Policy Insights - The "trade-in for new" policy for home appliances in China will be strengthened and expanded by 2025, with a total of 162 billion yuan allocated in the first half of the year to support its implementation, stimulating consumer activity, although demand elasticity varies by category and there is regional imbalance in subsidy consumption [1] - The US-China tariff policy shows a trend of "tightening first, then loosening," causing short-term disruptions to China's home appliance exports but also encouraging companies to accelerate global capacity layout and enhance supply chain adjustment capabilities [1] Market Performance - In the first half of 2025, leading brands in the black appliance sector in China have further highlighted their brand and technological advantages, increasing market share, while the trend of industrial structure upgrading continues, with good domestic market performance but pressure on exports [1] - The national subsidy policy has significantly boosted the domestic demand market for white appliances, combined with ecological advantages and extreme weather stimuli, leading to simultaneous growth in volume and quality, although increased competition from export-to-domestic sales is squeezing the survival space of smaller brands [1] - The kitchen and bathroom sector continues to be constrained by ongoing adjustments in the real estate industry, but new policy subsidies focused on this sector have driven both volume and revenue growth for large kitchen and bathroom appliances, while small appliances see a decrease in volume but an increase in revenue [1] - The cleaning appliance industry maintains high growth rates, with leading domestic brands deepening overseas layouts expected to drive export business into a phase of scaling up [1] Financial Overview - In the first half of 2025, the overall credit risk in the home appliance industry is manageable, with rapid growth in total revenue and operational performance, and stable gross profit levels, although profitability varies across sub-sectors, with kitchen and bathroom appliances under continuous pressure, and cleaning appliances seeing revenue growth without profit increase, while black and white appliances show year-on-year profit improvement [2] - The overall operational efficiency of the home appliance industry has slightly declined, capital expenditure has contracted year-on-year, and there is significant room for optimization in debt maturity structure, although financial leverage remains stable [2]

Core Viewpoint - The report indicates that leading brands in the home appliance sector are operating steadily, with short-term tariff disturbances expected to have diminishing effects, and performance exceeding expectations mainly in small appliances and cleaning devices [1]. Group 1: Market Performance - In Q2 2025, the home appliance sector's revenue and profit grew by 5.6% and 3.1% year-on-year, respectively, with a slight deceleration compared to Q1 [2]. - The white goods segment saw revenue and profit growth rates of 5.8% and 6.0%, with leading brands outperforming second and third-tier brands, indicating an increase in industry concentration [2]. - The cleaning appliance segment experienced significant revenue growth of 31.5%, while OEMs faced a profit decline of 23.8% due to tariff impacts [2]. - The black goods segment reported revenue growth of 1.4% but a profit decline of 16.5%, with brand companies experiencing slower volume growth but continuing to raise average prices [2]. - The kitchen appliance sector faced challenges, with revenue and profit growth rates of -5.5% and +1.1%, respectively, particularly for integrated stoves, which saw declines of 39.6% and 16.8% [2]. Group 2: International Expansion and New Business - The overseas revenue share of the home appliance sector reached 39.5% in H1 2025, an increase of 1.4 percentage points year-on-year, indicating a trend towards international expansion [3]. - Companies are actively exploring new business areas, with Bull pushing into data centers and solar lighting, and Yitian Smart focusing on liquid cooling and computing power [3]. - In the core coverage of 40 companies, six exceeded revenue expectations, while four surpassed profit expectations, particularly in small appliances and cleaning devices [3]. Group 3: Investment Recommendations - The report suggests focusing on four main investment lines: 1) core drivers of international expansion and smart home key targets; 2) stable performance with upward elasticity; 3) leading companies with robust operations and high dividends; 4) home appliance companies diversifying into new growth areas [4].

Group 1 - The core viewpoint of the article highlights Hisense's strategic development over nearly 20 years, achieving a balanced layout in black appliances, white appliances, and kitchen appliances, connecting households to communities and cities, and integrating both ToC and ToB industries [1][3] Group 2 - On the day of the Hisense Open Day, FIFA President Infantino announced that Hisense officially became the official sponsor of the 2022 Qatar World Cup, making it the only Chinese company to sponsor four consecutive world-class events [3] - Hisense's overseas revenue is expected to surpass domestic revenue within three years, with recent acquisitions including Toshiba TV, Gorenje, and Japan's Sanden, leading to nearly 50 R&D institutions, industrial parks, and production bases globally [3] - In the first three quarters of this year, Hisense Group achieved operating revenue of 125.24 billion yuan, nearing the total revenue of 2019, with overseas revenue reaching 52.6 billion yuan, a year-on-year increase of 38%, accounting for 42% of total revenue [3]

Summary of Key Points from the Conference Call Industry Overview - The home appliance industry is experiencing significant growth potential in emerging markets, which account for 67% of the global population but only 32% of home appliance retail sales, indicating a substantial opportunity for growth [1][2][4] Core Insights and Arguments - **Emerging Market Growth**: Emerging markets are expected to be a key growth driver for the home appliance industry, with a notable increase in demand for air conditioners, refrigerators, and washing machines due to low penetration rates compared to developed countries [1][2][5] - **Air Conditioner Market**: The air conditioner market is growing rapidly, closely linked to GDP per capita. Countries with GDP per capita reaching $3,000 or $6,000 show significant increases in penetration rates [1][7] - **Export Recovery**: China's home appliance exports are gradually recovering from tariff impacts, with a notable increase in exports to Southeast Asia, Latin America, and the U.S. [1][8] - **Domestic Market Growth**: The domestic market is experiencing steady growth driven by the "trade-in for new" policy, with air conditioner shipments increasing by 8% and washing machines showing double-digit growth in the first five months of 2025 [1][9] Competitive Landscape - **Market Dynamics**: The competitive landscape is stabilizing, with Xiaomi's market share leveling off and major players like Midea and Gree adjusting their product structures [3][12] - **Small Appliances Growth**: The small appliance market, particularly for robotic vacuum cleaners and floor washers, continues to show high growth, with companies like Ecovacs reporting revenue and profit growth exceeding expectations [3][13] Investment Recommendations - **Focus on Dividend Stocks**: Investment strategies should focus on companies with strong dividend yields such as Gree, Midea, Haier, and Hisense, which have dividend rates exceeding 4% [3][15] - **Export Opportunities**: Companies in the export sector, particularly in small appliances and black electronics, are recommended for investment due to their growth potential in emerging markets and the U.S. [3][16][19] Additional Important Insights - **Impact of National Subsidies**: The national subsidy policy has led to structural growth in the domestic market, with significant price increases observed [1][9][14] - **Long-term Potential of Robotic Vacuums**: The robotic vacuum segment is viewed as a long-term growth area due to its strong growth potential and limited impact from domestic subsidy policies [3][17] - **Advantages of OEMs**: OEMs like New Bao and Dechang are positioned well in the global market due to scarce overseas production capacity, which enhances their competitiveness in exports to the U.S. [3][19]

Core Viewpoint - The report from CITIC Securities indicates that the home appliance industry maintains a high level of prosperity due to government subsidies, with a positive outlook for leading companies in the sector [1] Group 1: Industry Trends - The demand for air conditioners is experiencing significant growth driven by high summer temperatures [1] - The black electrical products sector is seeing an upgrade in product structure, leading to an increase in average prices [1] - The price decline in panels is contributing to improved conditions in the sweeping robot industry, with profit margins expected to reach a turning point [1] Group 2: Market Dynamics - Changes in e-commerce tax rules are favorable for leading brands, enhancing their competitive position [1] - The two-wheeler segment is benefiting from government subsidies, resulting in a substantial increase in sales [1] - The motorcycle industry is accelerating its expansion into overseas markets [1] Group 3: Company Performance - Leading companies across various segments are benefiting from the high prosperity of the industry, showing good performance in market share and profit margins [1] - The expectation for stable performance in the second and third quarters is highlighted, with a positive outlook for the subsequent earnings of leading enterprises [1]

Group 1 - The core viewpoint of the report is that the home appliance industry is expected to outperform the market, with positive expectations for major white goods companies in Q2 2025 due to the effective use of subsidy funds and a seasonal increase in demand [1] - Key recommendations include leading white goods companies such as Midea Group, Gree Electric Appliances, Haier Smart Home, and Hisense Visual Technology, along with a focus on TCL Electronics and companies like Bear Electric and Roborock that show potential for operational improvement [1] - The report highlights that the previous phase of subsidy withdrawal saw a resilient growth pattern in the industry, with core product categories maintaining positive revenue growth despite challenges [2] Group 2 - The impact of policy changes on the industry was concentrated in the earlier stages, with a notable adjustment in performance metrics during 2011, followed by a recovery phase where the white goods index outperformed the market [3] - The report draws parallels with the U.S. market, indicating that commercial HVAC systems have shown better performance compared to consumer appliances during economic downturns, suggesting a shift in demand dynamics [4] - Companies like Whirlpool have implemented price increases and enhanced dividend payouts to mitigate the impact of rising costs and maintain stable return on equity (ROE) amidst challenging market conditions [5] Group 3 - The anticipated impact of the old-for-new policy on overall white goods sales is estimated to be around 9% of the 2023 sales volume, indicating a limited effect on the overall market dynamics [6] - The diversification of leading home appliance companies is expected to further dilute the impact of policy changes on financial statements, suggesting a strategic advantage in navigating market fluctuations [6]

Core Viewpoint - The article discusses the improvement in the competitive landscape of small home appliances and the leadership of major players in the white and black appliance sectors, highlighting growth opportunities and market dynamics [1][3]. Group 1: Investment Recommendations - Two main investment themes are suggested: 1) The improvement in the competitive landscape of small home appliances is expected to bring profit elasticity, particularly in the robotic vacuum cleaner sector, which has high growth potential and low penetration rates. The industry is anticipated to stabilize after a period of competition and the leading companies are expected to see profit improvements [3]. 2) The concentration of market share among leading companies and their high dividend yields provide a stable investment option. Major brands are leading the current price competition, resulting in increased industry concentration. The global production capacity of leading home appliance manufacturers is well-established, allowing them to adjust production plans based on tax rate changes [3]. Group 2: Domestic and Export Performance - Domestic sales have seen growth driven by government subsidies, with various categories achieving double-digit growth despite some limitations in Q2. The sales growth during the 618 shopping festival showed significant increases in categories such as cleaning appliances (+26%), water appliances (+22%), and kitchen small appliances (+22%) [4]. - Export performance in Q2 was negatively impacted by uncertainties in tariff policies, leading to a reduction in shipment volumes. However, as tariff policies become clearer, a gradual recovery in export performance is expected in subsequent quarters [4]. Group 3: Segment Growth Expectations - The expected growth ranking for different segments of the home appliance industry is as follows: white appliances > cleaning appliances > black appliances > small kitchen appliances > components > personal care appliances > large kitchen appliances [5].

Core Viewpoint - The home appliance industry is expected to experience significant retail growth during the 2025 618 shopping festival, driven by low-priced small appliances and sustained growth in major appliance categories, with leading companies benefiting from policy incentives and leading the upgrade of product structures [1][2]. Group 1: Retail Growth and Performance - The overall retail performance of the home appliance industry has significantly improved, with online sales accelerating during the 618 shopping festival, showing a weighted average year-on-year growth of +15% across 20 representative categories [2]. - High-priced major appliances saw volume growth, while average prices remained stable, with air conditioners, washing machines, and black appliances experiencing retail growth rates exceeding 20% [2]. - Low-priced small appliances also showed strong performance, with online average prices for products like rice cookers, pressure cookers, and air fryers increasing by over 10% year-on-year [2]. Group 2: Leading Brands and Product Upgrades - Leading brands performed exceptionally well during the 618 shopping festival, with Midea's retail sales growing over 20% and Gree's air conditioner sales leading the market, particularly the "Wind Does Not Blow" series, which saw a 240% year-on-year increase [3]. - In the black appliance sector, Hisense maintained a 24% market share in television sales, with strong performance in the high-end market [3]. - The cleaning appliance segment saw strong growth, with Ecovacs and Roborock leading in sales, achieving first and second place in the 618 shopping festival [3]. Group 3: Subsidy Policies and Market Outlook - The continuation of the national subsidy program for appliance replacements is expected, with approximately 500 billion yuan in subsidy funds utilized by the end of May, indicating a faster-than-expected pace [4]. - An additional 138 billion yuan in central funds will be allocated in July and October 2025, ensuring a steady release of demand in the home appliance sector [4]. - The home appliance industry is anticipated to maintain stable demand release in the second half of 2025, supported by a more balanced use of subsidy funds [4].

Core Viewpoint - The report from Guolian Minsheng Securities maintains an "outperform" rating for the home appliance industry, highlighting a significant acceleration in retail sales during the 2025 618 shopping festival, driven by low-priced small appliances and sustained growth in major appliance categories, with leading companies benefiting from policy incentives and ongoing product upgrades [1] Group 1: Retail Performance - The home appliance industry experienced a notable uplift in overall sales during the 618 shopping festival, with a weighted average year-on-year growth rate of +15% for 20 representative categories in online retail sales from May 12 to June 15, 2025 [1] - The online retail volume and price growth rates for these 20 core categories were +13% and +1% respectively, indicating a strong performance in both volume and pricing [1] - Major appliances like air conditioners, washing machines, and black goods saw retail growth rates exceeding 20%, while low-priced small appliances also experienced significant growth, with online prices for rice cookers, pressure cookers, and air fryers rising over 10% year-on-year [1] Group 2: Brand Performance - Leading brands performed exceptionally well during the 618 shopping festival, with Midea's retail sales increasing over 20% and Gree's air conditioner sales leading the market, particularly the "Wind Does Not Blow" series, which saw a 240% year-on-year increase [2] - Other notable performers included Little Swan, COLMO, Haier, and Casarte in the white goods sector, while Hisense led the black goods market with a 24% share, particularly excelling in the high-end segment [2] - In the cleaning appliance category, Ecovacs maintained the top position in total sales, with Stone Technology achieving rapid growth, ranking first and second in sales for sweeping and washing machines respectively during the festival [2] Group 3: Subsidy and Demand Outlook - Concerns arose regarding the continuity of subsidy programs after notifications of pauses in certain regions, but data indicates that the usage of subsidy funds has accelerated since May, with approximately 50 billion yuan utilized by the end of May 2025 [3] - The central government is expected to allocate an additional 138 billion yuan in subsidies in July and October, ensuring a steady and orderly implementation of the policy through the end of the year [3] - The home appliance replacement program is anticipated to maintain a steady demand release in the second half of 2025, supported by a more stable pace of subsidy fund usage [3]

Investment Rating - The report indicates a positive investment outlook for companies with strong domestic sales and flexible supply chains, particularly Haier and Hisense [2][9][10]. Core Insights - The impact of U.S. tariffs on Chinese home appliance companies varies significantly, with some companies like Haier benefiting from higher local production capacity [2][12]. - Chinese home appliance firms are leveraging their supply chain stability and scale advantages to maintain competitiveness despite tariff-induced price increases [6][15]. - The long-term changes in tariff policies are expected to reshape the competitive landscape of the home appliance industry, favoring larger companies with resilient production capabilities [15]. Summary by Sections U.S. Market Exposure - Midea's revenue from the U.S. market is approximately 20% of its total export revenue, while Haier's is close to 60%, with a significant portion sourced from local suppliers [2]. - Gree has minimal exposure to the U.S. market, with only about 2% of its revenue coming from there [2]. - Hisense's revenue from the U.S. market is around 10%-20%, primarily sourced from Mexico [2]. Strategies to Mitigate Tariff Impact - Companies are adopting various strategies such as price increases and shifting production to Southeast Asia to mitigate tariff impacts [4][15]. - Major OEMs like Dechang and Xinbao are relocating factories to countries like Vietnam and Indonesia to reduce tariff exposure [3][4]. Consumer Impact - The additional costs from tariffs will ultimately be passed on to U.S. consumers, leading to higher product prices and potential economic pressure [5][6]. Competitive Advantages - Haier's higher local production in the U.S. provides a competitive edge over rivals like Samsung and Electrolux [12]. - Hisense's production in Mexico allows it to effectively cover the U.S. market, potentially increasing market share despite overall demand decline [11]. Companies with Strong Domestic Market Focus - Gree Electric is well-positioned due to its low export ratio and strong domestic sales, which are less affected by U.S. tariffs [9]. - Other companies like Supor and Boss Electric also show resilience due to high domestic sales and cash dividend rates [9]. Future Areas of Interest - The report suggests monitoring the kitchen appliance sector and companies with global production capabilities that can adapt to tariff changes, such as Hisense [10].