2025-12-08 00:41Summary of the China Consumer Appliances Sector Conference Call Industry Overview - Industry: China Consumer Appliances Sector - Focus: White goods, specifically air conditioners (AC), washing machines (WM), and refrigerators Key Points from the Expert Call 1. 4Q25 Shipment Revisions: - Shipments for AC, WM, and fridges have been revised down to -20%, -1%, and -3% year-over-year (YoY) respectively. - This decline is attributed to weak domestic demand due to fading trade-in subsidies, a high base from 4Q24, and rising copper prices [3][4]. 2. Domestic Subsidies Outlook: - There are diverging opinions on whether domestic trade-in subsidies will be extended into 2026. - Some experts believe extensions are likely due to unreleased replacement demand and the 2027 recycling target, while others argue for an end to subsidies due to diminishing impacts and low availability in the second half of 2025 [3][4]. 3. 2026 Domestic Shipment Forecast: - Expected changes in shipments with subsidies: AC -2.0%, WM +1.9%, fridge -1.5% YoY. - Without subsidies, the forecast is: AC -5.4%, WM -2.2%, fridge -4.1% YoY. - The outlook is lower than previous forecasts due to recent cuts in 2025 shipment numbers. - The demand for WM is expected to remain stronger than for refrigerators in 2026, influenced by product upgrades and previous demand pull-forward during COVID [4]. 4. Overseas Market Outlook: - Global white goods volume is expected to grow by 1.5% YoY in 2026, with specific growth rates for AC, WM, and fridges at +2.5%, +1.2%, and +0.5% YoY respectively, assuming stable US tariffs. - Chinese export volumes for AC, WM, and fridges are projected to decline by -4.0%, +0.2%, and -4.3% YoY due to rising overseas capacities and high US tariffs. - Key export markets for China in 2026 include Latin America, Africa, Indonesia, and Japan, although increased production capacities in Southeast Asia may reduce reliance on Chinese exports [4]. Stock Implications - Caution on Sector: The outlook for the China home appliance sector is cautious due to a post-subsidy down-cycle expected from Q3 2025 to 2027, with intensified competition. - Preferred Stocks: Midea and Haier are favored for their overseas growth potential and strong defensiveness, while Gree is viewed with caution as it is primarily a domestic AC player [5]. Risks Identified - Sector Risks: - Risks include a downturn in the property market affecting demand, elevated raw material prices, and global supply chain constraints impacting exports [7]. - Company-Specific Risks: - Gree: Risks include reduced demand due to property policy tightening, rising raw material prices, foreign exchange losses, increased competition, and lower-than-expected dividends [8]. - Midea: Risks include tighter property market policies, RMB exchange rate fluctuations, and slowing growth in the global robot market [9]. - Haier: Risks include declining refrigerator demand, slow adoption of smart appliances, and high raw material costs [9]. This summary encapsulates the key insights and forecasts from the conference call regarding the China consumer appliances sector, highlighting both opportunities and risks for investors.