Summary of Conference Call Records Industry Overview - The records focus on the impact of tariffs on the **cleaning appliances** and **small home appliances** industries, particularly in relation to the U.S.-China trade tensions and the subsequent shifts in production capacity to Southeast Asia [1][2][4][30]. Key Points and Arguments Tariff Impact on Exports - Following the U.S. tariffs on vacuum cleaners, China's export share to the U.S. dropped from **40% to 25%**, with Vietnam becoming a significant alternative source, accounting for approximately **30%** of imports [1][3]. - The cleaning appliance sector experienced a slowdown in shipments in Q2 2025 due to increased tariffs, but companies began to ramp up production in Southeast Asia to mitigate costs [1][5]. Company Strategies - Companies like **Dechang**, **Lec** and **Fujia** have shifted production to Southeast Asia to meet U.S. demand, with Lec already covering its export needs through overseas capacity [4][29]. - Brands such as **Ecovacs** and **Roborock** have also moved some production to Southeast Asia to benefit from lower tariffs, reducing cost pressures [6][7]. Small Appliance Sector Dynamics - The small appliance sector is slower in capacity transfer compared to cleaning appliances, with coffee machines moving to Indonesia and Thailand, while air fryers are being produced in Mexico and Southeast Asia [9][10]. - Leading companies like **Xingbao** have leveraged their Southeast Asian production advantages to secure more orders, while those lacking overseas capacity face order losses [10][11]. Black Appliance Industry Resilience - The black appliance sector, represented by companies like **Hisense** and **TCL**, has shown resilience against tariffs due to global production strategies and technological upgrades [12][16]. - The U.S. market remains crucial, accounting for **17%** of global demand, and despite tariffs causing a **10%-15%** increase in retail prices, demand remains stable due to the essential nature of these products [12][13]. Future Trends - The tariff situation has catalyzed a shift towards diversified and decentralized production strategies in the home appliance industry, with companies increasingly establishing overseas capacities [30][32]. - Component suppliers are also adapting by following major clients abroad, enhancing their market presence and product offerings in new regions [32][33]. Additional Important Insights - The cleaning appliance industry is expected to recover from Q2 2025 impacts as production ramps up in Southeast Asia [8]. - The overall export scale of Chinese white goods remains robust despite a decline in the U.S. import share, driven by overseas capacity and growing demand in non-U.S. markets [26][28]. - The ongoing trade tensions have prompted a strategic shift among second-tier appliance manufacturers, who are capitalizing on favorable conditions in Southeast Asia to enhance their international revenue [33].

Summary of Conference Call Notes Industry Overview - The conference call discusses the investment opportunities in the Hong Kong stock market, particularly focusing on the home appliance sector, with a specific emphasis on Haier Smart Home [1][2][24]. Key Points and Arguments 1. **U.S. Economic Resilience**: The U.S. economy shows unexpected resilience due to expansive fiscal policies and quantitative easing from the Federal Reserve, maintaining a relative advantage amid global economic downturns [1][5]. 2. **Downward Pressure on U.S. Demand**: In the second half of the year, U.S. demand is expected to face downward pressure, with real income affected by inflation and student loan issues, while businesses are likely to experience inventory destocking [1][6]. 3. **Federal Reserve Policies**: The Federal Reserve is implementing quantitative policies to enhance bank capital adequacy and alleviate fiscal financing pressures, ensuring a loose policy direction [1][9]. 4. **U.S. Real Estate Market**: The U.S. real estate market is expected to remain stable in the short term, with long-term upward trends, although potential impacts from tax policy changes are to be monitored [1][10]. 5. **Market Style Shift**: There is a notable shift in market style towards large-cap growth stocks, driven by inflation expectations and cyclical value reassessment [1][12][14]. 6. **Haier's Market Performance**: Haier continues to grow its market share in the U.S., particularly in the refrigerator and washing machine segments, benefiting from product iteration speed and channel rebates [1][17]. 7. **Valuation of Haier**: Haier is considered undervalued in the Hong Kong market, with significant potential for value appreciation due to the recovery of the U.S. real estate market and operational improvements [2][24]. 8. **Impact of Tariffs**: Short-term tariff impacts on Haier's financials are limited, as price increases across the board mitigate the effects of tariffs on imported goods [18][19]. 9. **Long-term Outlook for Haier**: Haier's position in the USMCA (United States-Mexico-Canada Agreement) is favorable, with a significant portion of its revenue derived from U.S. manufacturing, reducing tariff risks [19]. 10. **Investment Recommendations**: The call recommends focusing on potential outperformers in the second quarter, highlighting Haier, Midea, and Gree as key players with strong cash returns [15][24]. Additional Important Insights - **Inflation and Consumer Spending**: Rising inflation is expected to impact real income, with a projected CPI increase of over 3% by year-end, affecting consumer spending [6][8]. - **Supply Chain Efficiency**: Haier's improvements in digital inventory management and supply chain efficiency are crucial for maintaining competitive advantage [21][22]. - **Market Dynamics**: The shift from a "barbell" investment strategy to a focus on mid-cap growth stocks reflects changing market dynamics, with increased attention on sectors like TMT and traditional consumption [12][13]. - **Future Growth Potential**: Despite current challenges, Haier's growth potential remains strong, particularly in overseas markets, which are expected to drive future revenue growth [23][24].

Core Insights - The Thai white goods market is experiencing a downturn, with an overall decline of 8.3% from January to May 2025, while Haier's white goods segment has achieved a remarkable growth of 26%, outperforming the industry and competitors [1] - Haier's success in Thailand is attributed to its localized innovation, high-end product offerings, and collaborative supply chain strategies, which have allowed it to capture significant market share [2][3] Market Performance - The overall Thai white goods market is down by 8.3% in early 2025, while Haier's white goods have grown by 26% [1] - In the refrigerator segment, Haier achieved a 40% increase despite a 4.2% decline in the overall market [1] - Haier's washing machines saw a 72% growth, significantly outpacing the market's 5.8% increase [1] - The air conditioning market declined by 21.1%, yet Haier's air conditioning segment maintained a stable performance [1] Product Innovation - Haier has introduced a 520-liter T-door ice water refrigerator in Thailand, featuring Smart Ice technology, which caters to local preferences for ice [2] - The air conditioning units have been optimized for health, energy efficiency, and ease of installation, enhancing market competitiveness [2] High-End Market Strategy - Haier launched three high-end washing machine models in Bangkok, targeting the premium segment traditionally dominated by Japanese and Korean brands [3] - The company is actively engaging with local culture through events like international marathons and badminton championships to strengthen brand recognition [3] Supply Chain Development - Haier's Spring Valley air conditioning industrial park has begun trial production, with a planned capacity of 6 million units, covering a wide range of air conditioning products [3] - This facility is positioned as Haier's largest overseas air conditioning manufacturing base and the first 5G-connected factory in Southeast Asia, enhancing efficiency and supply chain reliability [3] Future Outlook - As Chinese brands continue to gain influence in Southeast Asia, the dominance of Japanese and Korean brands is expected to diminish, providing Haier with further growth opportunities [3]

Core Viewpoint - The home appliance industry maintains a high level of prosperity, with strong growth in air conditioning demand driven by summer heat, and leading companies are expected to perform well in the upcoming quarters [1] Group 1: White Goods - The summer heat has led to significant growth in the air conditioning sector, with online sales growth of 55% and offline sales growth of 70% in the first two weeks of July [2] - Major companies like Gree, Midea, and Haier reported online sales growth of 61%, 37%, and 222% respectively, while offline sales growth was 66%, 56%, and 99% [2] - The domestic air conditioning market saw a 16% increase in June, with Gree, Midea, and Haier growing by 16%, 26%, and 27% respectively [2] Group 2: Robotic Vacuums - The competitive landscape in the robotic vacuum sector is improving, with companies like Ecovacs and Roborock showing online sales growth of 129% and 63% respectively [2] - The price increase by a competitor has led to a slight loss in market share, but overall, the industry is expected to see a profit margin improvement in Q3 [2] Group 3: Black Goods - The black goods sector experienced a 10% year-on-year growth in online sales in the first two weeks of July, primarily driven by an increase in average prices [3] - Companies like Hisense and Vidda saw online growth of 37% and 6%, while TCL grew by 46% [3] - The average price of 65-inch and 75-inch panels is expected to decline by $4 in July, continuing a downward trend [3] Group 4: Two-Wheelers - The domestic sales of electric two-wheelers are projected to reach 32.325 million units in the first half of 2025, marking a 29.5% year-on-year increase, driven by government subsidies [3] - After a brief disruption in subsidy funding, regions like Wuxi have resumed normal funding trends, supporting industry growth [3] - Companies like Ninebot announced domestic shipments exceeding 8 million units, while Niu Technologies reported significant sales during a recent product launch [3] Group 5: Motorcycles - The sales of motorcycles with engine sizes over 250CC reached 102,000 units in June, reflecting a 14.3% year-on-year increase, with exports growing by 59.9% [4] - The market concentration among top brands is increasing, with the top three brands holding a combined market share of 46.9% [4] - International demand is recovering, with notable growth in registrations in Italy and Spain, indicating a positive trend for Chinese motorcycle manufacturers [4]

Investment Rating - The report maintains an "Outperform" rating for the home appliance industry [4] Core Views - The home appliance industry is experiencing internal growth while external sales are under pressure, with a stable outlook for the second quarter [4][13] - Domestic sales are benefiting from national subsidy policies, leading to positive retail and shipment growth, while external sales face challenges due to high base effects and tariff disruptions [13][14] - The overall performance of listed home appliance companies is expected to remain stable with revenue growth driven by structural upgrades and efficiency improvements [13] Summary by Sections White Goods - Domestic sales growth is accelerating, while external sales are declining due to high base effects and tariff disruptions [2][14] - In April and May, air conditioner shipments increased by 2.6% year-on-year, with domestic sales up 9.5% and external sales down 6.3% [2][14] - Revenue growth for white goods companies is expected to be around double digits, with profit margins showing slight improvement [2][22] Kitchen Appliances - Kitchen appliance demand is improving due to national subsidy policies, with online retail sales growth for range hoods and gas stoves between 10%-20% [2][38] - However, the real estate sector continues to exert pressure, particularly on integrated stove companies [38] - Traditional kitchen appliance companies are expected to see improved profit margins due to declining raw material prices [38] Black Goods - The black goods segment is experiencing structural upgrades, with television sales and revenue increasing by 9.7% and 14.5% respectively during the 618 shopping festival [3][49] - Panel prices have begun to decline, which is expected to improve profitability for black goods companies [49] Small Appliances - The small appliance sector is seeing a recovery in kitchen small appliances, with online retail sales for kitchen small appliances growing by 25% during the 618 period [4][57] - However, external sales are facing short-term pressure due to tariffs and overseas factory setups [57] - Companies like Roborock and Ecovacs are expected to see significant revenue growth, with Roborock projected to grow by 40% [72]

Summary of Key Points from the Conference Call Industry Overview - The home appliance sector is expected to show strong performance in Q2 2025, with leading brands like Midea, Haier, and Gree projected to achieve double-digit growth due to stable profitability and market share gains. In contrast, second-tier brands may experience single-digit declines or marginal growth [1][3][4]. Key Insights and Arguments White Goods and Components - The white goods and components sector is anticipated to demonstrate robust operational resilience, with leading companies expected to achieve over 10% year-on-year growth. In contrast, second-tier white goods companies are likely to see weak performance, with revenue and earnings projected to decline slightly or grow marginally [4]. - Midea Group is recommended as a top pick, with expected revenue and earnings growth of over 15%. Haier is also expected to achieve double-digit growth due to strong domestic air conditioning performance and stable overseas business [4]. Home Appliance Performance - The overall performance of the home appliance industry in Q2 2025 is promising, with strong domestic demand driven by national subsidy policies. The air conditioning market saw a 36% increase in online retail volume, with Midea and Haier gaining market share [5]. - The kitchen small appliance sector is recovering, with a 25% growth during the 618 shopping festival, driven by improved average prices and sales volume [10]. Cleaning Appliances - The cleaning appliance sector is benefiting from national subsidy policies and global market share gains. Companies like Ecovacs and Roborock are experiencing strong revenue growth, while the price increase by a competitor has led to a decline in market share for others, providing growth opportunities for leading brands [1][6]. Black Goods - The black goods sector is stable, with an increase in Mini LED penetration driving price increases. TCL Electronics and Hisense are expected to see revenue and performance growth due to product structure optimization and overseas market expansion [1][13][15]. Export Manufacturing - Export manufacturing companies like Ousheng Electric and Lek Electric are expected to gradually recover their performance in Q3 and Q4 2025, benefiting from well-established production capacity in Southeast Asia [12]. Additional Important Insights - The air conditioning market remains competitive, but leading companies are managing costs effectively without sacrificing profit margins. The small appliance sector is seeing improved profitability due to capacity clearing and marginal improvements in traffic costs [2]. - The kitchen appliance sector is facing pressure from real estate completion demands, but national subsidy policies are providing support. Traditional products are stable, while integrated stoves are experiencing significant declines [17][19]. - Companies like Bull Group are facing growth pressures due to a weak macro environment, although their new energy and overseas business segments are growing rapidly [21]. - Ecovacs is projected to achieve a net profit of 485 to 515 million yuan in Q2, representing a year-on-year growth of 56% to 66%, driven by strong domestic market performance and international sales [7][8]. This summary encapsulates the key points from the conference call, highlighting the performance expectations and strategic insights across various segments of the home appliance industry.

Group 1 - The report highlights that government subsidies stimulated sales in Q2, leading to continued positive revenue growth. The competitive landscape in the small home appliance sector has improved, driving profit recovery, while leading players in the major appliance sector are helping to concentrate market share, suggesting an increase in holdings [2][29]. - The report recommends focusing on two main investment lines: 1) The improvement in the competitive landscape of small home appliances brings profit elasticity, particularly in the vacuum cleaner sector, which has high growth potential and low penetration rates. The kitchen small appliances sector is gradually returning to growth after two years of decline, with a significant increase in sales during the 618 shopping festival [2][29]. - The report indicates that leading brands in the white goods sector are dominating the current price competition, leading to increased industry concentration. The export performance of major appliance manufacturers is expected to gradually recover as uncertainties around tariff policies are clarified [3][31]. Group 2 - The company Salted Fish's differentiated product, the konjac sauce, achieved over 100 million in monthly sales within 16 months, setting a record for the fastest-selling snack product. The konjac snack segment is still in a high-growth phase, supported by a strong supply chain and channel capabilities [7][8]. - The company is expanding its overseas market presence with its own brand "Mowon," developing localized products based on local tastes, which is expected to drive growth in international markets [8][9]. - The report maintains an "increase holdings" rating for the company, projecting EPS of 2.99, 3.73, and 4.63 for 2025-2027, with a target price of 100.00 yuan based on strong performance in konjac products [7][8].

Investment Rating - The report maintains a "Positive" outlook on the home appliance industry for the mid-2025 performance forecast [3] Core Insights - The home appliance sector is expected to benefit from domestic sales policies and the "old-for-new" program, which is driving demand for major appliances and kitchen appliances [4][5] - The air conditioning industry saw a cumulative production of 101.54 million units from January to May 2025, representing an 8% year-on-year increase, while sales reached 103.49 million units, up 9% year-on-year [4][17] - The report identifies three main investment themes: 1. **White Goods**: The reversal of real estate policies and the "old-for-new" program are expected to catalyze growth in the white goods sector, which is characterized by low valuations, high dividends, and stable growth [5][6] 2. **Exports**: Companies like Ousheng Electric are recommended due to stable income growth driven by large customer orders, while Dechang shares are highlighted for their expanding automotive parts business [6] 3. **Core Components**: The report suggests that the demand for core components will exceed expectations due to the strong performance of white goods, recommending companies like Huaxiang and Shun'an Environment for their competitive advantages [6] Summary by Sections 1. Air Conditioning and Major Appliances - The air conditioning sector is experiencing high growth in exports, with a 11% year-on-year increase in external sales from January to May 2025 [4][17] - The "old-for-new" policy is expected to enhance the average price of white goods, with major companies like Midea and Gree projected to see revenue growth of 8% and 5% respectively in Q2 2025 [4][29] 2. Kitchen Appliances - The kitchen appliance market is recovering due to real estate policies and the "old-for-new" program, with online sales of range hoods and gas stoves increasing by 17.5% and 16.5% respectively [40] - Companies like Boss Appliances are maintaining strong market shares in the kitchen appliance sector, with expected revenue growth of 5% in Q2 2025 [41] 3. Small Appliances - The small appliance sector is benefiting from high growth in domestic sales and exports, with companies like Supor and Joyoung expected to see revenue increases of 5% and 120% respectively in Q2 2025 [4][41] - The "old-for-new" policy is set to include small appliances, which is anticipated to significantly boost sales [5][20] 4. New Displays and Lighting - The emerging display market is at a turning point, with companies like Hisense and Jimi Technology expected to see revenue growth of 5% in Q2 2025 [4][5] 5. Investment Highlights - The report emphasizes the potential for a rebound in the home appliance sector driven by favorable policies and market conditions, recommending a combination of leading companies such as Midea, Haier, and Gree for investment [5][6]

Group 1: Core Views - The company maintains a "stronger than market" investment rating for the home appliance industry, emphasizing the need for upward expectations and the overall low exposure to the U.S. market [1] - Key recommendations include focusing on high-quality, high-dividend white goods leaders, leading TV brands with strong product capabilities, and small appliances with expected performance elasticity [1] Group 2: White Goods - Domestic sales of white goods are expected to see high single to double-digit growth by Q2 2025, driven by national subsidy policies, with terminal sales outpacing shipments [1] - The air conditioning leaders are actively adjusting product structures, showing significant market share elasticity and outperforming the overall industry [1] - The cost environment is improving, and stable average prices are expected to enhance profitability, with Q2 revenue performance likely to exceed expectations [1] Group 3: Color TVs - The demand for color TVs has shown slight fluctuations, but the penetration rate of MiniLED technology is increasing due to subsidy policies [2] - The average selling prices for online and offline channels have increased by 10.5% and 6.5% year-on-year, respectively, indicating a significant product structure optimization [2] - Leading Chinese TV brands are expected to maintain steady revenue growth, benefiting from their advantages in the panel supply chain [2] Group 4: Kitchen Appliances - The demand for kitchen appliances is supported by national subsidies, with retail growth expected to remain relatively stable in Q2 2025 despite a decline in construction area [3] - The integrated stove market may face pressure, while the demand for separate stoves is expected to remain steady [3] Group 5: Emerging Small Appliances - The market for robotic vacuum cleaners and washing machines is experiencing high growth, with domestic brands performing well in exports [4] - The domestic market is expected to continue growing, driven by high-end products and competitive pricing strategies [4] Group 6: Small Kitchen Appliances - The trend of recovering domestic demand for small kitchen appliances continues, supported by low base effects and national subsidies [5] - The competitive landscape in the small appliance sector has eased, with significant price increases during the "618" shopping festival [5] - However, external sales are under pressure due to tariffs affecting some OEM small appliance companies [5]

Investment Rating - The report maintains a positive outlook on the home appliance sector, highlighting its undervalued status, high dividends, and stable growth potential [7] Core Insights - The home appliance sector has outperformed the CSI 300 index, with a 1.7% increase in the sector index compared to a 1.5% rise in the index [6][8] - Major companies like Haier, Midea, and Hisense are actively investing in robotics, indicating a shift towards automation and smart home solutions as new growth engines [6][14] - The report identifies three main investment themes: white goods, export opportunities, and core components, recommending leading companies in each category [7] Data Observations - In May 2025, the air conditioning sector saw a total production of 20.81 million units, a 1.8% year-on-year decrease, while total sales reached 22.03 million units, a 2.34% increase. Domestic sales rose by 13.39% to 14.13 million units, while exports fell by 12.83% to 7.91 million units [29][32] - The refrigerator sector produced 8.40 million units, a 2.0% year-on-year increase, with total sales of 8.50 million units, up 1.83%. Domestic sales increased by 13.70% to 3.89 million units, while exports decreased by 6.39% to 4.61 million units [36][37] - The washing machine sector experienced a production increase of 11.2% to 7.40 million units, with total sales of 7.50 million units, a 10.04% increase. Domestic sales grew by 15.16% to 3.51 million units, and exports rose by 5.89% to 3.99 million units [38][39] Industry Dynamics - The report notes a collective push by major home appliance companies towards robotics, with Haier, Midea, and Hisense leading the charge in developing industrial and service robots [6][14] - The report also mentions a trade agreement between the U.S. and Vietnam, which may impact the home appliance sector due to potential tariffs on exports [15] Component Data - In May 2025, the sales of rotary compressors for air conditioning increased by 4.4% year-on-year, while electronic expansion valves saw a significant rise of 31.7% [22][24] - The report indicates a decline in the sales of refrigerator compressors by 7.3% year-on-year, while washing machine motor sales increased by 1.8% [25][39]