Summary of Conference Call Notes on China Appliances Industry Industry Overview - The Chinese appliance market exhibited mixed dynamics in the first half of the year, with Q1 showing strong performance due to domestic subsidies and export pull-forward, while April data indicated a moderation in growth as exports flattened from Q1's growth [1][2][3]. - Q2 projections remain positive for overall air conditioning (AC) shipment growth, with a forecasted 9% increase, driven by a 17% growth in domestic shipments, despite a 1% decline in exports [3][4]. Key Company Insights Midea - Midea's revenue grew by 20.5% YoY in Q1, driven by domestic subsidies and export front-loading. However, growth is expected to decelerate to 4-5% for the remainder of the year [18]. - Forecasted revenue growth for Midea is approximately 9% in 2025, with home appliances contributing 66% of revenue, expected to grow by 8% [19]. - The company is focusing on energy solutions and industrial technology, with a projected 15% revenue growth in these segments [19]. - Midea's operating profit margin (OPM) is expected to dilute as it grows lower-margin businesses faster, with a forecasted OPM of 11% in 2024 [19][24]. Gree - Gree is expected to grow its topline by 6.5% YoY in 2025, but is likely to face challenges from softening domestic demand in the second half of 2025 as national trade-in subsidy programs taper off [8]. - The company’s topline growth is projected to decelerate significantly to 3.5% YoY in 2H25, underperforming industry peers [8]. Haier - Haier is projected to grow its topline by 7.4% YoY in 2025, with earnings expected to increase by 13.7% YoY, driven by growth in overseas markets, particularly in emerging markets [7]. - The target price for Haier is set at 28 RMB, indicating a potential upside of 5-6% [7]. Market Dynamics - Domestic sell-through growth is primarily volume-driven, with significant increases in both offline (20%) and online (45%) sales volumes, despite modest average selling price (ASP) growth of 3% [4]. - Intense pricing competition is noted in the entry-level segment, with manufacturers like Midea implementing price cuts of 5% across their online portfolio and targeting deeper reductions of 10-20% on specific entry-level products [4]. - The overall market remains value-conscious, with consumers showing a preference for premium SKUs due to national trade-in subsidy programs [4]. Production and Shipment Insights - April data indicated a cooling trend in AC shipments, with only 3% growth compared to 16% in Q1, driven by a flattening of exports [3][12]. - The production plans for Q2 indicate a 7% growth in domestic shipments for Midea, while exports are expected to remain flat or decline [18]. - The overall industry shipment data for ACs shows a YoY growth of 18% in Q1, with a projected 9% growth in Q2 [12]. Investment Implications - The investment outlook for Midea, Haier, and Gree is maintained at Market-Perform, reflecting cautious optimism amid mixed market dynamics and competitive pressures [11]. Additional Insights - The robotics and automation segment is expected to grow, with Midea positioned to benefit from potential growth in humanoid robotics manufacturing [6]. - Midea's long-term model forecasts a revenue compound annual growth rate (CAGR) of 7.7% and earnings CAGR of 9.1% from 2024 to 2029 [20]. This summary encapsulates the key points from the conference call regarding the Chinese appliances industry and the performance outlook for major companies within the sector.