Haier Smart Home: the world's leading electronics company. The company is the world's largest home appliance brand. Its products cover refrigerators, freezers, washing machines, air conditioners, water heaters, etc., and has seven major appliance brands including Haier, Casadi, GE Appliances, Fisher & Paykel, and AQUA around the world. Through more than 20 years of overseas localization, the company's share of overseas revenue reached 52% in 2023, leading the way in China's electronics companies going overseas. The company's revenue from 2010 to 2023 increased 11% to 261.4 billion, and profit to mother increased 17% to 16.6 billion.

North America: The mature home appliance market is growing steadily, and Haier's share of major appliances climbed to the top position. North America accounts for nearly 60% of the company's overseas revenue, and is also a major global home appliance market. The retail sales volume of the North American home appliance market reached $120.7 billion in 2023, with a compound increase of 5.4% in 2013-2023, with a compound volume/price increase of 1.5%/3.9%. The pattern of the major appliances industry in North America is concentrated. In 2023, Haier/Whirlpool's sales market share was 26.7%/21.6%. Haier maintained the top two market shares in all categories of major appliances, and the share of large kitchen appliances and household air conditioners exceeded 30%. As the company further strengthens its weak categories, the company's forward revenue in North America is expected to reach 105.6 billion yuan, with 28% room for growth compared to 2023. In terms of profit, the 2015-2023 Whirlpool North America EBIT margin is around 12%. As the company accelerates product iteration and upgrading, optimizes product structure, and improves manufacturing and operational efficiency, Haier's profit margin is expected to compete with Whirlpool North America in the future.

Europe: The home appliance market pattern is fragmented, and Haier's revenue is growing rapidly. Europe is also a relatively mature home appliance market. According to Euromonitor data, the retail scale of the European home appliance market reached 116.2 billion US dollars in 2023, with a compound increase of 1.4% in 2013-2023 (+3.6% in the euro caliber), with a compound increase of 1.0% in sales.

The European home appliance landscape is scattered, and domestic companies continue to seize the share. Haier's market share reached 8.9% in 2023. The company continues to strengthen its competitiveness in the European market. The acquisition and integration of Candy in 2019 and announced the acquisition of Carrier's global commercial refrigeration business in 2023. The channel layout and influence in the European market have steadily increased.

We assume that in the future, the company's market share in Western Europe will be close to that of Eastern Europe and that the market share of Eastern Europe can reach the level of the US, then the company's long-term revenue level in Europe is expected to reach 44.7 billion yuan, with room for 57% growth compared to 2023. The profit margin is comparable to the profitability of Bosch and Electrolux in Europe. Haier Europe's profit margin is expected to reach 5%-6% with the optimization of Candy's product structure and the improvement of manufacturing operations.

Australia and New Zealand: How strong the home appliance market coexists, Haier's share is steadily increasing. The retail sales volume of the Australian and New Zealand home appliance market in 2023 was 8.17 billion US dollars, with a compound increase of 0.4% in 2013-2023 (4.3% in Australian dollars), with a 1.6% compound increase in sales. The major appliance markets in Australia and New Zealand compete for supremacy. Haier is the leader in the industry. In 2023, its sales market share reached 15.0%, and its share increased by 4.7 pcts in the past 10 years. As the company gradually strengthens its market share in categories such as air conditioners and refrigerators, the company's long-term revenue level in Australia and New Zealand is expected to reach 8.1 billion yuan, with room for 31% growth compared to 2023. Compared to Electrolux, which is also a major electronics leader in Australia and New Zealand, Haier's steady profit margin in Australia and New Zealand is expected to reach 6%-8%.

Japan: Volume and price reduction in the home appliance industry have increased, and Haier's share of cold washing is high. The size of the Japanese home appliance market in 2023 was 26 billion US dollars, and the 2013-2023 compound growth rate was -1.3% (2.4% in yen caliber), of which the compound sales growth rate was -1.3%. Japan's major electronics market structure is extremely strong, with Panasonic leading the market share, and Haier's market share is close to 8%. The company entered the Japanese market in 2002, and through collaboration with Sanyo, the company excelled in the refrigerator and other fields. As the company strengthens its competitiveness in various categories, the company's long-term revenue level in Japan is expected to reach 5.5 billion yuan, with 49% room for growth compared to 2023.

Southeast Asia and South Asia: The home appliance industry is still growing, and Haier is already in the leading position. Demand for home appliances in Southeast Asia and South Asia is growing rapidly. The total retail sales volume of home appliances in the seven countries of India, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam was 33.5 billion US dollars in 2023, with a compound increase of 4.5% in 2013-2023, with a compound increase of 4.1%. The major electronics markets in Southeast Asia and South Asia are dominated by Chinese, Japanese, and South Korean brands. In 2023, Haier's sales market share in the above 7 countries was 8.4%, ranking second in the second tier. As the company accelerates its channel layout and production capacity development and the growth of the local home appliance market, the company's revenue in Southeast Asia and South Asia is expected to exceed 40 billion yuan, with 163% room for growth compared to 2023.

Middle East Africa and Latin America: The pattern of the home appliance industry is scattered, and Haier's market share is still low. Although the penetration rate of home appliances is growing in the Middle East, Africa and Latin America, the home appliance industry is growing slowly. In 2023, the retail scale of home appliances in Latin America/Middle East Africa was 39.1/25.7 billion US dollars. The compound growth rate in the past 10 years was -0.5%/+3.0%, of which the compound sales growth rate was +1.5%/+2.5%. The pattern of household appliances in the Middle East Africa and Latin America is scattered, and the market is basically occupied by foreign brands. In 2023, Haier's sales market share in the major appliances industry in the Middle East Africa and Latin America was 6.5% and 1.8%. Haier is gradually strengthening its production capacity, brand and channel layout in the Middle East Africa and Latin America, and announced the acquisition of the South African water heater brand Kwikot in 2024. As the scale of local household appliances continues to grow, Haier's forward revenue in the Middle East Africa and Latin America is estimated to be 5.1 billion and 6.9 billion, with room for 162% and 271% growth compared to 2023.

Overseas growth outlook: Capability first, broad space. Haier's overseas independent brand development path has gone through more than 20 years of exploration and development, and has accumulated rich experience and capabilities in many areas such as local operation, overseas team management, brand mergers and acquisitions integration, and global platform building. Based on global regional forecasts, Haier's overseas revenue is expected to reach 216.1 billion, with room for growth of about 60% compared to overseas revenue in 2023; on the profit side, Haier's overseas operating profit margin is expected to reach 8.9%, and the overseas forward profit outlook is expected to more than double.

Profit forecasting and valuation: After years of localized operation and brand mergers and acquisitions, the company has established leading competitiveness overseas, and there is still plenty of room for medium- to long-term growth. The company's projected net profit for 2024-2026 is 18.9/21.4/24 billion yuan (+14.0%/12.9%/12.3%). Through multi-angle valuation, a reasonable valuation of 34.76-38.10 yuan is expected, with a 13%-24% premium over the current stock price, maintaining a “superior to the market” rating.

Risk warning: Increased industry competition, sharp rise in raw material prices, overseas business operation risks, household appliance market demand falling short of expectations, risk of impairment of goodwill.