CITIC Construction Investment: Baidian's profits are bottoming out, and the inflection point is approaching, and sector valuations have room for upward restoration

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that the white power industry is currently in a critical window of bottoming out profits and reversal of expectations. Industry profits were under pressure in the first half of the year, mainly disrupted by phased factors such as exchange and raw material costs. It was not a systematic deterioration in demand and competitiveness. As external pressure eases and the low base effect gradually becomes apparent, industry profits are expected to recover quarterly in the second half of the year, and sector valuations have room for upward restoration.

CITIC Construction Investment's main views are as follows:

The profit of the 2026H1 white power industry is under pressure, mainly due to short-term disturbances such as exchange, copper prices, and depreciation. The leaders are relatively resistant to decline and second-tier differentiation, and profits are concentrated on the first line.

The fundamentals of the industry are improving: overseas is still the main increase, exports are superior to domestic sales. The industry's online production schedule shows that air conditioning was corrected in October, the pressure on exchange costs compounded by the low 25Q4 base has eased, and 26H2 profits are expected to recover quarterly. The organizational transformation of leading enterprises and their own brands are advancing in depth, and the growth logic is clear. The sector is expected to usher in fundamental restoration in stabilizing profits and optimizing the pattern.

Q1 What is the performance of the white power industry in the 2026 semi-annual report?

The economic pressure on the industry has increased, and the profit side is clearly under pressure. The total revenue of the nine listed companies was 596.9 billion yuan (-1.7%), withheld from mother 53.7 billion yuan (-7.2%), withheld 44.8 billion yuan (-21.5%), and a net interest rate of 9.0% (-0.5pct). The deduction of non-caliber reflects the real pressure. On a quarterly basis, the Q2 profit side declined markedly (return to mother - 9.2%, deduction - 28.5%), and cost and exchange pressure was concentrated on the release in Q2.

Q2 What are the differences between first-line white electricity and second-line white electricity meters?

First-tier leaders are relatively resistant to decline, second-tier companies are under heavy pressure, and profits are concentrated on the first tier at an accelerated pace. In the first tier, only the US revenue grew (+3.5%); Gree (-8.1%) and Haier (-2.8%) revenue declined but profit resilience was fair; second-tier profits declined sharply (Oaks -40.8%, Changhong Meiling -86.1%, and Q2 turned into a loss, and Hisense -20.2%). CR3 profit share rose to 93.2% (+2.6pct) and revenue share 84.2% (+0.9pct). The increase in profit concentration was greater than revenue, and the “revenue+profit” dual concentration pattern was further solidified.

Q3 What are the revenue drivers?

Overseas was the main increase. Although export sales have slowed, they are still significantly better than domestic sales. Domestic sales amounted to 338.8 billion yuan (-1.0%) and export sales of 252.1 billion yuan (+0.8%), and the overseas share continued to increase by about 42%. Structurally, ice washing overseas and emerging markets are highlights (Hairong export +34.8%, TCL Smart Home +16.0%, Hisense Europe ice washing nearly +15%, Haier South Asia +17.1%). Air conditioning exports are under pressure (Gree -22.0%, Oaks -20.4%), and Middle East Africa and South America are areas of reduction. Leading companies accelerated the upgrade from “product export” to “independent brand+localized operation” (Haier organizational transformation, Midea's OBM accounts for more than 50% of TOC export sales, Hisense Sports marketing+7+1 collaboration, Oaks ODM transformation to OBM).

Q4 How are the reasons behind changes in profitability broken down?

The decline in profits was not a significant deterioration in independent operations, but was mainly due to short-term disturbances in exchange, copper prices, and impairment. The industry's gross profit margin of 25.2% (only -0.16pct) was basically stable, and the three expenses for sales/management/R&D were stable or even declining. However, the financial expense ratio rose significantly due to RMB appreciation (Haier exchange affected about 1.58 billion yuan, US financial expenses rate +3.6 pct), and was concentrated on release in Q2.

Q5 How do you view subsequent domestic and foreign sales trends?

Due to structural differentiation where “exports are superior to domestic sales” and marginal improvements under a low domestic sales base, 26H2 profits are expected to gradually recover. Industry Online's September-November production schedule shows that the total production schedule for air conditioners in October has been corrected (+0.7%, domestic sales +16.4%, exports +6.9%), low base in November and Black 5 preparation continued to improve; ice washing exports grew steadily and positively (refrigerators +4.5%, washing machines +3.4%), benefiting from supply chain replacement just needed by emerging markets + European production capacity contraction. The low base of 25Q4 companies built repair space for 26Q4, and there is a high probability that Q3-Q4 profits will improve month-on-month.

Q6 What are the future highlights of Baidian?

The first line sees change and transformation, and the second line sees the reversal of the sea. Haier looks at organizational changes (DHVAC going overseas +13% verified, white power platform integration to be released, DTC efficiency improvement); Midea sees B-side second curve (OBM accounts for more than 50% of TOC exports and +15%, transforming from a consumer goods company to a global technology company); Hisense sees black and white electricity going overseas collaboratively (export sales +4.6%, European ice washing nearly +15%, short-term pressure, medium-term flexibility); Oaks sees the reversal after being dragged down by the Middle East (57.1% of overseas revenue, unbroken brand penetration logic).

Risk warning: 1) Risk of macroeconomic fluctuations: 2) Increased market competition: 3) Risk of fluctuations in raw material prices; 4) Risk of exchange rate fluctuations: 5) Risk of complex global trade environment.