growth of 8% and 15%, respectively [6][14]. - The lighting industry is anticipated to see gradual improvements as market conditions stabilize [6][14]. 6. Investment Highlights - The report emphasizes the attractiveness of the white goods sector due to its low valuation, high dividends, and stable growth potential, recommending a combination of leading companies [8][17]. - Export opportunities are highlighted for companies like Ousheng Electric and Dechang, which are expected to benefit from increased orders and stable profitability [8][17]. 7. Trade-in Policy Impact - The trade-in policy has been expanded to include 12 categories of appliances, significantly boosting sales and consumer interest [17][18]. - The report notes that the trade-in program has already led to over 62 million units sold in 2024, generating nearly 270 billion yuan in consumption [17][18].

Core Insights - Despite fluctuating tariff rates in the US over the past six months, Chinese small appliance exporters are seeking ways to adapt and remain competitive, with many concluding that China remains the most competitive production base globally [1][4] Group 1: Company Strategies - Some small appliance companies, like Letu Electric, have paused plans to establish factories in Southeast Asia due to rising costs and insufficient local infrastructure [1] - Letu Electric's general manager noted that labor costs in Malaysia have increased by 7%-8% over the past six months, making manufacturing costs approximately 15% higher than in China [1] - Companies that do not heavily rely on the US market are less inclined to set up overseas factories, with many preferring to explore alternative markets instead [3] Group 2: Industry Trends - Leading companies in the appliance sector, such as Xinbao, have already established overseas operations to mitigate external uncertainties, with Xinbao's Indonesian factory showing growth in exports [4] - Data indicates a decline in exports of various small appliances from China to the US, highlighting the impact of changing tariffs on kitchen appliance exports [4] - Industry experts suggest that in a complex trade environment, appliance exporters should focus on innovation and diversifying markets, especially for small enterprises facing challenges in global expansion [4]

Core Insights - Despite fluctuating tariff rates in the US over the past six months, Chinese small appliance exporters are actively seeking ways to adapt to the situation [2][3][4] - Many small and medium-sized enterprises (SMEs) are reconsidering plans to establish factories overseas, particularly in Southeast Asia, due to rising costs and insufficient local infrastructure [2][4] - Leading companies in the appliance industry have already established overseas operations to mitigate external uncertainties [5] Group 1: Company Strategies - Companies like Letu Electric have paused plans to set up factories in Southeast Asia, citing concerns over labor costs and energy reliability [2] - The monthly salary for workers in Malaysia has increased by 7%-8% in the past six months, making manufacturing costs there approximately 15% higher than in China [2] - New Bao, a leading small appliance exporter, has successfully established a factory in Indonesia, reporting significant export growth [5] Group 2: Market Dynamics - The proportion of US customers for many SMEs is relatively low, leading to a cautious approach towards overseas factory establishment [4] - In Ningbo, only about 20 out of over 3,000 appliance companies are considering overseas factories as a response to tariff impacts [4] - The overall export value of various small appliances from China has seen a decline, particularly in kitchen appliances to the US market [5] Group 3: Industry Trends - There is a growing trend among upstream component suppliers in China to follow their clients abroad, although local supply chains in regions like Mexico are not yet fully developed [3] - Industry experts suggest that innovation and market diversification are crucial for SMEs to navigate the complex trade environment [5]