White-Goods Sector Delivers Strong Q1 Performance; Midea Demonstrates Outstanding Growth and Profit Resilience

Overview

This report analyzes the Q1 2026 financial performance of China’s four largest white-goods manufacturers—Midea, Haier, Gree, and Hisense. Overall, most companies exceeded earnings expectations, with Midea demonstrating particularly strong revenue and profit growth. Despite cost pressures, many firms maintained stable margins through pricing adjustments and operational efficiency gains. Domestically, demand showed signs of improvement, while overseas demand softened due to front-loaded order fulfillment earlier in the year. Looking ahead, overseas growth is expected to rebound in Q2, though domestic markets face challenges from high year-ago comparables.

Core views

First, Q1 2026 results for the four leading white-goods companies broadly surpassed expectations. Year-on-year revenue and net profit growth for Midea, Haier, Gree, and Hisense were -1%/-2%, -7%/-15%, -21%/-10%, and -7%/-8%, respectively. Although most reported revenue declines, profit performance was relatively robust—especially for Midea, which achieved positive growth in both revenue and net profit, underscoring its strong growth resilience. Second, on profitability: despite rising raw material costs, most companies stabilized margins via pricing actions and improved operational efficiency. Midea’s margin performance was especially steady, with both gross and net margins holding flat year-on-year. Third, at the industry level, domestic demand improved during Q1, supported by extended trade subsidy policies and broader consumption recovery; overseas demand slowed due to concentrated order fulfillment in prior periods. Looking forward, the report expects overseas growth to recover in Q2, but domestic growth faces headwinds from tough year-ago comparisons—the upcoming 618 shopping festival will be a key indicator to watch.

Analysis framework

The firm first conducts a horizontal comparison of quarterly results across the four leading white-goods companies, focusing on revenue and profit growth trends and margin developments. By analyzing these data points, it identifies outperformers (e.g., Midea) and underperformers (e.g., Haier and Gree), and investigates underlying drivers. Second, it assesses how cost pressures impacted profitability, using historical data and forecasting models to gauge companies’ ability to respond through pricing and efficiency improvements. Finally, drawing on current industry trends and macroeconomic conditions, it projects future developments—including overseas market dynamics and domestic consumption recovery—to inform investment decisions.

Methodology notes

• Industry/sector analysis frameworkSupply-demand framework

  Assess company performance by analyzing upstream and downstream supply-demand relationships within the white-goods industry

  The firm evaluates corporate profitability and growth potential by analyzing changes in upstream raw material costs and downstream market demand in the white-goods sector.

• Corporate fundamentals and financial frameworkFree cash flow analysis

  Measure operating health based on changes in free cash flow

  The firm monitors changes in corporate free cash flow to assess capacity for production expansion, R&D investment, and long-term growth potential.

• Valuation methodologyDCF (Discounted Cash Flow)

  Estimate intrinsic value by forecasting future cash flows and discounting them to present value

  The firm applies a DCF model to value Midea, forecasting its future free cash flows and discounting them at an appropriate rate to derive the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Midea Group (000333.SZ / 0300.HK)

  As the industry leader in white-goods, benefits from improving domestic demand and overseas expansion

  Strengths

  Steady revenue and profit growth; resilient margins; rapid overseas business expansion

  Weaknesses

  High domestic base creates vulnerability to demand volatility

  Comparison

  Midea stands out most among peer white-goods companies in both growth and profitability

  Risks

  Intensifying overseas competition; raw material cost pressures

• Haier Smart Home (600690.SS / 6690.HK)

  Benefits from domestic market share gains and premium product positioning

  Strengths

  Strong domestic brand presence and diversified product portfolio

  Weaknesses

  Weak overseas demand and margin pressure

  Comparison

  Shows slightly better profit performance than Gree and Hisense

  Risks

  Sluggish growth in the U.S. market; channel expense control pressure

• Gree Electric (000651.SZ)

  Faces challenges from soft domestic demand and excessive reliance on overseas markets

  Strengths

  Technological leadership and brand strength in air conditioning

  Weaknesses

  Significant slowdown in revenue and profit growth; intensifying domestic competition

  Comparison

  Worst performer in growth and profitability among white-goods peers

  Risks

  Real estate market downturn impact; rising raw material costs

• Hisense Home Appliances (000921.SZ / 0921.HK)

  Benefits from VRF business growth and product mix optimization

  Strengths

  Technology advantage via Hisense-Hitachi joint venture

  Weaknesses

  Pressure from market concentration and channel penetration constraints

  Comparison

  Outperforms Gree and Haier on profit growth

  Risks

  Escalating competition; integration risks

Key data

• Midea Q1 2026 RevenueRMB 13.1581 billionUp 2.5% YoY, higher than 21% YoY growth in the same period last year
• Midea Q1 2026 Net ProfitRMB 12.675 billionUp 2.0% YoY, higher than 38% YoY growth in the same period last year
• Midea Q1 2026 Gross Margin25.8%Flat YoY
• Midea Q1 2026 Net Margin9.6%Essentially flat YoY
• Midea Q2 2026 Revenue Forecast+2% YoYExpected YoY growth of 2%
• Midea Q2 2026 Net Profit Forecast+0% YoYExpected YoY growth of 0%
• Haier Q1 2026 RevenueRMB 7.3687 billionDown 7% YoY
• Haier Q1 2026 Net ProfitRMB 4.652 billionDown 15% YoY
• Gree Q1 2026 RevenueRMB 3.3465 billionDown 21% YoY
• Gree Q1 2026 Net ProfitRMB 7.542 billionDown 26% YoY

Impact & implications

The report concludes that Midea demonstrates superior competitiveness and profitability within the white-goods sector. Its growth momentum stems not only from domestic market recovery but also from overseas expansion and emerging B2B businesses. Additionally, its shareholder return initiatives—such as share repurchase programs—enhance investor confidence. In contrast, Haier and Gree face greater challenges overseas, with mounting pressure on profit growth. Hisense, meanwhile, shows growth potential driven by its premium product portfolio and overseas positioning. Overall, after a Q1 recovery, the white-goods sector may confront diverging demand trends domestically and internationally; investors should closely monitor differentiated corporate strategies and cost-control capabilities.

Risks

• Negative impact of global macroeconomic weakness on white-goods demand
• Rising raw material costs eroding product profit margins
• Execution risk related to premium product strategy
• Intensified low-end competition compressing margins

What to watch

• Stimulative effect of the 618 promotional campaign on domestic demand
• Changes in overseas market demand and export order trends
• Effectiveness of corporate cost-control measures
• Overall white-goods sector margin levels