League of Nations Minsheng Securities: The endogenous trend in demand for air conditioning was stable in October, and export sales and shipments are still bottoming out

The Zhitong Finance App learned that Guolian Minsheng Securities released a research report saying that domestic sales of air conditioners were -21% in October and +24% for the same period in 2024. Excluding the base figure, domestic sales in October were -1% /flat compared to the same period in 2023/2019. There was little change from August to September, and the endogenous trend of demand was mainly stable; looking forward to the continuation, domestic sales of air conditioning were +24% year on year from November to December 2024. The base figure is still high, or still weak in the short term. In terms of export sales, excluding the base figure, AC export sales in October had a CAGR of +12% for 2 years, and the scale was still the second highest in the same period; considering the year-on-year ratio of export sales shipments in November-December 2024, the year-on-year ratio of export sales of air conditioners was +47%. According to Industry Online, the export production schedule for air conditioning in November/December was -14%/-2%, which may still be weak in the short term.

The main views of the League of Nations Minsheng Securities are as follows:

The industry released air conditioner production and sales data for October online

Household air conditioners produced 10.13 million units in the month, -27.92% YoY, sales volume of 10.28 million units, -20.13% YoY, of which 4.95 million units were sold, -21.32% YoY, 5.33 million units were exported, -18.99% YoY, year-end inventory 14.11 million units, -10.64% YoY; sales volume by manufacturer, Gree was -7.69% YoY (domestic sales -5.56%, export -12.50%); Haier +3% YoY (domestic sales remained flat, exports +2.63%); Haier +3% YoY (domestic sales remained flat, exports +2.63%); Haier +3% YoY (domestic sales remained flat, exports +2.63%); Haier +3% YoY (domestic sales remained flat, exports +2.63%); Haier +3% YoY (domestic sales remained flat, exports +2.63%); Haier +3% YoY (domestic sales remained flat, exports +2.63%); Haier +3% YoY (domestic sales remained flat, exports +2.63%); Haier +3% YoY (domestic sales remained flat, exports +2.63%); Haier +3% YoY 41% (domestic sales -7.41%, Exports -46.04%); TCL -19.74% YoY (domestic sales -31.37%, exports -17.65%).

The base is higher, and the endogenous trend is stable

Domestic sales of air conditioners were -21% year-on-year in October and +24% in October 2024. Excluding the base figure, domestic sales in October were -1% /flat compared to the same period in 2023/2019. There was little change from August to September, and the endogenous trend of demand was stable. In terms of terminals, Aowei's online/offline air conditioner retail sales volume in October was -22%/-42%, respectively, and the 2-year CAGR was +20%/+7%, weakening the main cause base; in October, the manufacturer's inventory was monitored at -11%/-1% month-on-month, and the industry was running healthily. Looking ahead, domestic sales of air conditioners were +24% year on year from November to December 2024. The base is still high and may still be weak in the short term. We are concerned about the relative resilience and positive changes in the business side of the leaders.

Vendor differentiation, focus on business side α

In the same month, Gree and Haier's sales volume remained flat at -6% /year on year, and Hisense was -7%/-2% respectively. Haier's resilience was outstanding, and Gree's share increased year-on-year for 2 consecutive months. The policy was initiated and promoted, and the monthly data of manufacturers was affected by the pace of operation, or there is no need to interpret it too much; in terms of trends, Haier's online/offline retail sales share of air conditioners was +2.3/+2.6 pct, respectively, and the upward trend continued in October. Gree's channel/price band expanded positively, and share performance improved marginally. In October, the average online/offline price of Aowei air conditioners was -2%/-12%, and the American/Haier online ratio was +4%/+8%, respectively. Offline was greatly affected by the brand structure, and the price system was mainly stable.

Export sales have bottomed out, and tariff pressure has been reduced

Air conditioning exports were -19% year-on-year in October, and are still bottoming out. Excluding the base figure, air conditioning export shipments in October had a CAGR of +12% for 2 years. The scale was still the second highest in the same period, and the trend is steady; considering the year-on-year ratio of export shipments from November to December 2024, the export production schedule for air conditioning was -14%/-2% in November/December, respectively, which may still be weak in the short term. Meanwhile, negotiations between China and the US made positive progress at the end of October. Tariff pressure was reduced, and US interest rate cuts began, and export sales are expected to converge to the middle single-digit historical center after digesting the impact of the base and the pace of early shipments; leading export sales orders are expected to continue to be steady, OBM has strong potential to promote overseas conversion. Management resilience is stronger than the industry, and the repair phase is expected to be better than linear expectations.

Investment advice

Influenced by the base and operating pace, domestic and foreign sales pressure for air conditioners was released as scheduled in October. Leading domestic terminals performed better than shipments, the industry operated healthily, and the price system was stable, and positive changes were worth paying attention to; export tariff pressure was reduced, and the US began interest rate cuts, which are expected to drive external demand. Leading OBM has strong potential, overseas conversion continues to advance, and the repair phase performance may be better than linear expectations. The performance of the white electronics sector has been weak since 2025Q3. Currently, the relative valuation has fallen back to a historical low. Short-term pressure pricing for domestic and foreign sales has been sufficient. Leading performance has gone through the cycle, operating resilience, and high dividend attributes have not changed. We continue to recommend Midea Group (000333.SZ), Haier Smart Home (600690.SH), Hisense Home Appliances (000921.SZ), and Gree Electric (000651.SZ).

Risk Alerts

Policy implementation falls short of expectations; raw material prices and exchange rate fluctuations; tariffs and external demand fall short of expectations.