According to a report from Guolian Minsheng Securities, both domestic and export sales of home air conditioners weakened in September due to base effects and policy impacts. While leading domestic brands showed mixed performance, Haier stood out with strong growth, attracting α attention; export orders and production guidance remain optimistic, though tariff negotiations have faced several challenges, and short-term data may continue to hover near the bottom. The leading players in emerging markets are expanding robustly, and overseas production transitions are underway, suggesting their recovery phase may outperform linear industry expectations. Since Q3 2025, the white goods sector has shown weak performance, with current relative valuations falling to historical lows, indicating that short-term pressures in both domestic and export sales may have been fully priced in.
Key insights from Guolian Minsheng Securities include: according to data released by Industrial Online, the production and sales figures for air conditioners in September reflected a production total of 10.57 million units, a year-on-year decline of 13.48%, and a sales total of 10.88 million units, down 10.24% year-on-year. Of these, domestic sales accounted for 5.95 million units, a decrease of 2.52% year-on-year, and exports totaled 4.94 million units, down 18.06% year-on-year, with ending inventory at 14.26 million units, down 2.36% year-on-year. Among manufacturers, Gree's year-on-year sales remained flat (domestic sales up 12.50%, exports down 20.00%); Midea saw a year-on-year decline of 18.18% (domestic sales down 15.00%, exports down 21.62%); Haier experienced a growth of 12.50% year-on-year (domestic sales up 25.00%, exports down 12.50%); Hisense saw a decline of 13.95% year-on-year (domestic sales up 3.03%, exports down 24.53%); TCL reported a decrease of 15.53% year-on-year (domestic sales down 35.00%, exports down 10.84%).
With the base numbers rising sharply, domestic sales continued to soften, showing a year-on-year decline of 3% in September, which aligns with expectations. The local policy of trade-in for old appliances is set to take effect in Q3 2024, contributing to higher base figures, and notable deceleration is apparent, while data excluding base effects show domestic sales being consistent with the same period in 2023/2019. In September, the year-on-year compound annual growth rate (CAGR) for online and offline retail volumes in the air conditioning sector stood at 31% and 1%, respectively. The trend in leading installations continued from August, with steady domestic demand during the off-peak season.
Looking ahead, Q4 2024 may mark the peak of this policy impulse, with domestic sales expected to rise 24% year-on-year to a new high, and deceleration in growth likely to be within market expectations. Q3 earnings forecasts for the sector remain stable, with current relative valuations at historical lows. In a downward beta phase, attention should be paid to the resilience and market share of leading firms, α.
Downplaying cyclical fluctuations, the focus is on operational aspects α. In September, domestic sales year-on-year for Midea/Gree/Haier air conditioners were -15%/+13%/+25%, while Hisense/Aux posted +3%/+28%. The divergence among leaders continues, with Haier achieving strong growth against the trend, while Gree's lower base expedited its pace. The policy activation window and seasonal production effects may lead to fluctuations in manufacturers' monthly data that do not require excessive interpretation. In Q3 2025, Haier's domestic sales grew 37% year-on-year, with market share up 3.7 percentage points year-on-year, compared to Q1/Q2 increases of +0.1/+0.7 percentage points, indicating α worth monitoring. In September, the average retail price of air conditioners monitored by Ovi online/offline increased by 0.4%/-7.5% year-on-year, with volume growth pressuring prices.
Tariff negotiations have seen challenges, resulting in short-term export volumes still adjusting. In September, air conditioning export sales saw a year-on-year decrease of 18%, showing a month-on-month decline and remaining in the adjustment phase. Leading firms may experience improvements in export orders; with Industrial Online's forecasts showing a year-on-year decrease of -9.4%/-6.6% for air conditioning export production in October/November compared to last year's results, expectations for November have been raised. If there are no unexpected developments in subsequent tariff negotiations, Q4 may still see modest improvements.
Since the mid-October export restrictions of rare earths, trade negotiations have encountered multiple challenges, and developments are still to be tracked. Considering that Q4 2024 air conditioning exports are expected to rise 49% year-on-year and the weakening impact of orders in Q2 2025, export growth is anticipated to converge gradually towards the mid-single digit range after digesting base effects and policy pressures. The leading firms in white goods are expanding vigorously in emerging markets, and the ongoing overseas production transitions suggest potential performance during the recovery phase could exceed linear expectations.
In terms of recommendations, reviewing industry cycles indicates that leading companies possess resilience, and their high quality & high dividend attributes remain unchanged. Continuous recommendations include Haier Smart Home (600690.SH), Midea Group (000333.SZ), Hisense Home Appliances (000921.SZ), and Gree Electric Appliances (000651.SZ).
Risks to consider include policy implementations falling short of expectations; fluctuations in raw material prices and foreign exchange rates; as well as risks related to tariffs and weaker external demand.