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Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Consumer Durables, specifically focusing on white goods and consumer discretionary products Core Insights 1. **Trade-in Policy Impact**: The trade-in policy has significantly boosted revenue, with a notable increase in retail sales at the Casarte store in Shenzhen, reaching Rmb4 million from September 6-16, compared to monthly sales of Rmb1.5-2 million in earlier months. This is attributed to provincial subsidies during June-August [1][5] 2. **Product Performance**: Air conditioners, washing machines, and refrigerators are outperforming due to national subsidies, while categories like dry-cleaning machines are excluded in some provinces [1][5] 3. **Sales Growth**: Retail sales in offline key account channels grew approximately 25% year-over-year from September 6-26 in Shenzhen, with specific stores like Five Star and Suning showing over 100% growth [2][5] 4. **Average Selling Price (ASP) Increase**: The ASP of Casarte products increased to Rmb700 post-implementation of the trade-in policy, compared to around Rmb5,000 prior to the policy [2][5] 5. **Subsidy Mechanism**: Customers receive direct price reductions when purchasing appliances, with subsidies processed by distributors after government review, which can take 3-6 months [5] 6. **Inventory Management**: Inventory levels peaked in May at Rmb40-50 million year-over-year but have since been reduced by Rmb30 million month-over-month, returning to a healthy level by July [5] 7. **Customer Demographics**: The majority of customers utilizing the trade-in policy are purchasing for new homes, with efforts to penetrate older communities to stimulate replacement demand [5] Company-Specific Insights 1. **Hisense Home Appliances Group**: Rated as a "Buy" due to high earnings growth visibility, attractive dividend yield, and undemanding valuation, trading at an average of 8x 2024E-25E P/E with ~20% profit growth expected [6][9] 2. **Haier Smart Home**: Also rated as a "Buy," benefiting from resilient domestic growth, market share gains, and improving overseas demand. The company is expected to deliver better-than-industry growth through product expansion [9][10] 3. **Gree Electric Appliances**: Rated as a "Buy," with a focus on stable growth outlook and attractive risk/reward profile, expected to grow in line with the overall AC market [13][14] Valuation and Risks 1. **Target Prices**: - Hisense: 12-month target price of Rmb40/HK$34 based on 17x/12x 2026E P/Es [6] - Haier: 12-month target price of Rmb33/HKD33 based on a discounted P/E approach [10] - Gree: 12-month target price of Rmb49 based on a 10x exit multiple applied to 2026E EPS [14] 2. **Key Risks**: - Disruption in white goods demand due to weaker macroeconomic conditions - Rising raw material costs impacting margins - Challenges in marketing effectiveness and integration of acquisitions [10][14] Additional Considerations - The conference highlighted the importance of government subsidies in driving consumer behavior and sales in the consumer durables sector, particularly in the context of trade-in policies [1][5] - The ongoing focus on premiumization and product mix improvements is expected to enhance margins and overall company performance in the competitive landscape [9][10]

_ 28 September 2024 | 1:01AM HKT Global Economics Wrap-Up: September 27, 2024 | --- | --- | --- | --- | |-------|-----------|---------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------| | | | | | | | Global | Economics | Andrew Tilton +852-2978-1802 \| andrew.tilton@gs.com | | n | Central o | bank pivots to sequential cuts: We rev ...

1 October 2024 | 4:14AM HKT _ China A-shares: 3 thematic trends: SPE in Semis; Foldable in Smartphones; AI in Software; Buy ideas on Catalysts & Valuation | --- | --- | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------- ...

26 September 2024 | 11:25PM HKT _ Anta Sports Products (2020.HK): Consumer Discretionary Tour Takeaways: Super Anta store tour with management; Buy (on CL) Post our China Conference 2024, as part of our on-site Consumer Discretionary Tour on Sep 23-26, we visited a Super Anta store in Longgang Universiade Center in the suburb of Shenzhen, and met Mr. Tsui Yeung (CEO of the Performance Sports Group which mainly incl Anta core brand), Mrs. Suki Wong (Senior ESG and IR Director) and the IR team. Key takeaways: ...

_ 1 October 2024 | 6:25PM EDT USA: GS Economic Indicators Update (Rindels) | --- | --- | |----------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------| | | | | Please find an update of our proprietary economic indicators below. The data behind | Jan Hatzius | | these exhibits can be downloaded here. Inte ...

1 October 2024 | 4:14PM CST _ China Real Estate Rebound not reversal, fiscal policy key to watch In the evening of Sep-29/30, Shanghai, Guangzhou, Shenzhen and Beijing governments announced easing measures (Exhibit 1). We think the timing of these policy easing measures in T1 cities came in line with market expectation post central authorities' supportive stance to the property sector, though the magnitude of policy easing against market expectation was slightly divergent (Guangzhou/Shenzhen in line and Bei ...

30 September 2024 | 9:01PM EDT _ US Autos & Industrial Tech Platforms & Power: driving more sustainable profitability; Upgrade F to Buy We believe that the key to success in the automotive industry will increasingly come from mastering both the platform and power aspects of vehicles, including for electric and hybrid vehicles. And this platform and power theme extends beyond autos to broadly incorporate industrial and technology infrastructure. What do we mean by platforms & power? n Platforms: By platforms ...

_ 29 September 2024 | 7:06PM EDT Oil Comment: Q&A on OPEC Supply, the Middle East, and China Stimulus n Oil prices are down about 3% over the past week despite rising geopolitical tensions in the Middle East and despite China stimulus. We believe that this price action reflects that the geopolitical risk premium remains limited and market expectations of potentially higher oil supply following press reports about Libya and Saudi Arabia. To be clear, neither report has changed our base case for supply. n We ...