Investment Rating - The investment rating for the home appliance industry is "Positive" and maintained [11] Core Insights - The air conditioning industry has significant space for growth, with leading companies focusing on the mid-to-high-end market while low-price demand continues to exist, benefiting the development of small and medium brands [3][6] - The report uses the case of Aux to analyze the characteristics and structure of the air conditioning industry, highlighting the challenges Aux faces in maintaining a high market share in the long term [5][9] Summary by Sections Introduction - Aux Electric submitted its listing application to the Hong Kong Stock Exchange on January 15, 2025. Despite challenges from industry leaders, Aux has achieved impressive operational results, with 2023 revenues exceeding 20 billion yuan [5][19] Industry Space - The air conditioning industry is expected to have a total shipment volume of over 200 million units in 2024, leading among major home appliance categories. The global penetration rate of air conditioning products remains low, indicating strong long-term growth potential [6][29] Aux's Rise - From 2015 to 2018, e-commerce channels contributed 60% of Aux's revenue growth, allowing it to achieve a temporary market share breakthrough. Aux adopted a differentiated competition strategy by leveraging price advantages against leading brands [7][60] Challenges for Aux - Since 2019, Aux's market share has declined rapidly due to price competition initiated by Midea. Aux's cost pressures limit its ability to follow suit in price reductions, resulting in a loss of price competitiveness [8][9] Investment Recommendations - The report concludes that the price-for-volume strategy is unlikely to disrupt the long-term competitive landscape of the air conditioning industry. The broad demand space supports Aux's revenue scale, but its profitability remains volatile due to production scale and supply chain integration challenges [9][42]