2025-06-26 14:09Summary of Hisense Home Appliances Conference Call Company Overview - Company: Hisense Home Appliances - Industry: Home Appliances Key Points and Arguments Sales Performance - During the 618 shopping festival, retail sales of home air conditioners, refrigerators, and washing machines increased by over 10% year-on-year, with washing machines experiencing a growth rate of 40%-50% [2][3] - Central air conditioning revenue returned to positive in Q1 2025, but is expected to decline in Q2 2025, with an annual target maintained at a slight increase [2][3] - The company anticipates a rapid growth in exports from 2024 to Q1 2025, although Q2 may see a decline due to tariffs [2][3] Profitability - The profit margin for white goods is expected to remain stable despite intense competition, as last year's domestic profit margins were relatively low [5][3] - The external sales profit margin is expected to recover, but the Japanese three-electric business may face pressure due to yen appreciation and exchange rate impacts [5][3] Market Trends - In Q2 2025, the central air conditioning market is under pressure, particularly in the refined decoration market, with inventory digestion slowing in the consumer market [6][3] - Hisense brand growth is faster than the Rongsheng brand, while the decline of the Japanese brand is minimal [6][3] - The overseas market share of Hisense central air conditioning is expected to reach around 10% in Q2 2025, up from 8% last year, indicating an expansion in overseas market share [7][3] Competitive Landscape - Hisense faces strong competition from Midea in the white goods sector but can improve efficiency through resource sharing [3][10] - The company has implemented various efficiency measures, including reducing the number of suppliers and streamlining product SKUs, which have started to show results [11][3] Tariff Impact - The impact of U.S. tariffs on sales is limited, as the U.S. market accounts for only about 2%-3% of total revenue, with some products being rerouted through Mexico [9][3] - The overall demand in mature markets is more significantly affected by tariff policies compared to emerging markets [9][3] Strategic Initiatives - Hisense and Midea have signed a strategic cooperation agreement to share resources and improve operational efficiency [10][3] - The company is exploring direct-to-consumer (DTC) models to optimize channel structures and enhance profitability [10][3] Future Outlook - The company expects a stable domestic sales trend in Q2 2025, with no significant changes compared to Q1 [8][3] - The overall market competition is expected to intensify, leading to slight price declines in Q2 2025 [14][3] Cash Flow and Financial Health - Operating cash flow has improved in the first half of 2025 compared to last year, with a stable dividend payout ratio [23][3] - Capital expenditures are expected to increase this year, with a preliminary estimate of around 2 billion RMB for next year [23][3] Other Notable Information - The company is observing a gradual increase in the contribution of emerging markets to its revenue, particularly in regions like the Middle East and Africa, and ASEAN [21][3] - The integration of overseas channels into the listed company platform does not have a clear timeline yet [20][3]