2025-09-08 06:23Summary of Haier Smart Home Co. (600690.SS) Conference Call Company Overview - Company: Haier Smart Home Co. - Industry: Home Appliances Key Points 1. Revenue and Profit Growth Outlook - Management expects a revenue growth of MSD-HSD% and a profit growth of DD% CAGR in the coming years, with plans to increase dividends gradually over the mid to long term [2][10][8] 2. Overseas Expansion Strategy - Management is focusing on further localization in the US market to enhance local manufacturing capabilities, with a US$3 billion investment aimed at expanding US manufacturing [6][7] - Anticipated growth and margin improvements in Europe following recent reforms, with sequential improvements in white goods sales continuing into Q3 [10][8] - Emerging markets are expected to see fast growth due to a combination of value-for-money products and technology-driven offerings, particularly in the APAC region [10][8] 3. Domestic Market Performance - Management remains optimistic about the growth and margin expansion of air conditioning (AC) products, attributing this to cost reduction initiatives and efficiency gains despite intense competition [10][8] - The domestic market has shown a decline in pricing for the Leader brand, while the Haier and premium Casarte brands have experienced an increase in average selling price (ASP) driven by product mix improvements [10][8] 4. Competitive Edge - Management believes that their relative competitive edge in the US market stems from local production capabilities compared to most competitors [7][8] 5. Investment Thesis - Haier is recognized as a leader in refrigerators and washing machines in China, with a strong position in the premium segment through its Casarte brand. The company is rated as a "Buy" due to: - Resilient domestic growth driven by market share gains and premiumization - Improving overseas demand and favorable foreign exchange (FX) conditions - Ongoing margin improvement potential from product mix enhancements and operational efficiency gains [8][9] 6. Risks and Challenges - Key risks include: - Potential disruptions to white goods demand due to weaker global macroeconomic conditions - Rising raw material costs - Ineffective marketing and channel expense savings - Challenges in successfully integrating acquisitions [9][10] 7. Valuation and Price Target - The 12-month price targets for Haier's A/H shares are set at Rmb31/HK$31, based on a discounted P/E approach applying a 14x exit P/E to 2027E EPS [9][10] 8. Brand Building and OEM Business - Management emphasizes the importance of brand building in the OEM business, which requires capabilities in product innovation, supply chain management, and after-sales services. They do not foresee large acquisitions in the white goods space but may consider opportunities in other areas like HVAC [6][8] Conclusion Haier Smart Home Co. is positioned for growth through strategic overseas expansion, a focus on premium products, and operational efficiencies. However, the company faces risks from macroeconomic factors and competition in both domestic and international markets.