Summary of Hisense Home Appliances Conference Call Company Overview - **Company**: Hisense Home Appliances - **Industry**: Home Appliances Key Points 2025 Performance and 2026 Outlook - **Domestic Sales**: In 2025, domestic sales were negatively impacted by a sluggish real estate market, leading to a decline in Hisense Hitachi's revenue. The company expects a single-digit growth in domestic processing business in 2026 due to efficiency improvements from SKU streamlining and channel reforms [2][3] - **International Sales**: International sales of refrigerators and washing machines saw double-digit growth, while air conditioning sales declined due to weak demand in emerging markets. However, a recovery in air conditioning sales is anticipated in Q1 2026 as channel inventory normalizes [2][3] - **Overall Revenue**: The company expects overall revenue for 2025 to remain flat, with a target to achieve 80% of the equity incentive unlocking goal [3] Processing Business Initiatives - **Efficiency Measures**: Since the second half of 2025, the company has implemented SKU streamlining and channel reforms, including a significant reduction in online SKUs for the Cologne brand by over 50%. The company aims for double-digit growth in international sales and a 0.5 percentage point increase in operating profit margin through improved sales structure [4] Central Air Conditioning Business - **Market Share**: The C-end and public construction segments are expected to recover with single-digit growth in 2026. The company plans to enhance competitiveness through product iterations and cost reductions [5][6] - **Sales Growth**: Despite a projected decline of 15%-20% in the renovation segment due to real estate impacts, the company aims to maintain or increase market share. International sales of central air conditioning are expected to grow by over 20% in 2026 [6] Data Center Business - **Growth Potential**: The data center segment currently contributes minimally to revenue, but the company plans to achieve a compound annual growth rate of at least 30% in its water machine business over the next three years, indicating significant growth potential [7] - **Market Strategy**: The company focuses on the domestic market for data center business while leveraging local distributors for resource access [8] Sales Projections for 2026 - **Domestic Revenue**: Expected to achieve single-digit growth, driven by energy efficiency upgrades in refrigerators and strong demand for washing machines. The company anticipates at least 10% growth in international sales, supported by promotional activities during the World Cup [9] - **Profit Margins**: The profit margin for international sales of refrigerators and washing machines improved from less than 1% in 2024 to around 4% in 2025, with expectations for continued improvement in 2026 [9] Three-Store Business Performance - **2025 Results**: The three-store business saw a revenue increase of about 3% in the first three quarters of 2025, but incurred losses of approximately 160-170 million yuan. The company expects to turn around this segment in 2026 with improved order conversion [10] Production Capacity - **Factory Operations**: The Monterrey factory is operating at full capacity, while the Thai factory is progressing as planned, with expectations for rapid capacity growth in 2026 [11] Overall Performance Expectations - **Revenue Growth**: The company aims for mid-single-digit revenue growth in 2026, with performance growth expected to outpace revenue growth. A minimum dividend payout ratio of 50% is anticipated, contingent on meeting profit targets [12]