Guolian Minsheng Securities: During the Spring Festival of the 26th year, the low base period led to double-digit growth in January air conditioner shipments.

Guolian Minsheng Securities released a research report stating that due to the impact of the Spring Festival peak season, air conditioner shipments in January 2026 saw a double-digit year-on-year growth; combined with the production growth rate in February calculated by the industry online, the cumulative decline in domestic and export sales in January and February compared to the fourth quarter of 2025 narrowed. Looking ahead, exports are expected to see a turning point as the base decreases, while domestic demand remains weak and stable amid rising costs. The outlook for the industry and prices can be moderately optimistic. Since the third quarter of 2025, leading export orders have been trending upward, OBM momentum is strong, production capacity layout is leading, and the repair phase is expected to outperform linear expectations. Guolian Minsheng Securities' main points are as follows: Industry online released air conditioner data for January In January 2026, air conditioner production was 19.93 million units, up 19.52% year-on-year, and sales were 19.85 million units, up 11.92% year-on-year. Domestic sales were 8.26 million units, up 14.53% year-on-year, while exports were 11.59 million units, up 10.13% year-on-year. End-of-period inventory was 14.89 million units, down 10.93% year-on-year. By manufacturer, Gree's sales increased by 2.67% year-on-year (domestic sales +1.67%, exports +4.17%); Midea increased by 21.75% year-on-year (domestic sales +47.50%, exports +6.51%); Haier increased by 2.12% year-on-year (domestic sales +35.92%, exports -38.37%); Hisense increased by 19.21% year-on-year (domestic sales +58.54%, exports +4.55%). Impact of the Spring Festival peak season, improvement in domestic sales month-on-month In January, domestic air conditioner shipments increased by 15% year-on-year. Considering the impact of the Spring Festival peak season in 2026 and 2025 on factory schedules, the month's domestic shipments' CAGR relative to comparable periods in 2024 and 2021 where applicable were +6% and +5%, respectively. Based on the industry's February production growth rate calculation, domestic sales in January and February are expected to decrease by 12% year-on-year, compared to 29% year-on-year decline in the fourth quarter of 2025. The decline is narrowing, and the actual growth rate of domestic sales in January is higher than previous production expectations. Retail end, the leading installation card for two years in January is CAGR positive, and the overall retail air conditioning sales increased by 13% year-on-year, in sync with shipments. In the upcoming months, domestic sales are expected to improve steadily, with a year-on-year growth of 9% in January and February 2025, and 3% and 4% year-on-year in March and April, respectively. Different pace among manufacturers, CR2 increased year-on-year In January, Midea/Gree/Haier's domestic air conditioner sales increased by 48%/2%/36% year-on-year respectively, while Hisense/Oaks increased by 59%/-42% year-on-year. Due to the Spring Festival peak season, factory data is influenced by schedule differences, and it is recommended to refer to cumulative data in January and February. In January, Midea's market share continued to increase year-on-year, with CR2 of domestic shipments increasing by 5.2%, and the trend continued for two consecutive months; Haier's momentum continued, with an increase in market share by 2.7% year-on-year in domestic shipments. Among the second-tier brands, Hisense performed well in January, while Oaks/TCL/Zhigao saw a decline in market share year-on-year. At the retail end, Gree's online retail sales share in January increased by 2.3% year-on-year, showing marginal improvement. The favorable trend of cost increases and weak stable demand concentration improvement suggests a moderately positive outlook for the industry in the year. Export base remains high, approaching a turning point In January, air conditioner exports increased by 10% year-on-year, compared to +17% in the same period of 2025. According to industry's February production calculation, air conditioner exports in January and February are expected to decrease by 7% year-on-year. In March and April, exports are expected to decrease by 7% and increase by 3% year-on-year, respectively. While the base remains high, the decline is narrowing, and a turning point is approaching. In the near term, there have been many twists and turns in US tariff justice expectations, but pressure may still ease, and the stimulus from US rate cuts is yet to be realized. The recovery trend in the washing and external markets has been gradually established. After digesting the base, air conditioners are expected to converge towards mid to high single-digit growth; leading export orders have been continuously recovering since the third quarter of 2025, OBM momentum is strong, and achieving strong recovery is expected to outperform linear expectations. Stocks Currently, valuation of white goods is at historical lows and high-quality, high-dividend stocks are recommended. Holdings in Midea Group Co., Ltd (000333.SZ,00300), HAIER SMARTHOME (600690.SH,06690), Hisense Home Appliances Group (000921.SZ,00921), and Gree Electric Appliances, Inc. of Zhuhai (000651.SZ). Risk warning Sharp rise in raw material costs, uncertainty regarding tariffs and external demand.