Investment Rating - The report maintains an "Outperform" rating for Hisense Home Appliances Group with a target price of RMB34.58, indicating an expected upside from the current price of RMB25.69 [2][6]. Core Insights - The company reported stable growth in revenue and net profit for the first half of 2025, achieving revenue of RMB49.34 billion (YoY +1.44%) and net profit of RMB2.08 billion (YoY +3.01%) [3][11]. - The overseas market continues to show strong performance, with overseas revenue reaching RMB20.45 billion, a growth of 12.3% YoY, driven by significant increases in Europe, America, Middle East Africa, and Asia Pacific regions [4][11]. - Domestic revenue slightly declined to RMB25.25 billion (YoY -0.31%), primarily due to a downturn in the central air conditioning industry, although the company maintains a strong market position with Hisense Hitachi [12]. Financial Performance Summary - Revenue projections for the next few years are as follows: RMB97.05 billion in 2025, RMB102.73 billion in 2026, and RMB112.62 billion in 2027, reflecting growth rates of 5%, 6%, and 10% respectively [2][10]. - Net profit is expected to grow from RMB3.69 billion in 2025 to RMB4.62 billion in 2027, with corresponding growth rates of 10%, 11%, and 13% [2][10]. - The company's gross profit margin is projected to improve slightly from 21.1% in 2025 to 21.4% in 2026 and remain stable thereafter [2][10]. Valuation - The report anticipates an EPS of RMB2.66 for 2025, RMB2.95 for 2026, and RMB3.34 for 2027, with a PE ratio of 13x for 2025 [6][13]. - The valuation reflects the company's ongoing global expansion and product optimization strategies under national subsidy policies, which are expected to enhance profitability [6][13].

Industry Overview - The Chinese home appliance industry is undergoing a strategic transformation from scale-driven to value-driven amidst profound changes in global manufacturing [1] - The 2024 performance of the industry shows a stark contrast, with leading companies like Midea, Haier, and Hisense achieving revenue and profit growth, while Skyworth faces significant declines due to structural imbalances [1] Midea Group - Midea Group reported total revenue of 409.1 billion yuan in 2024, a year-on-year increase of 9.44%, and a net profit of 38.5 billion yuan, up 14.29%, marking a historical high [2][3] - The company’s cash flow from operating activities reached 60.5 billion yuan, 1.56 times its net profit, indicating strong profitability [2] - Midea has successfully established a dual-driven model of "smart home + commercial and industrial solutions," with ToB business revenue exceeding 100 billion yuan for the first time, reaching 104.5 billion yuan, a 6.9% increase [3][4] Haier Smart Home - Haier Smart Home achieved revenue of 285.98 billion yuan in 2024, a 4.29% increase, and a net profit of 18.74 billion yuan, up 12.92%, reflecting improved operational quality [5][6] - The Casarte brand continues to lead in the high-end market, with significant growth in revenue, particularly in the fourth quarter [6][7] - Haier's overseas revenue reached 143.81 billion yuan, a 5.43% increase, with emerging markets showing strong performance [7] Hisense Home Appliances - Hisense reported total revenue of 92.75 billion yuan in 2024, an 8.35% increase, and a net profit of 3.35 billion yuan, up 17.99%, showcasing strong profitability [8][9] - The company’s kitchen appliance segment grew by 72%, with significant advancements in product innovation [10] - Hisense's overseas revenue surpassed 35.6 billion yuan, a 28% increase, with a notable rise in market share in Europe and South Africa [11] Skyworth Group - Skyworth's total revenue for 2024 was 65.01 billion yuan, a decrease of 5.8%, with net profit dropping by 46.9% to 568 million yuan, indicating significant operational challenges [12][13] - The company remains heavily reliant on its smart home and photovoltaic businesses, which account for over 80% of total revenue [12][15] - The photovoltaic segment saw a revenue decline of 13.1%, attributed to market challenges and policy uncertainties [15][16] Future Outlook - The home appliance industry is experiencing structural changes, with leading companies strengthening competitive barriers through technological innovation and global expansion [17] - The integration of AI technology into home appliances is reshaping the competitive landscape, with significant market share growth expected for AI-enabled products [17] - The trend of increasing overseas revenue and brand output among leading companies indicates a shift from product export to brand export, with emerging markets becoming key growth drivers [17][18]

Core Viewpoint - Hisense Group's home appliance subsidiaries, Hisense Home Appliances and Hisense Visual Technology, reported strong financial performance for 2024, driven by government subsidy policies and effective sports marketing strategies, particularly in overseas markets [1][2][5]. Financial Performance - Hisense Home Appliances achieved revenue of 92.746 billion yuan, a year-on-year increase of 8.35%, and a net profit of 3.348 billion yuan, up 17.99% [1]. - Hisense Visual Technology reported revenue of 58.530 billion yuan, a 9.17% increase, and a net profit of 2.246 billion yuan, up 7.17% [1]. - The fourth quarter of 2024 showed significant growth for both companies, with Hisense Home Appliances' revenue reaching 22.167 billion yuan, a 7.08% increase, and a net profit of 555 million yuan, up 34.91% [1]. Market Analysis - Domestic revenue for Hisense Home Appliances declined by 2.12%, while overseas revenue surged by 27.59%, accounting for nearly 40% of total revenue [1]. - The overall market for central air conditioning in China saw a 12.5% decline, indicating ongoing pressure in the domestic market despite some recovery in the fourth quarter [2][3]. Strategic Initiatives - The implementation of the "trade-in for new" policy has helped stabilize the domestic market, although challenges remain [2]. - Hisense's focus on sports marketing has enhanced brand recognition and sales in overseas markets, with a reported global TV market share of 13.95%, an increase of 0.99 percentage points [5][6]. Product Development - Hisense has made significant advancements in product categories, with a 72% year-on-year revenue growth in kitchen appliances and a 58% market share in large-screen TVs [3][5]. - The company is also investing in smart home technology, launching its self-developed AI solutions to enhance its product offerings [3]. Future Outlook - Continued government subsidies and the recovery of public construction orders are expected to support revenue stabilization in the domestic market [4]. - The transition of sports marketing from brand recognition to brand reinforcement will be crucial for improving overseas market margins and enhancing high-end product sales [7].