Core Viewpoint - The company's 1H25 performance slightly underperformed expectations due to currency fluctuations, personnel adjustments in the three electrical businesses, and ongoing negative impacts from the real estate sector on air conditioning sales [1][2]. Financial Performance - 1H25 revenue reached 49.34 billion yuan, a year-on-year increase of 1.4%, while net profit attributable to shareholders was 2.077 billion yuan, up 3.0% year-on-year [1]. - For 2Q25, revenue was 24.502 billion yuan, down 2.6% year-on-year, and net profit was 949 million yuan, a decrease of 8.3% year-on-year [1]. - The company's performance was pressured by exchange rate fluctuations, intensified competition in the air conditioning market, and a decline in domestic demand [1][2]. Market Trends - Domestic demand for air conditioning is weak, with intensified competition leading to a decline in retail prices; air conditioning retail sales saw a year-on-year increase of 26% in 4Q24 but a decrease of 2% in 1Q25 [1][2]. - The air conditioning market is facing increased competition, particularly from Xiaomi, which has accelerated its market presence [1]. - Hisense's air conditioning products, classified as second-tier assets, have been negatively impacted by the competitive environment, with online retail market share dropping by 0.5 percentage points to 4.2% in 2Q25 [1][2]. Business Segment Performance - The central air conditioning market in China contracted by 15.9% year-on-year in 1H25, with the home decoration retail market down 18% [2]. - Hisense's revenue from the air conditioning segment fell by 6% in 1H25, with a profit margin of 17.5%, an increase of 0.2 percentage points year-on-year [2]. - The three electrical businesses faced a significant decline in exchange income due to currency fluctuations, impacting profits by approximately 200 million yuan [2]. Export and Profitability - The export of white goods has slowed down, with a year-on-year increase of 8% in 1Q25 followed by a decrease of 7% in 2Q25 [2]. - Despite the slowdown, the operating profit margin for the washing machine business improved by 0.8 percentage points to 4.2% in 1H25 due to reduced losses from the Monterrey factory and improved sales structure [2]. Profit Forecast and Valuation - The company has slightly adjusted its net profit forecasts for 2025 and 2026 down by 2.5% and 4.8% to 3.742 billion yuan and 4.197 billion yuan, respectively [2]. - The current stock price corresponds to a P/E ratio of 10.1x for A shares and 8.3x for H shares for 2025E [2]. - The target price remains unchanged at 36.5 yuan for A shares and 32.5 HKD for H shares, indicating an upside potential of 34.2% and 34.6%, respectively [2].

Group 1 - Hisense Home Appliances Group Co., Ltd. reported a steady growth in core business driven by technological innovation in its 2025 semi-annual report [1] - The multi-split central air conditioning system from Hisense holds over 20% market share, ranking first in the industry [3] - Hisense's new air conditioning products achieved a sales revenue market share of 43.9% in the fresh air segment, an increase of 12.3 percentage points year-on-year [3] Group 2 - The refrigerator business showed robust performance with a retail sales revenue growth of 9.5% year-on-year, and market share increased by 1.64 percentage points [3] - Hisense's washing machine domestic main business revenue grew by 37.58%, leading the industry, with a doubling of market share in the mid-to-high-end segment [5] - The launch of the world's first 4-in-1 heat pump washing and drying machine, the Cotton Candy Ultra, showcases Hisense's innovation in washing technology [5] Group 3 - Hisense's kitchen appliances saw a 52% year-on-year increase in offline retail revenue, reflecting product strength and channel synergy [5] - The company accelerated its overseas business expansion, achieving overseas revenue of 20.451 billion yuan, a year-on-year growth of 12.34% [5] - Revenue growth in Europe, the Middle East, and Africa exceeded 22.7%, while the Americas saw a 26.2% increase [5] Group 4 - Hisense washing machines achieved the highest market share in the UK, with over 30% market share in several European countries [7] - Hisense refrigerators ranked first in sales volume or revenue share in 12 countries, marking a historical high [7] - The company’s products gained significant recognition among overseas users, enhancing its brand presence globally [7]

Investment Rating - The investment rating for Hisense Home Appliances is "Accumulate" [1] Core Views - The company achieved revenue of 49.34 billion yuan in H1 2025, a year-on-year increase of 1.44%, and a net profit attributable to shareholders of 2.08 billion yuan, up 3.01% year-on-year. However, in Q2 2025, revenue was 24.50 billion yuan, down 2.60% year-on-year, and net profit was 949 million yuan, down 8.25% year-on-year [2] Summary by Sections Business Performance - External sales revenue showed steady growth, while domestic sales faced short-term pressure. In H1 2025, the HVAC segment generated revenue of 23.69 billion yuan, up 4.07% year-on-year, with the central air conditioning business affected by the real estate renovation market, leading to a decline in Hisense Hitachi's revenue by 6.0% year-on-year. The new air conditioning segment saw rapid growth, with a 48% increase in revenue for the high-end series [3] - The washing and refrigeration segment achieved revenue of 15.39 billion yuan, up 4.76% year-on-year, with retail sales of Rongsheng refrigerators and Hisense refrigerators increasing by 9.7% and 8.6% respectively. Hisense washing machines focused on technological upgrades and scenario-based innovations, with domestic revenue up 37.6% year-on-year [3] - Other main businesses generated revenue of 6.61 billion yuan, up 8.89% year-on-year, with the three electric companies achieving a 3% year-on-year revenue increase and new business rights of 6.9 billion yuan, laying a foundation for future order growth [3] - By region, domestic revenue in H1 2025 was 25.25 billion yuan, down 0.31% year-on-year, while overseas revenue was 20.45 billion yuan, up 12.34% year-on-year, with significant growth in Europe (22.7%), the Americas (26.2%), and the Middle East and Africa (22.8%) [3] Profitability Analysis - The gross margin for H1 2025 was 21.48%, up 0.2 percentage points year-on-year. The HVAC segment's gross margin was 27.12%, down 1.56 percentage points, while the washing and refrigeration segment's gross margin was 18.74%, up 2.12 percentage points. The gross margin for other main businesses was 15.80%, up 0.99 percentage points [4] - Domestic gross margin was 31.02%, down 0.06 percentage points, while overseas gross margin was 12.33%, up 1.35 percentage points, attributed to scale effects and product improvements [4] - The net profit margin for H1 2025 was 6.06%, down 0.17 percentage points, and for Q2 2025, it was 5.53%, down 0.41 percentage points, influenced by exchange losses and increased operational costs due to organizational restructuring [5] Strategic Initiatives - The company is focusing on smart living strategies and technological innovation, with a diverse brand matrix including Hisense, Rongsheng, Kelon, Hitachi, and York, catering to differentiated customer needs. Hisense's brand value and recognition continue to rise, supported by sponsorship of major international sports events, enhancing its global brand influence [6] Financial Forecast - The company adjusted its profit forecast, expecting revenues of 99.2 billion yuan, 106.8 billion yuan, and 114.2 billion yuan for 2025-2027, with net profits of 3.72 billion yuan, 4.21 billion yuan, and 4.66 billion yuan respectively. The corresponding EPS is projected to be 2.68 yuan, 3.04 yuan, and 3.36 yuan, maintaining a PE ratio of 10, 8, and 8 times for the respective years [8]

Core Insights - Hisense Home Appliances reported a strong performance in its 2025 semi-annual report, driven by technological innovation and steady growth in core businesses [2] - The company maintained a leading position in the multi-split central air conditioning market with over 20% market share [2] - Hisense's air conditioning products achieved the highest market share in the fresh air segment, with a sales share of 43.9%, an increase of 12.3 percentage points year-on-year [2] Air Conditioning Business - Hisense's air conditioning segment showed significant growth, leading the fresh air market with a 43.9% sales share [2] - The company’s multi-split central air conditioning maintained over 20% market share, solidifying its industry leadership [2] Refrigerator Business - The refrigerator segment demonstrated robust performance, with retail sales increasing by 9.5% year-on-year and market share rising by 1.64 percentage points [2] - Rongsheng refrigerators saw a retail sales increase of 9.7%, while Hisense refrigerators experienced an 8.6% growth in retail sales [2] Washing Machine Business - Hisense's washing machine domestic revenue grew by 37.58% year-on-year, outpacing industry growth [2] - The company launched the world's first 4-in-1 heat pump washing and drying machine, showcasing significant technological advancements [2] Kitchen Appliances - Hisense's kitchen appliance business saw a 52% year-on-year increase in offline retail revenue, reflecting successful product upgrades and channel integration [2]

Core Insights - Hisense Home Appliances reported a total revenue of 49.34 billion yuan for the first half of 2025, a year-on-year increase of 1.44%, and a net profit attributable to shareholders of 2.077 billion yuan, up 3.01% year-on-year [1][2] Group 1: Business Performance - The HVAC (Heating, Ventilation, and Air Conditioning) segment generated revenue of 23.694 billion yuan, reflecting a year-on-year growth of 4.07%, with a gross margin of 27.12%, down 1.56% [2] - The washing and refrigeration segment achieved revenue of 15.392 billion yuan, a year-on-year increase of 4.76%, with a gross margin of 18.74%, up 2.12% [2] - Hisense washing machines saw a significant domestic revenue growth of 37.58% [2] Group 2: Market Expansion - Hisense's air conditioning exports reached 5.371 million units, marking a year-on-year increase of 17%, with the multi-split central air conditioning systems holding over 20% market share [2] - The company's air conditioning exports accounted for 9.5% of the national total [2] - Revenue from the European region grew by 22.7%, with air conditioning and washing machine revenues increasing by 34.5% and 38.9% respectively [2] Group 3: Channel Development - In the first half of 2025, the company opened 1,821 new proprietary stores, with store revenue increasing by 18% [2] - Revenue from the Douyin channel grew by 51%, with the 5A customer group showing an 82% increase in repurchase and active recommendations [2]

Core Viewpoint - The article discusses the resurgence of nostalgia for old appliances in China, highlighting the emotional connection consumers have with durable products like air conditioners, which have stood the test of time and technological advancements [2][3][4]. Group 1: Market Dynamics - The air conditioning market is experiencing intense competition, with significant price reductions observed. For instance, the average online retail price of air conditioners dropped by 1.9% year-on-year in Q1 2025, with some individual products seeing price declines exceeding 10% [7][8]. - The 1.5-horsepower wall-mounted air conditioners accounted for 54% of online retail sales, with a year-on-year price drop of 5% [8]. - The trend of "price wars" has led some manufacturers to compromise on quality, resulting in a potential "trust crisis" among consumers regarding the air conditioning industry [8]. Group 2: Technological Advancements - Hisense is focusing on technological upgrades rather than engaging in price wars, emphasizing the importance of quality and innovation in the air conditioning sector [9][21]. - The introduction of the "Chinese Variable Frequency Chip" marks a significant technological advancement, showcasing Hisense's commitment to self-research and development in core technologies [12][16]. - Hisense has developed a fully self-researched variable frequency architecture, which includes proprietary chips and algorithms, ensuring independence from foreign imports [13][14][16]. Group 3: Product Features and Benefits - Hisense's new air conditioning systems feature advanced technologies such as the "Xinxin Ice Vein System," which allows stable operation even at high temperatures of 68 degrees Celsius [17]. - The "King Kong Cabin" outdoor unit promises durability with a 10-year guarantee against leaks and rust [18]. - Energy-saving capabilities are enhanced with AI algorithms, allowing for up to 53% energy savings during operation, significantly reducing electricity costs for consumers [19][20]. Group 4: Historical Context and Industry Impact - Hisense has a long history in the variable frequency air conditioning market, having established the first production line in China in 1996 and launching the first variable frequency air conditioner in 1997 [23][24]. - Over 29 years, Hisense has evolved its technology through multiple generations, establishing itself as a leader in the industry and pushing for a shift from price competition to quality competition [24][32]. - The recent launch of the variable frequency architecture is seen as a culmination of Hisense's technological efforts and is expected to set new standards in the global air conditioning market [27][34].

Group 1 - The 2025 FIFA Club World Cup will feature 32 teams, significantly expanding from the previous 7 teams, with a total prize pool of $1 billion, marking a historic high in both scale and commercial value [1] - Hisense is the first global official partner of the Club World Cup, introducing the "AI Fan Home Renewal Plan," which integrates technology into sports, showcasing the intersection of sports and technology [1][3] - Since 2016, Hisense has doubled its global revenue and tripled its overseas income, with the share of its own brand increasing from 51.8% to 85.6% [4] Group 2 - Hisense has transitioned from simple brand exposure to deep technical integration in sports events, enhancing its brand influence through active participation [5][7] - The company has become the first VAR display official partner for the 2024 European Championship, providing support for accurate officiating and improving the viewing experience [7] - Hisense's AI technology is transforming the viewing experience from passive watching to immersive participation, with the introduction of AI features in their products [8][10] Group 3 - The AI Fan Home Renewal Plan includes AI displays, air quality management, and food preservation, creating a comprehensive viewing experience for fans [12] - Hisense's revenue for 2024 is projected to be 215.3 billion yuan, with overseas income reaching 99.6 billion yuan, accounting for 46% of total revenue [12] - Hisense has ranked second in global TV shipments for three consecutive years, with a market share of 14%, and leads in the high-end market for large-screen TVs [13]

Core Viewpoint - Hisense has established itself as a key player in sports marketing and technology, transitioning from a simple sponsor to a co-builder of the event technology ecosystem, particularly through its partnership with FIFA for VAR technology support [1][2]. Group 1: Sports Marketing Journey - Hisense began its sports marketing journey in 2008 by sponsoring the Australian Open, with overseas revenue below 6 billion yuan and a self-owned brand ratio of only 21% [2]. - As of now, Hisense's overseas revenue has reached 99.6 billion yuan, with the self-owned brand ratio increasing to 86%, and brand awareness rising from 28% in 2017 to 56% in 2024 [2]. - Over 17 years, Hisense has evolved from brand exposure to technical collaboration, significantly enhancing its presence in the sports marketing sector [1][2]. Group 2: Technological Advancements - Hisense has been recognized for its technological contributions, with the VAR technology reducing average review time by 5 seconds during the 2024 European Championship, enhancing game continuity [2]. - The company has developed an AI-driven viewing experience, offering services such as pre-match predictions, real-time tactical analysis, and post-match summaries [4][5]. - Hisense's AI technology extends beyond visual experiences, integrating smart home appliances to create a comprehensive viewing ecosystem [5]. Group 3: Globalization and Localization Strategy - Hisense's global trust index has improved due to its dual strategy of "technology + localization," investing nearly 5% of its revenue in R&D and leading the establishment of international standards [6]. - The company operates 31 R&D centers and 36 manufacturing bases worldwide, tailoring products to local markets, such as a large-capacity refrigerator designed for the U.S. market [6]. - According to Ipsos' 2024 Global Trust Index, Hisense ranks first in the smart home appliance sector and is the only appliance brand in the top ten overall [6].

Group 1 - The 2025 FIFA Club World Cup will feature 32 top club teams competing for a total prize pool of $1 billion, with the champion receiving up to $125 million [1] - Major sponsors for the event include Hisense, Adidas, Budweiser, Bank of America, and Coca-Cola, indicating a competitive marketing landscape [1] - Hisense has evolved from a newcomer to a seasoned player in sports sponsorship, having sponsored major football events since 2016 [2] Group 2 - Hisense's new marketing plan integrates AI technology across its product lines, focusing on enhancing the viewing experience for fans [2][3] - The company aims to create an AI-driven experience that includes features like AI display, AI air conditioning, and AI food preservation, catering to the needs of football fans [3] - Hisense's brand recognition has increased to 56% globally, and its sales volume has risen to the second position worldwide due to its consistent sponsorship of major football events [3] Group 3 - Hisense has been named the first official VAR display partner for the FIFA Club World Cup, providing technical support for accurate officiating [4] - The collaboration with FIFA has been ongoing for eight years, focusing on technological innovation to enhance the experience for players, referees, and fans [4][5] - The use of VAR technology has significantly improved the efficiency of match officiating, with a reduction in average review times during competitions [4]

Investment Rating - The investment rating for Hisense Home Appliances is "Buy" (maintained) [1] Core Views - In Q1 2025, the company achieved a revenue of 24.84 billion yuan (up 5.8% year-on-year) and a net profit attributable to shareholders of 1.13 billion yuan (up 14.9%) [5] - The company has shown strong performance in its export business, with cost reduction and product structure optimization contributing to steady improvement in profitability [5] - The profit forecast for 2025-2027 has been raised, with expected net profits of 3.84 billion yuan, 4.34 billion yuan, and 4.83 billion yuan respectively [5] - The current stock price corresponds to a PE ratio of 10.0, 8.8, and 7.9 for the years 2025, 2026, and 2027 respectively, indicating potential for alpha [5] Financial Performance - In Q1 2025, the gross margin was 21.4% (down 0.2 percentage points), while the net margin remained stable at 6.6% (up 0.03 percentage points) [7] - The company’s revenue from air conditioning and home appliances showed significant growth, with domestic sales benefiting from the "old-for-new" policy and exports continuing to optimize profitability [6] - The company’s financial summary indicates a projected revenue growth from 85.6 billion yuan in 2023 to 116.2 billion yuan in 2027, with a compound annual growth rate (CAGR) of approximately 7.0% [8] Business Segmentation - The air conditioning segment is expected to return to growth, with a market share exceeding 20% in multi-split systems [6] - The home appliance segment is projected to grow rapidly, with exports expected to outpace domestic sales [6] - The refrigerator segment is also showing strong growth, with domestic and export sales increasing by 12% and 22% respectively in early 2025 [6]