Core Viewpoint - The home appliance industry is experiencing a divergence in performance among major players, with Midea Group and Haier Smart Home showing stable growth, while Gree Electric is facing pressure and a decline in performance in the third quarter of 2025 [1][4]. Group 1: Company Performance - Midea Group reported a revenue of 363.06 billion yuan, a year-on-year increase of 13.82%, and a net profit of 37.88 billion yuan, up 19.51% [5]. - Haier Smart Home achieved a revenue of 234.05 billion yuan, with a growth of 9.98%, and a net profit of 17.37 billion yuan, increasing by 14.68% [5]. - Gree Electric's revenue was 137.18 billion yuan, down 6.50%, and its net profit was 21.46 billion yuan, a decrease of 2.27% [5]. Group 2: Market Trends - The home appliance industry (excluding 3C) saw a retail sales figure of 198.8 billion yuan in Q3 2025, a year-on-year decline of 3.2%, while the total retail sales for the first three quarters reached 670.1 billion yuan, up 5.2% [4]. - The air conditioning market is experiencing intense competition, leading to price wars among brands, with Midea leveraging its Hualing brand and Haier promoting its Tongshuai brand [3][11]. Group 3: Business Strategies - Midea Group's B-end business is outperforming its C-end business, with a 18% growth in ToB revenue compared to 13% in ToC [7]. - Haier Smart Home is deepening its multi-brand strategy, with high-end brand Casarte growing by 18% and Leader brand revenue increasing by 25% [8]. - Gree Electric is expanding its non-air conditioning product lines and has launched new brands targeting the price-sensitive market segment [15]. Group 4: Future Outlook - Analysts expect Midea's humanoid robots to enter offline commercial settings in the second half of the year, focusing on enhancing operational capabilities [10]. - Xiaomi is planning to become a leading brand in the home appliance sector within five years, aiming for a significant market share in air conditioning [14].

Core Insights - The report highlights the acceleration of industry rotation in the A-share market, indicating a shift from sustained single-line trends to rapid sector changes, with the industry rotation index showing increased activity since 2023 [13][14] - It emphasizes the scarcity of fundamentally strong investment opportunities, suggesting that while growth investment remains relevant, the range of viable options has significantly narrowed compared to the past two decades [20][19] - The report identifies the importance of "crowding" and "calendar effects" as tools for navigating the current market dynamics, with a focus on how these metrics can guide investment strategies [37][38] Group 1: Industry Rotation Dynamics - The A-share market has experienced a notable increase in industry rotation speed, with the duration of dominant trends decreasing from 6-12 months in previous years to approximately 2 months in 2023 [13][14] - The report outlines that the current market environment is characterized by a blend of "extreme rotation" and "absolute low volatility," where thematic investments and stable fundamental assets coexist [4][5] - The report provides a comparative analysis of industry performance, indicating that sectors such as military, robotics, and software are expected to benefit from low crowding and catalysts in the near term [6] Group 2: Investment Strategies and Sector Focus - For active funds, the report suggests focusing on sectors with strong growth trends and catalysts, particularly in the context of the upcoming quarterly reports [6] - It recommends maintaining positions in sectors like computing power, innovative pharmaceuticals, and non-ferrous metals, while also noting the potential for increased allocations in dividend-paying sectors such as banks and home appliances as the year-end approaches [6] - The report highlights the significance of calendar effects, suggesting that both active and long-term investors may find opportunities for positioning in the market during specific periods [5][6]

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]

Investment Rating - The report maintains an "Outperform" rating for the industry [8] Core Views - The cleaning appliance sector, particularly floor cleaning robots and washing machines, continues to show strong growth in September, while the white goods sector faces pressure due to high base effects from last year [3][15] - The overall sales of major white goods categories experienced a decline in September, primarily due to the high base from last year's government subsidies [3][15] - The washing machine segment saw a year-on-year growth rate of 49.4% in September, with volume and price growth rates of +39% and +7% respectively. The floor cleaning robot segment achieved a year-on-year growth rate of 26.2%, with volume and price growth rates of +21% and +4.55% respectively [3][15] Summary by Sections Market Data - The home appliance sector experienced a decline of 2.1% this week, with white goods, black goods, small appliances, and kitchen appliances showing declines of -0.6%, -5.6%, -2.4%, and -2.0% respectively [4][31] - Raw material prices for copper and aluminum decreased by 1.46% and 1.04% respectively compared to the previous week [4][31] Investment Recommendations - The report suggests focusing on the following areas due to expected recovery in domestic demand supported by policy: 1. Major appliances benefiting from trade-in programs, recommending companies like Midea Group, Haier Smart Home, Gree Electric, Hisense Home Appliances, TCL Electronics, and Hisense Visual [5] 2. Pet-related companies as a resilient sector, recommending companies like Guibao Pet, Zhongchong Co., and Petty Holdings [5] 3. Small appliances and branded apparel expected to recover from weak consumer demand, recommending leading companies like Bear Electric, Feike Electric, Supor, and Newell [5] 4. Electric two-wheelers benefiting from new standards and trade-in programs, recommending companies like Ninebot, Yadea Holdings, and Aima Technology [5] Industry Trends - The report highlights that the global restructuring of manufacturing continues to favor Chinese manufacturing advantages, particularly in major appliances, vacuum cleaners, and tools, recommending companies like Midea Group, Haier Smart Home, and Hisense Home Appliances [6] - The report notes that the cleaning appliance sector remains strong globally, with leading brands benefiting from increased penetration rates, recommending companies like Roborock and Ecovacs [5][6] Sales Performance - In September, the sales performance of major brands in the floor cleaning robot segment showed significant growth, with Ecovacs and Roborock leading with year-on-year growth rates of +94% and +27% respectively [16][20] - The washing machine segment also showed strong performance, with brands like Tineco and Roborock achieving year-on-year growth rates of +38% and +115.8% respectively [20][21] Air Conditioning Market - The air conditioning market faced pressure in September, with domestic and foreign sales declining by 2.5% and 18.1% year-on-year respectively [22][26] - Major brands like Gree, Haier, and AUX showed positive growth in domestic sales, while foreign sales for brands like Midea and Gree experienced declines [26][28]

Summary of Conference Call Notes Industry Overview - The consumer sector is currently viewed positively, with valuations at low levels and market attention extremely low. Certain assets like beer and frozen foods have dropped to levels seen in 2017-2018, despite significant earnings growth, indicating low risk and potential for reversal [1][4][5]. - The white liquor industry, while impacted by alcohol bans, has seen sufficient adjustment in expectations. Leading companies like Moutai are nearing bottom pricing, enhancing cost-effectiveness, and consumer demand is expected to recover in the long term [1][19]. - The white goods sector shows strong cost-performance advantages, with companies like Midea demonstrating global competitive strengths and stable growth in overseas market share, making them attractive for long-term investment [1][20][22]. Key Investment Opportunities - Focus on four investment directions: absolute cheap stocks, high dividend yields, low valuations, and companies expected to double in three years. Examples include Kangtong, Yihai, and Haidilao for high dividends, and CR Beer and Haier for low valuations [1][12][15]. - New consumption trends highlight a growing demand for quality and innovative products among new middle-class and Gen Z consumers, who are willing to pay for technologically advanced products [1][6][24]. Market Dynamics - The current market environment is characterized by a narrow funding situation, with limited incremental capital despite an increase in overall funds. The opening of the Hong Kong market has led to a diversion of funds to new consumption stocks [8][9]. - The anticipated return of long-term overseas funds to the Chinese market is expected as global interest rates decline, potentially increasing overseas allocations to Chinese assets [2][11]. Consumer Sector Insights - The consumer sector is expected to experience a 3 to 4-month rally from November to January, driven by macroeconomic factors and potential bottom reversals [3]. - The current consumer landscape differs significantly from April, with lower valuations and reduced market attention. Many stocks have reached their lowest points, with minimal risk [4][5]. Specific Company Insights - Companies like Hisense and AUX in the air conditioning sector have low P/E ratios (5-7 times), indicating growth potential despite slightly lower quality. Midea's strong earnings stability is noted with a P/E ratio of around 12-13 times [5]. - The liquor sector is expected to see a bifurcation, with Moutai's pricing nearing a bottom and consumer willingness to purchase increasing, suggesting a recovery in C-end consumption [19]. Emerging Trends - New consumption fields, such as tea and trendy toys, show clear cash flow and payment willingness, with some companies projected to grow over 20% next year [1][6]. - The experience-based consumption and medical beauty sectors are also highlighted as having strong growth potential, particularly among the new middle-class and female consumers [13][14]. Conclusion - The consumer sector presents various investment opportunities, particularly in undervalued stocks with strong fundamentals. The anticipated recovery in consumer spending and the return of overseas funds could further enhance market dynamics in the coming months [1][11][12].

Investment Rating - The report maintains a positive investment outlook for the home appliance industry, highlighting the potential for growth driven by real estate policies and the "old-for-new" replacement program [4][6]. Core Insights - The home appliance sector is experiencing a recovery, with significant growth in both domestic and export sales, particularly in the white goods and kitchen appliance segments, supported by favorable government policies [6][7]. - The report identifies three main investment themes: 1) White goods benefiting from real estate policy changes and the "old-for-new" program, with a focus on leading companies like Haier, Midea, and Gree [8][14]. 2) Export opportunities driven by large customer orders and recovering overseas demand, particularly for companies like Ousheng Electric and Dechang [8][14]. 3) Core components seeing increased demand due to the recovery in the white goods sector, with recommendations for companies like Huaxiang and Shun'an [8][14]. Summary by Sections 1. Domestic Sales Growth - From January to August 2025, the air conditioning sector saw a cumulative production of 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% [11][12]. - The refrigerator and washing machine sectors also reported domestic sales growth of 4% and 6%, respectively, during the same period [11][12]. 2. White Goods and Components - The average price of white goods is expected to rise due to the "old-for-new" policy and increasing raw material costs, with air conditioning prices projected to continue their upward trend [23][24]. - Key companies in the white goods sector are expected to report varying revenue growth for Q3 2025, with Midea projected to grow by 3% in revenue and 8% in profit, while Gree anticipates flat revenue and profit [24][25]. 3. Kitchen Appliances - The kitchen appliance sector is benefiting from real estate policies and the "old-for-new" program, with significant sales growth in major categories like range hoods and gas stoves [7][8]. - Companies like Robam and Vatti are expected to see mixed results, with Robam projecting a 2% revenue increase but a 7% decline in profit [24]. 4. Small Appliances - The small appliance sector is experiencing a revival, particularly in exports, with companies like Supor and Joyoung expected to report positive revenue growth [7][8]. - The "old-for-new" policy is expected to significantly boost sales in small kitchen appliances, with new categories like microwaves and rice cookers included in the subsidy program [14][15]. 5. New Displays and Lighting - The report notes a turning point in the emerging display sector, with stable prices in the panel market and growth potential in the lighting industry [8][9]. 6. Investment Highlights - The report emphasizes the importance of real estate and export chains, recommending investments in companies that are well-positioned to benefit from the ongoing transformation in the home appliance sector [8][14].

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].

- Model Name: Expected High Dividend Portfolio; Model Construction Idea: The model uses a two-stage approach to construct the expected dividend yield indicator. The first stage calculates the dividend yield based on the annual report's profit distribution, and the second stage predicts and calculates the dividend yield using historical dividends and fundamental indicators. Additionally, two short-term factors affecting dividend yield—reversal factor and profitability factor—are used to assist in screening, and the selection is made from the CSI 300 constituent stocks to construct the expected high dividend portfolio. The portfolio holds 30 stocks each period and rebalances monthly[3][8] - Model Construction Process: 1. Exclude suspended and limit-up stocks from the CSI 300 constituent stocks to form the candidate stock pool[13] 2. Exclude the top 20% of stocks with the highest short-term momentum (i.e., the top 20% of stocks with the highest 21-day cumulative gains) from the stock pool[13] 3. Exclude stocks with declining profitability (i.e., stocks with a negative year-on-year growth rate of quarterly net profit)[13] 4. Rank the remaining stocks in the stock pool by expected dividend yield and select the top 30 stocks with the highest expected dividend yield to construct the portfolio equally weighted[9] - Model Evaluation: The model's historical performance is outstanding, with a cumulative return of 358.90% and a cumulative excess return of 107.44% relative to the CSI 300 Total Return Index. The annualized excess return is 8.87%, with a maximum rolling one-year drawdown of only 12.26% and a monthly excess win rate of 60.19%[11] Model Backtest Results - Expected High Dividend Portfolio, average return in September 2025: -5.35%, underperformed the CSI 300 Index by 8.09% and the CSI Dividend Index by 3.87%[3][14] - Best performing stocks in September 2025: CITIC Special Steel (3.81%), Yutong Bus (-0.35%), Industrial and Commercial Bank of China (-1.75%), Shuanghui Development (-1.90%)[15] Factor Construction and Evaluation - Factor Name: Expected Dividend Yield Factor; Factor Construction Idea: The factor is constructed by predicting dividend distribution using the method of dividend distribution combined with fundamental indicators. Two short-term factors affecting dividend yield—reversal factor and profitability factor—are used to assist in screening[14] - Factor Construction Process: 1. Calculate the dividend yield based on the annual report's profit distribution[8] 2. Predict and calculate the dividend yield using historical dividends and fundamental indicators[8] - Factor Evaluation: The factor is used to assist in screening and constructing the expected high dividend portfolio, which has shown outstanding historical performance[3][8] Factor Backtest Results - Expected Dividend Yield Factor, average return in September 2025: -5.35%, underperformed the CSI 300 Index by 8.09% and the CSI Dividend Index by 3.87%[3][14]

Investment Rating - The report maintains a positive outlook on the home appliance sector, particularly focusing on white goods, with an emphasis on their undervalued status, high dividends, and stable growth potential [4]. Core Insights - The report highlights the impact of the fourth batch of government subsidies amounting to 69 billion yuan, aimed at promoting the replacement of old appliances, which is expected to stimulate demand in the home appliance market [10][68]. - The production and sales of major appliances such as air conditioners, refrigerators, and washing machines have shown mixed results, with a notable decline in production for October 2025 compared to the previous year [11][32]. - The report identifies three main investment themes: white goods benefiting from favorable real estate policies, export opportunities for companies with strong client orders, and the demand for core components driven by the overall market growth [4]. Summary by Sections Industry Dynamics - The home appliance sector's performance is closely tied to government policies, with the recent 690 billion yuan subsidy expected to enhance consumer purchasing power [10][68]. - October 2025 production for air conditioners, refrigerators, and washing machines is projected to decline by 9.9% compared to the previous year, indicating potential challenges in the market [11]. Sales Data - In August 2025, the air conditioning sector saw a production increase of 9.4% year-on-year, but total sales decreased by 1%, with domestic sales up by 1.2% and exports down by 4.2% [32]. - The refrigerator market experienced a production increase of 3.4% and a sales increase of 2.1%, with domestic sales rising by 5.9% while exports fell by 0.8% [36]. - The washing machine sector reported a production increase of 5.8% and a sales increase of 6.6%, with domestic sales slightly up by 0.6% and exports up by 12.1% [37]. Key Companies - The report notes that major companies such as Midea, Haier, and Gree are well-positioned to benefit from the favorable market conditions and government policies [4]. - Companies like Ousheng Electric and Dechang Co. are highlighted for their stable income growth driven by large client orders and expanding automotive parts businesses [4]. Component Market - The demand for core components is expected to rise due to the overall growth in the white goods sector, with companies like Huaxiang and Sanhua Intelligent Control being recommended for their competitive advantages [4].

Group 1: Strategy Overview - The report highlights that the first anniversary of the bull market has resulted in absolute returns for dividend assets, but the perceived gains are weak, with relative returns lagging behind the market [17][18][19] - From October 24, 2024, to September 25, 2025, the banking sector contributed +5 percentage points to absolute returns, while coal was a significant drag on performance [17][18][23] - The report indicates that the current AH premium index is at the 2nd percentile over the past 15 years, suggesting potential for upward correction in A-share dividend assets [18][19] Group 2: Financial Sector Insights - The banking sector is expected to stabilize its interest margins this year, with insurance funds actively increasing stock allocations [17][18] - Recommendations include focusing on banks with high dividend yields and solid asset quality, particularly smaller regional banks like Chengdu Bank and Jiangsu Bank [17][18] - The report suggests that the economic structural transformation will provide greater elasticity in the fundamentals and valuations of banks, with a focus on banks like China Merchants Bank and Ningbo Bank [17][18] Group 3: Transportation and Utilities - The report identifies several high-yield stocks in the transportation sector, emphasizing the investment value of dividend assets [17][18] - Key recommendations include Sichuan Chengyu and Anhui Expressway, which are noted for their growth potential [17][18] - In the port sector, China Merchants Port is highlighted for its overseas asset layout and increasing dividend payout ratio [17][18] Group 4: Energy and Chemicals - The petrochemical industry is expected to see accelerated transformation and growth, with a focus on energy security and long-term cash flow stability [17][18] - Recommendations include major players like China Petroleum and China National Offshore Oil Corporation [17][18] - The report suggests that coal prices may strengthen due to recent policy measures, with a focus on companies like China Shenhua Energy and Shaanxi Coal and Chemical Industry [17][18] Group 5: Food and Beverage Sector - The report notes that leading companies in the food and beverage sector are showing resilience, with a focus on improving bottom-line signals [17][18] - Recommendations include high-dividend stocks like Moutai and Wuliangye, which are expected to maintain strong cash flows [17][18] - The report also highlights the stability of traditional leaders like Yili and Shuanghui, emphasizing their shareholder return strategies [17][18] Group 6: Home Appliances - The home appliance sector is characterized by quality and cyclical dividends, with a focus on leading companies [17][18] - Recommendations include Midea Group and Haier Smart Home, which are expected to benefit from policy support and improving domestic sales [17][18] - The report also suggests monitoring small appliance leaders like Supor, which are positioned to capitalize on changing consumer demands [17][18] Group 7: Real Estate - The report indicates a recovery in new home transactions from a low base, with a focus on core segments [17][18] - Recommended stocks include Greentown China and Swire Properties, which are noted for their stable cash flows and dividend commitments [17][18] - The report emphasizes the importance of monitoring rental income and occupancy rates in the commercial real estate sector [17][18] Group 8: Metals - The report highlights the recovery of profitability in the metals sector, particularly in aluminum, which is seen as a resilient dividend asset [17][18] - Recommendations include China Hongqiao and Tianshan Aluminum, which are expected to maintain or increase dividend payouts [17][18] - The report also notes the potential for high-dividend stocks in the sector, such as Zhongfu Industrial [17][18] Group 9: Publishing - The education publishing sector is characterized by stability and high dividend yields, with a focus on companies like Southern Publishing [17][18] - The report suggests that companies are actively exploring new business directions, such as AI education, which may provide upside potential [17][18] - Recommendations include Zhongyuan Publishing and Changjiang Publishing, which are noted for their solid fundamentals and dividend policies [17][18] Group 10: Selected Dividend Asset Portfolio - The report presents a curated list of stable dividend assets, including Sichuan Chengyu in transportation and Wuliangye in food and beverage [12][17] - Quality dividend assets highlighted include Midea Group and Southern Publishing, while cyclical dividend assets include Shaanxi Coal and China Hongqiao [12][17] - Potential dividend assets include China Merchants Port in the transportation sector, indicating a diversified approach to dividend investing [12][17]