Core Insights - Qinghai Province is set to further optimize its consumer goods trade-in policy by 2026, aiming to boost consumption and economic development [1] Group 1: Investment and Economic Impact - In 2025, Qinghai Province invested a total of 1.69 billion yuan, benefiting over 1.52 million people and stimulating consumption worth 19.7 billion yuan [1] - The province achieved significant results in vehicle and appliance upgrades, with 92,000 new cars, 496,000 home appliances, 615,000 digital products, and 31,900 home decor items purchased through the trade-in program [1] Group 2: Policy Adjustments - The central government will continue to allocate long-term special treasury bond funds to support the trade-in policy, with local governments providing matching funds [1] - In 2026, Qinghai will implement further optimizations to the trade-in policies for automobiles, home appliances, and digital products [1] Group 3: Specific Subsidy Standards - The subsidy for old car trade-ins will be adjusted to a percentage of the vehicle price, with new energy vehicles receiving 12% of the price (up to 20,000 yuan) and fuel vehicles receiving 10% (up to 15,000 yuan) [2] - For home appliances, consumers will receive a 15% subsidy on qualifying products, with a maximum of 1,500 yuan [2] - The subsidy for digital products will also be set at 15% for items priced under 6,000 yuan, with a maximum of 500 yuan [2]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Consumer Appliances Sector - **Outlook**: The major appliance sector is entering a post-subsidy downcycle in H225-27, with expectations of subdued domestic demand in H126 due to fading subsidy benefits. However, demand may stabilize in H226 and potentially turn around in 2027 [2][11]. Core Insights - **Domestic Demand**: Anticipated declines in shipments for air conditioners (AC), washing machines (WM), refrigerators, and range hoods by 5%, 2%, 4%, and 5% YoY respectively in 2026, as trade-in subsidies continue to impact the market [2]. - **Average Selling Price (ASP)**: Expected to remain stable in 2026, with potential product mix downgrades offset by industry-wide price hikes led by Midea due to rising copper prices [2][36]. - **Consumer Survey Findings**: A UBS Evidence Lab survey indicated limited upside in white goods demand for 2026, with a median household budget for home appliances expected to drop by 11% YoY, particularly in tier-1 cities where the decline is projected at 27% [3][27]. Export Challenges and Opportunities - **Exports**: Global white goods demand is projected to grow by 1.5% YoY in 2026, but Chinese exports of AC, WM, and refrigerators are expected to decline by 4.0%, 0.2%, and 4.3% YoY respectively. Exports to Europe and the US are likely to remain muted due to US tariffs and capacity relocation [4][16]. - **Emerging Markets**: There is potential for demand growth in emerging markets and the US, particularly with lower interest rates [4][16]. Stock Recommendations - **Buy Ratings**: Midea, Haier, Hisense, and Roborock are recommended for their potential to consolidate market share and grow margins through price hikes. Midea is favored for its overseas demand exposure, Haier for its margin upside from US rate cuts, and Roborock as a beneficiary of trade-in subsidies [5][10]. - **Sell Rating**: Gree is viewed as vulnerable to domestic headwinds [5]. Earnings Forecast Adjustments - **Earnings Forecasts**: Adjustments made due to lower-than-expected domestic appliance sales and rising raw material prices, particularly copper. Price targets for major appliance companies have been revised upwards as valuations are rolled forward to 2027 [7][8]. Consumer Behavior Insights - **Purchase Intentions**: The survey revealed a decline in purchase intentions across most categories, with notable increases for TVs and cleaning appliances. The largest declines were seen in AC and WM, likely due to prior subsidy usage [3][27]. - **RVC Market**: Purchase intentions for leading robot vacuum cleaner brands (Ecovacs, Roborock, Dreame) have increased, indicating a shift towards these products due to improved affordability and consumer education [3][44]. Additional Insights - **Subsidy Impact**: The impact of trade-in subsidies has been significant, with 128 million units purchased in 2025. However, the demand pull-forward effect suggests limited upside for 2026 [19][26]. - **Market Trends**: The importance of smart features and integration with smart home platforms is rising among consumers when selecting RVCs, indicating a trend towards more technologically advanced products [45]. This summary encapsulates the key points from the conference call, highlighting the current state and future outlook of the China consumer appliances sector, along with consumer behavior trends and stock recommendations.

Summary of the Conference Call on China Consumer Appliances Sector Industry Overview - The conference call focused on the **China Consumer Appliances Sector**, particularly the **2026 home appliances trade-in subsidies** announced by the **National Development and Reform Commission (NDRC)** and the **Ministry of Finance** on December 30, 2025 [2][3]. Key Points and Arguments 1. **Announcement Timing**: The release of the 2026 subsidy policies was slightly ahead of expectations, as the 2025 version was released on January 8, 2025. The overall content aligns with market expectations, benefiting white goods and smart home products [2][3]. 2. **Narrowed Subsidy Scope**: The 2026 subsidies will cover only **6 categories**: fridge, washing machine, TV, air conditioner, PC, and water heater. This is a reduction from the 12 categories in 2025, which included major kitchen appliances and small appliances like range hoods and microwaves. This change may negatively impact companies focused on major and small appliances [3][4]. 3. **Subsidy Structure Changes**: - The subsidy for energy-efficient products will be **15% of the sales price**, with a cap of **Rmb1,500** per category per consumer. This is a decrease from the previous **20%** for Level 1 energy-efficient products and **15%** for Level 2, with a cap of **Rmb2,000** [4]. 4. **Encouragement for Local Governments**: The policy explicitly encourages local governments to subsidize smart home products, including age-adaptive home products. Local governments will have the discretion to set specific categories and standards [5]. 5. **Estimated Total Subsidy Amount**: The total amount for the 2026 subsidies has not been officially released, but estimates suggest it could be around **Rmb250 billion**, slightly lower than the **Rmb300 billion** in 2025. This estimate is based on a recent fund of **Rmb62.5 billion** issued to support consumer goods trade-in [5]. Sector Implications - The focus on white goods is expected to benefit industry leaders such as **Midea** and **Haier**. The support for smart home products may also favor companies like **Roborock** and **Ecovacs**. However, sales for major appliances (e.g., **Robam**) and small appliances (e.g., **Supor**, **Joyoung**) may face challenges due to a high sales base [6]. Risks Identified 1. **Home Appliances Sector Risks**: - Impact of the **China property market** on demand - Elevated raw material prices - Global supply chain constraints affecting exports [9]. 2. **Robotic Vacuum Cleaner Sector Risks**: - Intensifying market competition - Raw material price increases - Foreign exchange losses due to currency fluctuations [10]. 3. **Small Appliances Sector Risks**: - Economic downturn leading to weak consumption - Price competition - Rising raw material costs eroding profitability [10]. Additional Information - The report was prepared by **UBS Securities Asia Limited**, with analysts including **Rennie Pan**, **Christine Peng**, and **Molly Huang** [7]. - The document includes disclaimers regarding the potential conflicts of interest and the nature of the research provided [11][12]. This summary encapsulates the critical insights and implications from the conference call regarding the China Consumer Appliances Sector and the upcoming subsidy policies for 2026.

Group 1: Core Points - The Zhejiang province will implement a vehicle trade-in program from January 1, 2026, to December 31, 2026 [1][25] - The program aims to encourage consumers to replace old vehicles with new ones, providing subsidies for eligible purchases [3][18] Group 2: Subsidy Details - For scrapping and updating vehicles, personal consumers can receive a subsidy of 12% of the vehicle price, with a maximum subsidy of 20,000 yuan for new energy vehicles and 15,000 yuan for fuel vehicles [7][9][19] - The eligibility for the subsidy requires that the old vehicle must be registered in the applicant's name before January 8, 2025, and the new vehicle must be purchased within the program period [13][21] Group 3: Application Process - Consumers can apply for subsidies through platforms like Alipay and WeChat by searching for the "Zhejiang Auto Trade-in" mini-program [17][22] - Required documents for application include the scrapping certificate, vehicle deregistration certificate, sales invoice, and vehicle registration certificate, all of which must be obtained after January 1, 2026 [13][21] Group 4: Additional Consumer Products - The program also includes subsidies for household appliances such as televisions, refrigerators, washing machines, air conditioners, computers, and water heaters, with a subsidy of 15% of the actual sales price and a maximum of 1,500 yuan per item [30][31] - Consumers can participate in both online and offline activities to claim these subsidies, with specific guidelines for each method [32][43]

Core Viewpoint - Beijing will implement a subsidy program for the replacement of old household appliances and digital products starting January 1, 2026, aimed at encouraging consumer spending in these sectors [1]. Subsidy Details - The subsidy will apply to six categories of household appliances (refrigerators, washing machines, televisions, air conditioners, water heaters, and computers) and four categories of digital products (mobile phones, tablets, smartwatches, and smart glasses) [1][10]. - The subsidy amount will be 15% of the final sales price after discounts, with a maximum of 1,500 yuan for household appliances and 500 yuan for digital products per item [1][10]. Qualification Process - Consumers can obtain subsidy qualifications through the "Jingtong" mini-program starting at 8 AM daily, with qualifications valid for the month of issuance [1][4]. - The program allows for both online and offline redemption, with specific platforms and stores designated for each [4][12][13]. Redemption Guidelines - For online purchases, consumers must complete the qualification process in the mini-program and then use the generated code on designated e-commerce platforms [6][7]. - For offline purchases, consumers must show the qualification QR code to participating retailers for verification [7]. Additional Information - The program includes a mechanism for reissuing qualifications if they expire without use, allowing consumers to reapply [1][4][16]. - The initiative is part of a broader effort to stimulate economic activity in the consumer electronics sector [1].

Investment Rating - The investment rating for Roborock is "Buy" with a target price of Rmb241.5, indicating an expected share price return of 47.8% and an expected total return of 48.2% [4][7]. Core Insights - Roborock's robot vacuum business experienced a GMV growth of over 30% YoY during the "11.11" shopping event in China, but the company anticipates a significant gap in sales growth for 4Q25E due to high competition and previous government subsidies [1][2]. - The management is optimistic about business momentum in Europe and APAC markets, despite facing challenges in the US market due to tariffs and inventory pressures [3][4]. - The company is focusing on dual-mopper robot vacuum products and has launched new models to meet consumer demand [2][3]. Summary by Sections Robot Vacuum Business - The GMV for the robot vacuum business grew over 30% YoY during "11.11" in China, but the management expects a decrease in subsidy contributions in 4Q25E [2]. - The net price of key products has been adjusted to Rmb3k+, which is higher QoQ, indicating a strategy to maintain pricing power [2]. Overseas Business - There has been stable growth in Europe and APAC markets, while the US market shows weak growth due to high tariffs and inventory issues [3]. - The blended ASP in direct sales channels overseas is approximately US$600, with a previously achieved OPM of around 15% in the US [3]. Other Business Segments - The wet-dry vacuum business ranks second in market share in China, but is expected to incur net losses in 4Q25 due to ongoing subsidies [4][6]. - The washing machine segment reported a net loss of Rmb40-50 million in 3Q25, with plans to reduce losses through lower selling expenses [6].

Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Consumer Durables, specifically the white goods sector - **Key Players**: Midea, Haier, Gree, Hisense Core Insights and Arguments 1. **Divergent Performance in 3Q25**: - Midea and Haier reported approximately 10% revenue and profit growth, exceeding expectations - Gree and Hisense experienced significant declines in profits, with Gree reporting a year-over-year profit decline of SD% [1][10] 2. **Domestic Market Dynamics**: - Split AC growth showed notable divergence, with Gree facing a sequential revenue decline while Midea, Haier, and Hisense reported revenue growth [1] - The market anticipates a deceleration in domestic growth into 4Q25 and 2026 due to a higher base, with expected shipment declines of 10% and 5% for major white goods [2][16] 3. **Pricing and Margins**: - Competition remains a key focus, particularly in the AC industry, with less competitive pricing observed compared to previous periods - Despite demand pressures, significant price cuts are not expected due to leading players' focus on profitability and lean inventory [3] 4. **Overseas Growth as a Key Driver**: - Overseas markets, particularly APAC and Europe, are expected to drive growth for Chinese white goods companies, supported by past investments in manufacturing and branding [4][6] 5. **Shareholder Returns**: - Current share prices imply an average dividend yield of 5% to 6% for covered white goods stocks, providing downside protection amid growth concerns [7] 6. **Future Outlook for Key Players**: - Midea and Haier are expected to continue leading the sector with positive growth, while Gree faces persistent pressure due to high domestic market exposure [8] Additional Important Insights 1. **Earnings Revisions**: - Earnings forecasts for Midea and Haier have been raised, while estimates for Gree and Hisense have been lowered to reflect recent performance [14] 2. **Management's Strategic Focus**: - Midea's management aims for revenue growth of MSD-HSD% CAGR from 2026 to 2028, with a focus on market share gains in refrigerators and washing machines, and margin improvements in AC [33][34] 3. **Investment in Technology**: - Midea plans to invest in AI and robotics, focusing on robotic home appliances and humanoid robots, indicating a strategic shift towards automation and advanced technology [34] 4. **Valuation Adjustments**: - Target prices for Midea and Haier have been adjusted based on updated earnings forecasts, reflecting a positive outlook for these companies [35] 5. **Market Sentiment**: - Consumer sentiment has pulled back, but property indicators in the US have shown improvement, suggesting a mixed outlook for consumer durables [31] This summary encapsulates the key points discussed in the conference call, highlighting the performance of major players in the white goods sector, market dynamics, and future growth strategies.

Summary of Hisense Home Appliances Group (000921.SZ) 3Q25 Earnings Call Company Overview - **Company**: Hisense Home Appliances Group - **Ticker**: 000921.SZ - **Reporting Period**: 3Q25 Key Financial Results - **Total Revenue**: Rmb 22,192 million, up by +1% year-over-year (yoy) - **Net Profit**: Rmb 735 million, down by -5% yoy - **Comparison to Estimates**: Revenue and net profit were -4% and -16% below Goldman Sachs estimates respectively [1][4][5] Core Insights and Arguments - **Central AC and Exports**: The central air conditioning (AC) business continues to face pressure, contributing to lower revenue growth. Exports of AC units have also moderated, impacting overall performance [4][6] - **Domestic Market Performance**: Despite challenges in the central AC segment, domestic white goods showed healthy growth, particularly in washing machines and refrigerators, which demonstrated resilience in both domestic and overseas markets [4][6] - **Margin Decline**: Gross Profit Margin (GPM) and Operating Profit Margin (OPM) declined by 0.6 percentage points and 0.1 percentage points yoy to 20.2% and 3.9% respectively. This decline is attributed to lower contributions from the higher-margin central AC segment and increased domestic competition [4][5] Management Focus Areas for Future - **Earnings Call Topics**: Management will address several key areas during the earnings call, including: 1. Breakdown of sales channels in 3Q25 and outlook for the central AC business 2. Impact of trade-in stimulus on the legacy white goods business 3. Changes in competitive intensity, particularly in split ACs 4. Updates on export orders and tariff impacts 5. Measures to enhance operating efficiency and margins [2][4] Investment Thesis - **Buy Rating Justification**: The investment thesis supports a Buy rating based on: 1. High earnings growth visibility, particularly with the 2024 Employee Stock Ownership Plan (ESOP) target 2. Attractive dividend yield 3. Valuation metrics indicating the stock is trading at an undemanding forward Price-to-Earnings (P/E) ratio against high single-digit profit growth expectations [6][7] Risks to Consider - **Key Risks**: 1. Potential disruption in white goods demand due to weaker global macroeconomic conditions 2. Further slowdown in the property market affecting demand for Variable Refrigerant Flow (VRF) systems 3. Increased competition from domestic players threatening the Hisense-Hitachi joint venture's leading position 4. Margin dilution from greater penetration in the developer channel 5. Below-expected integration performance of the Hisense-Hitachi joint venture 6. Underperformance of the legacy white goods business [8][6] Conclusion Hisense Home Appliances Group's 3Q25 results reflect a mixed performance with challenges in the central AC segment and exports, while domestic white goods show resilience. The company is focusing on improving margins and operational efficiency, with a positive long-term outlook supported by strategic initiatives and a favorable investment thesis. However, several risks could impact future performance.

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **China Consumer Appliances** industry, focusing on **home appliances** and **small kitchen appliances** sales trends for April 2025 and the first four months of 2025 (4M25) [2][3][5]. Core Insights and Arguments - **Sales Recovery**: Home appliance sales showed a steady recovery in April 2025, with major categories experiencing year-over-year (YoY) growth due to trade-in subsidies and a low base effect. The upcoming air conditioning (AC) peak season is expected to further boost sales [2][3]. - **Robotic Vacuum Cleaners (RVC)**: RVCs maintained strong sales momentum, with online retail sales growing by **67% YoY** in 4M25, driven by new product launches and trade-in subsidies [2][4]. - **Impact of US Tariffs**: The reduction of US tariffs on home appliances from **145% to 30%** is anticipated to improve market sentiment and earnings for home appliance companies in 2025 [2]. - **Pricing Pressure**: Despite the sales recovery, there is ongoing pricing pressure, particularly for ACs and refrigerators, with online average selling prices (ASPs) dropping by **3% and 4% YoY**, respectively [3][4]. Sales Performance by Category - **Major Appliances**: - Offline sales for ACs, washing machines (WMs), refrigerators, and range hoods rose **12%**, **17%**, **17%**, and **44% YoY**, respectively. Online sales showed a mixed performance with ACs up **35%** but WMs only **11%** [3][9]. - Haier gained market share in WMs, with online and offline value shares increasing to **37.2%** and **40.1%**, respectively, attributed to the successful launch of new products [3]. - **RVC Sales**: - RVC online sales grew **81% YoY** in April, with brands like Dreame and Narwal leading the market with **102%** and **101%** growth, respectively [4]. - **Small Kitchen Appliances**: - Online sales for small kitchen appliances rebounded, with growth rates between **3% and 11% YoY**, and ASPs increased by **1% to 15% YoY**. However, price pressures are expected to persist [5]. Additional Important Insights - **Market Sentiment**: The overall market sentiment is expected to improve as the industry enters the AC peak season, benefiting from a lower sales base from the previous year [2]. - **Competitive Landscape**: Xiaomi continues to gain share in ACs but has plateaued in WMs and refrigerators, while Haier's innovative products have helped increase ASPs in the WM segment by **12% YoY** [3][4]. - **ASP Trends**: The ASPs for various appliance categories are under scrutiny, with some categories experiencing declines, indicating potential challenges ahead for manufacturers [3][5]. This summary encapsulates the key points discussed in the conference call, highlighting the recovery trends, competitive dynamics, and pricing pressures within the China Consumer Appliances industry.

Construction Industry - In January-February, key indicators of the real estate market continued to decline year-on-year, with real estate development investment down by 9.8%, new construction area down by 29.6%, construction area down by 9.1%, sales area of commercial housing down by 5.1%, and completed housing area down by 15.6%, although the decline was narrower compared to the same period last year [2] - Infrastructure investment grew by 5.6% year-on-year, with water management investment up by 39.1%, air transport investment up by 13.4%, public facility management investment up by 2.6%, road transport investment down by 3.2%, and railway transport investment up by 0.2% [2] - National major power generation enterprises completed an investment of 75.3 billion yuan in power source projects, a year-on-year increase of 0.2%, while grid projects saw an investment of 43.6 billion yuan, up by 33.5% [2] Machinery Industry - In January-February, the machinery industry maintained growth, with most product outputs increasing year-on-year. The export value of electromechanical products totaled 2.3 trillion yuan, a year-on-year increase of 5.4%, accounting for 60.0% of total exports [3] Automotive Industry - In January-February, 4.553 million vehicles were produced, a year-on-year increase of 16.2%, with passenger car production at 3.936 million (up 17.2%) and commercial vehicle production at 617,000 (up 10.2%) [4] - New energy vehicle production continued to grow rapidly, increasing by 52.0%, with sales accounting for 40.3% of total vehicle sales. Vehicle exports reached 910,000, a year-on-year increase of 10.9%, although the growth rate slowed [4] - In February, vehicle production was 2.1 million, a year-on-year increase of 39.6%, but a month-on-month decrease of 14.1% [5] Home Appliance Industry - In January-February, the production of the three major white goods (washing machines, air conditioners, refrigerators) increased year-on-year, with washing machine production at 18.52 million units (up 12.7%), air conditioner production at 41.28 million units (up 9.0%), and refrigerator production at 15.12 million units (up 11.7%) [6] - Home appliance exports increased by 9.4% year-on-year, although the growth rate was narrower compared to the same period last year [6] Container Industry - In January-February, container production reached 3.519 million cubic meters, a year-on-year increase of 51.3%, although the growth rate was significantly narrower compared to the same period last year, with export volume increasing by 21.2% [7]