2025-11-28 01:42Summary of Hisense Home Appliances Conference Call Company Overview - Company: Hisense Home Appliances - Industry: Home Appliances, specifically focusing on air conditioning, refrigerators, and washing machines Key Points and Arguments Market Conditions - The central air conditioning business is under pressure in the real estate market, particularly in the refined decoration sector, with a potential decline of 15-20% expected [2][5] - Domestic sales (C-end and public construction) are anticipated to see slight growth, while external sales of refrigerators and washing machines are projected to grow in double digits [2][4] - Orders for processing products are expected to show a turning point in December, with a return to positive growth by the end of 2026 or early 2027 [2][3][5] Financial Performance and Projections - The company faces challenges in achieving its annual performance targets, aiming to unlock nearly 100% of its equity incentive goals [2][5] - For 2026, domestic sales will focus on enhancing product strength and cost competitiveness, while external sales are expected to grow by over 10% with improved profit margins [2][5] - The net profit margin for the central air conditioning business is stable, estimated between 6-10% [4][12] Strategic Initiatives - The company plans to enhance its foundational capabilities by reducing SKU counts, integrating R&D platforms, and improving procurement efficiency to boost single product profitability [2][6] - Expansion of proprietary channel stores and strengthening of lower-tier channel construction are key strategies [2][7] - The company is optimistic about long-term growth in emerging markets, driven by increasing appliance penetration and favorable demographic trends [4][10] External Market Dynamics - The impact of national subsidy policy reduction on price competition is not straightforward; the company does not expect significant price increases despite subsidy reductions [6] - The company is focusing on structural products that benefit from subsidies, such as high-end air conditioning and fresh air systems [7] Profitability and Cost Management - External sales profitability recovery is primarily driven by gross margin improvements, with a 0.5 percentage point increase in profit margin expected, of which 0.3 percentage points come from cost reduction and efficiency improvements [8] - The processing product orders are gradually reducing inventory, indicating a potential recovery in sales [9] Regional Performance - The European market accounts for over 30% of the overall structure for air conditioning and refrigerators, with emerging markets like ASEAN and Central-South America showing significant growth potential despite seasonal fluctuations [10][11] - The company aims to increase overseas revenue contribution to over 20% within 3 to 5 years, leveraging new production capabilities [11] Future Outlook - The company anticipates a modest growth in the C-end market for new housing and second-hand demand, with a projected growth of around 10% in 2025 and single-digit growth in 2026 [18] - The new fresh air conditioning products are expected to have a gross margin advantage of at least 10 percentage points over non-fresh air products [21] Shareholder Returns - The company plans to maintain a minimum dividend payout ratio of 50% and will consider increasing this ratio in the future [17] Additional Important Insights - The company is actively working on balancing cooperation and competition with Midea, focusing on resource optimization and market penetration strategies [15][16] - The integration of logistics and procurement strategies with Midea is progressing well, although details on overseas collaborations remain limited [14]