Goldman Sachs remains bullish on Midea’s relative strength in the white-goods divergence cycle

Overview

This report reviews the 2025 performance of China’s leading white-appliance peers and looks ahead to demand, margins, shareholder returns, and company-level divergence from 1Q26 onward. Goldman Sachs notes that in 2025 the performance gap among the three covered leaders widened: Midea was broadly in line with expectations and outperformed the industry, Haier was below expectation, and Hisense was mixed. On the demand side, domestic replacement-policy support weakened at the margin after a high base, while overseas markets were relatively more resilient. On the return side, all three companies increased payout ratios, and Midea and Haier also launched share repurchase programs.

Core views

The core view is that in the near term, white appliances still face demand uncertainty, cost inflation, and regional volatility, but shareholder returns at the leading companies are improving and inter-company divergence will continue. Goldman Sachs expects 1Q26 covered-company revenue and net profit to be about -2% and -5% year-over-year, but better than 4Q25 on a quarter-over-quarter basis. Midea is seen as most likely to continue outperforming, benefiting from domestic share gains, overseas brand expansion, and newly emerging B2B business; Haier still has overseas and premiumization upside, but faces short-term pressure from the domestic and U.S. markets and costs; Hisense has structural growth in its VRF business, a strong Hisense-Hitachi joint venture, and potential 2026 EBIT turn to positive in three key components, but also faces real-estate, competition, and integration risks.

Analysis framework

The report uses a framework combining earnings replay, cross-company peer comparison, management call highlights, target price and EPS revisions, shareholder return calculations, and valuation multiple methodology. It focuses on comparing revenue growth, net profit growth, gross margin, operating margin, payout ratio, buyback programs, regional growth, and segment performance.

Methodology notes

• Valuation methodsExit P/E Discounting Method

  Apply a 2028e EPS to a target P/E multiple and discount at a 9.5% cost of equity back to 2027e to derive the 12-month target price.

  Midea uses a 16x exit multiple, Haier uses a 13x exit P/E, and Hisense uses 14x for the Hisense-Hitachi JV and 11x for traditional white goods on the 2028e P/E.

• factor analysisGS Factor Profile

  Compares stocks across growth, financial return, valuation multiples, and blended percentiles.

  Growth is based on forward sales, EBITDA, and EPS growth; financial return is based on ROE, ROCE, and CROCI; valuation multiples are based on P/E, P/B, P/D, EV/EBITDA, and EV/FCF metrics.

• M&A scoringM&A Rank

  Classifies covered companies into three tiers by likelihood of being acquired.

  Tier 1 indicates a high likelihood, tier 2 a medium likelihood, and tier 3 a low likelihood; if the score is 1 or 2, M&A risk may be embedded in the target price.

Asset mapping & comparison

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

• Midea Group A/H

  Core preferred name, Buy rating

  Strengths

  Domestic share gains, overseas growth, expanding B2B business, manufacturing and channel advantages, 7%-9% shareholder returns, and higher upside to target price.

  Weaknesses

  4Q25 net profit was down year-over-year, and it remains affected by M&A-related noise and cost inflation disruptions.

  Comparison

  2025 and 4Q25 revenue growth were clearly better than Haier and Hisense, with stronger earnings resilience.

  Risks

  Weakening global macro impacts on white-goods demand, rising commodity costs, execution risk on premiumization, and intensifying competition in mid-to-low segments.

• Haier Smart Home A/H

  Buy rating but below expectation in the near term

  Strengths

  Leading positions in refrigerators and washing machines, strong premium Casarte brand, room for overseas market share expansion, and improved dividends and buybacks.

  Weaknesses

  2025 results below expectations, with 4Q25 revenue and profits down sharply; domestic demand, U.S. competition, and cost pressure remain significant.

  Comparison

  Compared with Midea, 4Q25 growth and margin performance were weaker; however, valuation is below historical median, and there is re-rating potential if U.S. and European demand or margins improve.

  Risks

  Global white-goods demand below expectation, rising raw material costs, insufficient cost-saving realization, and Candy integration and synergy below expectations.

• Hisense Home Appliances Group A/H

  Buy rating with mixed operating performance

  Strengths

  Structural growth in VRF, strong Hisense-Hitachi JV, attractive dividend yield, and potential EBIT recovery in three-key components in 2026.

  Weaknesses

  2025 revenue and profit were down year-over-year, 4Q25 declines were large, and traditional white goods still need improvement.

  Comparison

  Shareholder returns and valuation are attractive, but growth visibility and progress in business integration still need monitoring.

  Risks

  White-goods demand below expectations, weaker property market dragging VRF demand, tougher domestic competition, margin dilution from deeper penetration of EPC channels, JV integration below expectations, and underperformance in traditional white goods.

Key data

• Midea 2025 revenue/net profitRmb458.5bn / Rmb43.9bnUp 12%/14% year-over-year; revenue basically met Goldman Sachs expectations, while net profit was about 1% below expectations.
• Midea 4Q25 revenue/net profitRmb93.8bn / Rmb6.1bnRevenue rose 6% year-over-year, while net profit fell 11% year-over-year; excluding M&A impact, profit was positive growth.
• Haier 2025 revenue/net profitRmb302.3bn / Rmb19.6bnUp 6%/4% year-over-year, but 3%/9% below Goldman Sachs estimates.
• Haier 4Q25 revenue/net profitRmb68.3bn / Rmb2.2bnYear-over-year down 7%/39% on a comparable basis, affected by weak domestic demand, U.S. competition, and cost pressure.
• Hisense 2025 revenue/net profitRmb87,928mn / Rmb3,187mnDown 5%/5% year-over-year, with revenue slightly below expectation and profit roughly in line.
• Hisense 4Q25 revenue/net profitRmb16,396mn / Rmb375mnDown 26%/32% year-over-year.
• Three-company average payout ratioabout 62%Up about 5 percentage points from the prior year average.
• 2025 dividend yieldabout 5%-7%Midea’s implied shareholder yield further reached 7%-9%.
• Goldman Sachs 1Q26 covered-company forecastRevenue/net profit YOY approx -2%/-5%Expected to improve quarter-over-quarter versus 4Q25 but still affected by demand and cost pressure.

Impact & implications

For investors, this means the white-appliances industry is not entering a broad recovery, but rather a more differentiated phase where execution, overseas expansion, cost pass-through, and shareholder returns matter more. Even in a demand-uncertain environment, Midea has maintained revenue growth and strengthened downside protection through high dividends and buybacks, making it relatively more attractive. Haier and Hisense remain constructive on a Buy basis, but near-term validation is still needed on domestic demand, the U.S. market, cost absorption, business integration, and margin recovery.

Risks

• Global macro weakness causing white-goods demand to miss expectations.
• Rising raw material and copper prices squeezing margins.
• Middle East conflict leading to order delays or cancellations and potentially affecting overseas demand.
• Tariffs, oil prices, and transportation cost increases affecting overseas profitability.
• Domestic replacement-policy stimulus on an aging goods cycle has weaker incremental impact, and a high base contributes to year-over-year pressure.
• Heightened competition in lower and mid-tier pricing segments that may impact product mix and margins.

What to watch

• Whether 1Q26 revenue and net profit improve month-over-month as expected.
• The pace of replacement-policy continuation, the benefit captured by offline channels, and the recovery trajectory in domestic demand.
• Whether overseas orders are increasingly affected by Middle East conflict, tariffs, and shipping costs.
• Whether rises in raw material costs can be offset through technology upgrades, product mix, and pricing.
• The sustainability of Midea’s B2B growth, overseas brand building, and smart-building solution progress.
• Whether Haier’s U.S. market in H2 improves due to a low base, and whether Europe and emerging markets can sustain growth.
• Whether Hisense can return to profit in three-key components in 2026 and whether integration efficiency improves in central air-conditioning and VRF.
• The execution pace of dividend and buyback programs.