CITIC SEC: It is expected that in the second half of the year, opportunities in the home appliance industry will come more from industrial trends and the enterprises' own adjustment capabilities. We are optimistic about three main lines.

CITIC SEC released a research report stating that in the first half of 2026, the demand for China's home appliance industry will exhibit overall fluctuations. Domestic sales are affected by high base comparisons and weather conditions, while external sales face intensified differentiation due to external disturbances such as costs and exchange rates. It is expected that in Q2 and the first half of the year, leading companies will still demonstrate resilience. Looking forward to the second half of 2026, the opportunities in the industry are expected to come more from industrial trends and companies' own adjustment capabilities. There are three main lines to focus on: first, leading players in the black goods sector will continue to increase their market share through globalization and integration of overseas targets; second, leading white goods companies are accelerating their global capacity, channel, and brand layouts, opening up long-term growth potential; third, the demand for liquid cooling is entering a growth phase, and leading companies are likely to benefit first. The main viewpoints from CITIC SEC are as follows: Industry: Steady revenue growth with pressured profitability. This article analyzes the second-quarter performance of 16 overseas home appliance companies. According to the Q2 2026 financial reports published by these 16 companies, the overall revenue of overseas home appliance companies is estimated to have increased by 4.8% year-on-year, with small appliances and HVAC sectors growing by 10.3% and 7.5% respectively; meanwhile, the refrigeration/washing and lighting/water heater sectors declined by 1.7% and 2.7% year-on-year. Amid rising raw material and tariff costs, profitability remains volatile, with an overall gross margin down by 1.4 percentage points year-on-year. The gross margins for refrigeration/washing, HVAC, small appliances, and lighting/water heater sectors decreased by 5.8, 0.9, 0.2, and 0.4 percentage points year-on-year, respectively. Coupled with companies actively reducing costs and increasing efficiency, the overall net profit margin decreased by 1.3 percentage points year-on-year. Total inventory is down by 1.0% year-on-year but up by 3.3% quarter-on-quarter, with HVAC inventory increasing by 5.0% and 4.4% year-on-year and quarter-on-quarter respectively, aligning with the pace of commercial business expansion. In Q2 2026, North American commercial demand continues to exhibit high prosperity, with significant growth in data center orders. Johnson Controls and Trane Americas' orders increased by 37% and 43% year-on-year, respectively; Carrier's global commercial HVAC orders grew by approximately 65% year-on-year, and data center orders surged by over 300% year-on-year. Trane's building climate solutions saw a 15% year-on-year increase in organic revenue; Daikin Americas' application HVAC revenue rose by 29% year-on-year, supported by demand and capacity improvements in data centers. Overall, investment in North American data centers and infrastructure continues to drive project-based HVAC demand, with order growth notably outpacing revenue, and future delivery visibility is high. In Q2 2026, North American residential demand rebounded quarter-on-quarter but remained under pressure year-on-year, with varying performances among different companies. Carrier's North American residential and light commercial sales increased by 9% and 10% year-on-year, respectively; Trane's residential business revenue fell by 7% year-on-year, with sales down by 12%, but the decline has significantly narrowed from Q1's -21%. Daikin's North American residential business revenue rose by 12% year-on-year, with sales of residential ductless units up by 18%, mainly driven by channel expansion and market share gains. In larger appliances, the industry scale declined by approximately 3% year-on-year in Q2, with Whirlpool's North American revenue down by 1.5% year-on-year and Electrolux's organic revenue in North America down by 2.9% year-on-year. On the pricing front, Trane's price and structural contributions grew by about 3%; Whirlpool implemented price adjustments of over 10% in Q2 and further raised prices by about 4% in July; Electrolux adopted price hikes ranging from 5% to 20% in Q2, resulting in positive pricing contributions, with this round of price increases primarily aimed at offsetting tariff and raw material cost increases. In Q2 2026, European HVAC demand showed some improvement, and overall demand for major appliances remained stable. High temperatures and energy-efficient replacements supported residential HVAC, leading to high single-digit growth in Carrier's European residential and light commercial sales; Daikin's European light commercial sales and multi-split units grew by 7% and 9% year-on-year, respectively, with heat pump heating sales up by 7% year-on-year. In the major appliance sector, the European market size remained flat year-on-year, with Electrolux's organic revenue in Europe, the Middle East, Africa, and Asia Pacific increasing by 4.5% year-on-year, primarily due to improvements in sales, product mix, and market share. In Q2 2026, the Asia-Pacific demand remained robust, Latin America showed resilience, while the Middle East faced disruptions from geopolitical factors. Johnson Controls' Asia-Pacific revenue and orders grew by 15% and 12% year-on-year, respectively; Trane Technologies' Asia-Pacific revenue and orders increased by 10% and 31% year-on-year, respectively; Daikin's revenue in Asia and Oceania surged by 17% and 28% year-on-year, with India, Thailand, and Australia performing particularly well. In Latin America, Electrolux's organic revenue grew by 4.5% year-on-year, mainly driven by sales growth in Brazil; Whirlpool's revenue in Latin America increased by 7.8% year-on-year, but after excluding exchange rate effects, it was down by 1.7% year-on-year, as sales growth in Brazil could not fully offset pricing and structural disruptions. The Middle East, however, faced delays in projects, extended logistics cycles, and impacts from geopolitical issues, adversely affecting Trane's and Daikin's HVAC businesses. Risk Factors: Demand from Europe and the Third World is below expectations; fluctuations in tariff policies; downstream demand is weaker than expected; intensifying industry competition; significant volatility in raw material costs; distortion in data provided by third-party data providers.