Investment Rating - The report maintains a "Positive" outlook on the home appliance sector, highlighting its performance against the Shanghai and Shenzhen 300 Index [3][4]. Core Insights - The home appliance sector outperformed the Shanghai and Shenzhen 300 Index, with the sector index rising by 1.8% compared to a 1.6% increase in the broader index [4][5]. - Key companies such as Beiyi Co., Lek Electric, and Huaxiang Co. showed significant gains, while Aopu Technology and Stone Technology faced declines [4][7]. - December 2025 production data for major appliances indicates a total production of 30.18 million units, a 14.1% decrease from the previous year [10]. - The Ministry of Industry and Information Technology and five other departments issued a plan to enhance the adaptability of supply and demand in consumer goods, aiming for a significant optimization of the supply structure by 2027 [11]. Summary by Sections Market Performance - The home appliance sector index increased by 1.8%, outperforming the Shanghai and Shenzhen 300 Index [4][5]. - Notable performers included Beiyi Co. (10.2%), Lek Electric (9.0%), and Huaxiang Co. (8.4%) [4][7]. Industry Dynamics - December 2025 production data shows a total of 30.18 million units for air conditioners, refrigerators, and washing machines, with air conditioner production down 22.3% year-on-year [10]. - The government plan aims to create three trillion-level consumption fields and ten hundred-billion-level consumption hotspots by 2027 [11]. Sales Data - October sales data revealed a significant decline in offline sales for major appliances, with air conditioner retail volume down 48.3% and retail value down 53.7% [33][36]. - The average retail price for air conditioners decreased by 10.7% to 4,224 yuan [33]. Investment Opportunities - The report identifies three main investment themes: 1. Head companies in white and black appliances with low valuations and high dividends [4]. 2. Core component manufacturers expanding into emerging tech fields [4]. 3. Growth in overseas demand for new consumer appliances [4]. Raw Material Prices - As of November 28, 2025, copper prices increased by 17.83% year-on-year, while aluminum prices rose by 5.15% [13][20].

Market Overview - The white goods sector experienced a slight increase of 0.03% on November 28, with Shenzhen Konka A leading the gains [1] - The Shanghai Composite Index closed at 3888.6, up by 0.34%, while the Shenzhen Component Index closed at 12984.08, up by 0.85% [1] Stock Performance - Shenzhen Konka A (000016) closed at 5.20, with a rise of 1.76% and a trading volume of 254,400 shares [1] - Midea Group (000333) saw a minor increase of 0.08%, closing at 79.86 with a trading volume of 181,300 shares [1] - Gree Electric (000651) and Haier Smart Home (600690) had minimal increases of 0.07% and a slight decrease of 0.04%, respectively [1] - TCL Smart Home (002668) and Aucma (600336) experienced declines of 0.83% and 2.15% [1] Capital Flow - The white goods sector saw a net inflow of 236 million yuan from institutional investors, while retail investors experienced a net outflow of 154 million yuan [1] - Midea Group had a significant net inflow of 2.43 billion yuan from institutional investors, despite a net outflow of 934.17 million yuan from retail investors [2] - Gree Electric recorded a net inflow of 67.54 million yuan from institutional investors, with a minor outflow from retail investors [2] - Haier Smart Home had a mixed capital flow, with a net inflow of 27.39 million yuan from institutional investors but a significant outflow from retail investors [2]

Summary 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]

Core Insights - The leadership of Gao Yuling at Hisense Home Appliances has seen a decline in revenue growth and net profit margins, marking the lowest performance in recent years [5][6] - Key executives, including Yin Zhixin, have been promoted or given expanded roles, indicating a strategic shift within the company [3][4] Financial Performance - Revenue growth rates from 2022 to 2025 for the first three quarters are 13.90%, 13.81%, 8.75%, and 1.35%, while the net profit growth rates are 14.10%, 165.99%, 10.99%, and 1.65% [5] - The current performance under Gao Yuling is the worst in nearly four years, attributed to increased competition and price reductions in the domestic appliance market [6] Executive Changes - Gao Yuling was elected as the new chairman on November 21, 2022, following the retirement of the previous chairman [2] - Yin Zhixin has been promoted to President of Hisense Group China while still managing the ice-wash business, which has been a significant revenue source [3][4] Market Challenges - The air conditioning segment, a major revenue contributor, has seen a decline in gross margins, with a year-on-year drop of 1.56% [6][7] - The company faces challenges in online sales channels, lagging behind competitors like Gree and Midea, which could impact future market share [7] Strategic Initiatives - Hisense has initiated a restructuring plan to enhance its air conditioning business, including the establishment of a new air conditioning division [7] - Despite these efforts, the effectiveness of the restructuring has yet to be realized, with market share and pricing under pressure [7][8]

Core Viewpoint - The leadership of Gao Yuling at Hisense Home Appliances has seen a decline in revenue and net profit growth, marking the lowest performance in recent years, amid increasing competition in the domestic home appliance industry [1][7][9]. Leadership Changes - Gao Yuling was elected as the new chairman of Hisense Home Appliances on November 21, 2022, marking the beginning of the "Gao Yuling era" [2]. - Following her appointment, several key personnel changes occurred, including the resignation of former president Hu Jianrong and the departure of board member Zhu Dang [2][3]. - Key figures supporting Gao Yuling, including Yin Zhixin, have been promoted to significant roles within the company, indicating a consolidation of leadership [3][4]. Financial Performance - The financial data from 2022 to the first three quarters of 2025 shows a significant decline in revenue growth and net profit growth, with figures of 13.90%, 13.81%, 8.75%, and 1.35% for revenue growth, and 14.10%, 165.99%, 10.99%, and 1.65% for net profit growth, respectively [6][7]. - This performance represents the lowest growth rates in nearly four years for the company [7]. Business Segment Analysis - The ice washing business, previously led by Yin Zhixin, has shown strong performance with revenues of 26.07 billion, 30.84 billion, and 15.39 billion for 2023, 2024, and the first half of 2025, respectively, reflecting year-on-year growth rates of 22.93%, 18.29%, and 4.76% [5]. - In contrast, the air conditioning segment, which is the largest revenue source, has seen much lower growth rates of 12.02%, 4.22%, and 4.07% during the same periods [5]. Market Challenges - The home appliance industry is experiencing intensified competition, leading to price reductions in high-margin products like air conditioners, which has negatively impacted Hisense's revenue and profit [9][10]. - The company's air conditioning products have faced a decline in gross margin, with a year-on-year decrease of 1.56% reported for the first half of the year [10]. - Despite efforts to restructure and enhance market competitiveness, the effectiveness of these initiatives has yet to be realized, as indicated by the declining market share in both online and offline channels [11].

Summary of Hisense Home Appliances Conference Call Industry Overview - The domestic home appliance market is influenced by subsidy policies, with a year-on-year decline expected in 2025, but normal growth anticipated in the following year. The continuation of national subsidy policies in 2026 is expected, with potential adjustments in details, highlighting the importance of monitoring policy changes on the market [2][4][5]. Company Performance - Hisense's overseas business has shown a fluctuating trend due to Trump's tariffs, but the overall outlook remains optimistic. Emerging markets are seeing increased penetration, while mature markets maintain stability. Future overseas sales revenue is expected to grow over 10% in the next three years [2][6][16]. - The central air conditioning business faces challenges from the real estate sector's downturn, but growth is expected from the consumer and public construction channels. Hisense Hitachi is expanding into the large chiller market and accelerating overseas business development [2][7][8]. Market Dynamics - The European heat pump market is recovering after a destocking phase, indicating potential for growth. Hisense plans to increase investment in overseas markets to enhance brand influence and accelerate expansion in emerging markets [2][9][10]. - The new water machine factory in Changsha is expected to contribute approximately 20% annual revenue growth over the next 3-5 years, with a projected market share increase of about 1% annually in 2026 [2][11][12]. Financial Metrics - The overall net profit margin is expected to remain around 16% through 2026, despite pressure on gross margins from the increasing share of Hisense and York brands in the central air conditioning business [2][14]. - The company anticipates domestic sales revenue growth in the mid-single digits for 2026, while overall performance growth could reach double digits, factoring in the impact of subsidy reductions [3][26]. Strategic Initiatives - Hisense is focusing on enhancing its overseas market presence, with over 50% of revenue from overseas sales in processing and washing products. The company aims to leverage sports marketing to boost brand influence and expand into emerging markets [2][10][24]. - The company plans to streamline its product offerings by reducing SKUs by over 50% to improve operational efficiency and gradually enhance profit margins [3][28]. Challenges and Opportunities - The central air conditioning sector is experiencing pressure from the real estate market, with a 24% year-on-year decline in revenue from the refined decoration segment. However, new applications in agriculture, energy storage, and data centers are showing growth potential [2][7][8]. - The company is also addressing the competitive landscape in domestic channels by enhancing its self-owned channel strategy and reducing reliance on online platforms [2][27]. Conclusion - Hisense Home Appliances is navigating a complex market landscape with a focus on overseas growth, product efficiency, and strategic partnerships. The company is well-positioned to capitalize on emerging market opportunities while managing domestic challenges and maintaining profitability [2][10][26].

Share Price Information - The share price for the 2022 incentive plan was RMB 19.15 on the grant date of February 28, 2023[4]. - The share price for the 2022 holding plan was RMB 23.72 on the grant date of June 1, 2023[4]. - The reserved shares for the 2024 holding plan had a share price of RMB 29.37 on the grant date of July 15, 2024[4]. - The share price for the 2024 holding plan was RMB 28.28 on the grant date of July 10, 2024[4]. - The share price on the grant date for the 2024 equity incentive plan was RMB 28.28[17]. - The share price for the last grant before the reporting period was RMB 23.72[15]. Incentive Plans and Share Releases - A total of 6,397,866 shares were eligible for release under the second release period of the 2022 A-share incentive plan[11]. - The company approved the repurchase and cancellation of 755,634 shares due to various reasons including employee departures and performance assessments[11]. - The first release period allows for 40% of shares to be released after 12 months from the grant date[8]. - The second release period allows for 30% of shares to be released after 24 months from the grant date[8]. - The third release period allows for 30% of shares to be released after 36 months from the grant date[8]. - The company has established multiple incentive plans to align employee interests with shareholder value[10]. - The total number of unexercised shares granted under the 2024 equity incentive plan is 13,180,050 shares[16]. Unlock Periods - The first unlock period for shares is set at 12 months, allowing for 40% of the total shares to be unlocked[19]. - The second unlock period is at 24 months, allowing for 30% of the total shares to be unlocked[19]. - The third unlock period is at 36 months, allowing for another 30% of the total shares to be unlocked[19]. Shares Held by Employees and Executives - The total number of shares granted to key employees is 5,624,140 shares, with 2,459,630 shares unlocked during the reporting period[12]. - The total number of shares held by executives and directors is 1,854,000 shares, with 927,000 shares unlocked during the reporting period[12]. - The total number of shares held by the company’s executives as of June 30, 2025, is 7,478,140 shares[12]. - The total number of shares granted to the company’s executives under the 2024 plan is 200,000 shares each for two executives[16].

Core Insights - The Ronshen Fangtang series refrigerators achieved remarkable sales during the "Double Eleven" shopping festival, ranking first in the dual-system refrigerator category with total sales exceeding 250 million yuan, showcasing its strength in "embedded aesthetics" and "healthy preservation" [7][9] - The success of the Fangtang series is attributed to Ronshen's 40 years of expertise and cutting-edge technological innovations, meeting the evolving consumer demands for health, aesthetics, convenience, and quality in refrigeration [7][8] Product Features - The Fangtang series features the industry-leading IDP Dual Purification 2.0 technology, which can actively identify and purify odors from over a hundred types of food, achieving a sterilization rate of 99.9999% and an odor removal rate of over 99.9% [7][8] - The design of the Fangtang series is a 60 cm ultra-thin flush-mounted style, allowing for perfect integration with kitchen cabinets, enhancing kitchen aesthetics and providing a seamless home decor experience [8] Industry Recognition - The Fangtang refrigerator is the only model in the industry to pass a comprehensive odor removal test and has received the first "Automatic Ice Making Refrigerator Technology Certification" from the China Household Electrical Appliances Research Institute, setting a new technical benchmark for automatic ice-making functions [8] Marketing Strategy - Ronshen employed diverse and innovative marketing strategies during the Double Eleven period, collaborating with key opinion leaders for product testing and promotion, which created a strong word-of-mouth effect on social media [8] - The brand also engaged celebrities in live-streaming events to interactively showcase the refrigerator's key features, successfully driving consumer interest and sales conversion [8] Brand Positioning - As the official designated refrigerator for the 2026 FIFA World Cup™, Ronshen aims to connect with global consumers, highlighting the brand's commitment to innovation and user insight [9]

Investment Rating - The report maintains an "Outperform the Market" rating for the home appliance industry [6][7][14]. Core Views - The home appliance industry is experiencing pressure on both domestic and international sales due to high base effects, with October retail sales down 15% year-on-year. White goods and black goods are expected to see retail sales declines exceeding 20%, while small appliances are performing slightly better [2][3][19]. - In October, the total sales volume of air conditioners in China decreased by 20.1%, with domestic sales down 21.3% and exports down 19.0%. The pressure on production for December remains significant, although export production is expected to improve as the peak season approaches [4][45]. - The report highlights a 13.3% year-on-year decline in home appliance export value in October, with washing machines and vacuum cleaners showing stable performance. The export value of air conditioners fell by 29.3% [5][47]. Summary by Sections 1. Investment Recommendations - Recommended companies include Midea Group, Haier Smart Home, TCL Smart Home, Gree Electric, and Hisense Home Appliances for white goods; Hisense Visual for black goods; and Roborock, Bear Electric, and Ecovacs for small appliances [6][14][15]. 2. Market Performance - The home appliance sector achieved a relative return of +1.47% this week, while the broader market (CSI 300 Index) declined by 3.77% [60]. 3. Retail Demand Analysis - In October, retail sales of home appliances faced significant declines, with major categories like air conditioners, refrigerators, and washing machines experiencing drops of over 20% in retail value [3][20][19]. 4. Export Performance - The report notes a continued decline in home appliance exports, with a significant drop in air conditioner exports and stable performance in washing machines and vacuum cleaners [5][47]. 5. Production Insights - December air conditioner production is under pressure, with domestic production expected to decline by 22.6% year-on-year, while export production is projected to decrease by 8.2% [4][45]. 6. Key Data Tracking - The report tracks key data such as raw material prices, shipping indices, and real estate performance, indicating ongoing challenges in the market [60][62][76].

Market Overview - The white goods sector experienced a decline of 0.18% on November 24, with TCL leading the drop [1] - The Shanghai Composite Index closed at 3836.77, up 0.05%, while the Shenzhen Component Index closed at 12585.08, up 0.37% [1] Stock Performance - Notable gainers in the white goods sector included: - Aokema (600336) with a closing price of 7.81, up 5.11% and a trading volume of 373,900 shares, totaling 291 million yuan [1] - Deep Blue Technology (000016) closed at 5.15, up 2.39% with a trading volume of 275,500 shares [1] - Major decliners included: - Midea Group (000333) closed at 78.56, down 0.24% with a trading volume of 367,700 shares, totaling 2.903 billion yuan [1] - Gree Electric (000651) closed at 40.11, down 0.35% with a trading volume of 355,300 shares, totaling 1.427 billion yuan [1] Capital Flow - The white goods sector saw a net inflow of 423 million yuan from institutional investors, while retail investors experienced a net outflow of 271 million yuan [1] - Detailed capital flow for selected companies: - Midea Group had a net inflow of 34.3 million yuan from institutional investors, but a net outflow of 217 million yuan from retail investors [2] - Haier Smart Home (600690) recorded a net inflow of 42.8 million yuan from institutional investors and a net outflow of 72.9 million yuan from retail investors [2] - TCL Smart Home (002668) had a minor net inflow of 1.64 million yuan from institutional investors, with retail investors showing a net outflow of 1.06 million yuan [2]