Since the beginning of the year, the share price of Haier Smart Home Co.,Ltd. (600690) has shown a continuous downward trend. Why is the company's stock being sold off by the market? Could it have been unfairly punished?
Key Market Concerns: Revenue and Gross Margin Pressures
One area of concern is a perceived slowdown in the company's growth momentum.
In 2025, the company achieved operating revenue of 302.347 billion yuan, a year-on-year increase of 5.71%. Net profit attributable to shareholders was 19.553 billion yuan, up 4.39% year-on-year, while adjusted net profit was 18.604 billion yuan, an increase of 4.49%.
Breaking it down by product, in 2025, revenue from air conditioner products was 53.742 billion yuan, up 9.55% year-on-year. Refrigerator product revenue was 84.165 billion yuan, up 1.11%. Kitchen appliance revenue was 41.323 billion yuan, up 0.51%. Water appliance revenue was 17.474 billion yuan, up 10.94%. Washing machine product revenue grew by 3.10%. Revenue from equipment parts and channel integrated services was 38.893 billion yuan, an increase of 19.93%.
While the overall annual performance showed growth, on a quarterly basis, the company has experienced two consecutive quarters of declining revenue.
In the fourth quarter of 2025, operating revenue was 68.293 billion yuan, down 6.72% year-on-year. Net profit attributable to shareholders was 2.18 billion yuan, a significant decrease of 39.22%. Adjusted net profit was 1.711 billion yuan, down 45.14% year-on-year. In the first quarter of this year, Haier Smart Home Co.,Ltd. reported revenue of 73.687 billion yuan, a year-on-year decline of 6.86%, with net profit attributable to shareholders falling 15.22% to 4.652 billion yuan.
In 2025, the company continued to solidify its leading position in the Chinese market. Its core product categories maintained top industry share: offline refrigerator share reached 47.7%, washing machines 47.4%, and water heaters 32.5%, all holding leading positions.
In reality, the overall home appliance sector is under pressure. The increase in urbanization rate has been a key driver of demand growth for the home appliance industry. However, as economic growth has slowed, the period of rapid urbanization has largely concluded. The current annual increase in the urbanization rate has slowed to around 1%, leading to a continuous weakening of the marginal effect of traditional growth drivers. In 2025, the policy promoting the replacement of old home appliances continued, but its pulling effect gradually weakened. The residual impact of the policy still effectively supported market demand release in the first half of the year, but the policy's pull continued to diminish in the second half, resulting in an industry-wide trend of higher performance in the first half and lower in the second. According to AVC data, the total retail sales of all home appliance categories (excluding 3C products) in China in 2025 were 893.1 billion yuan, a year-on-year decrease of 4.3%; retail sales in the second half of the year were 421.4 billion yuan, down 16% year-on-year.
Another concern is the erosion of the company's gross profit margin.
Regarding its premium strategy, the company adheres to a high-end brand strategy, relying on global localized R&D and "listening-based innovation" to drive the continuous creation of hit products across global markets. Through original product technology, series iteration, experience center upgrades, and optimization of the TC service model, it promotes leadership in price index and brand influence. In 2025, revenue for the Casarte brand grew by double digits year-on-year, with its share in the high-end washing machine market reaching 75%.
However, despite the firm push for a mid-to-high-end strategy, the gross profit margin has been under pressure in recent years, showing a declining trend in the 2024 and 2025 annual reports and the first quarter 2026 report.
The company's gross profit margin for 2025 was 26.7%, down 1.1 percentage points from the same period in 2024. The company attributed this to sustained increases in bulk materials like copper in the domestic market during Q4 and accelerated declines in industry average prices due to intensifying domestic competition.
In fact, the current domestic home appliance market is characterized by high ownership rates and a massive installed base: research estimates suggest the total stock of home appliances in China exceeds 4 billion units, with an average of over 8 units per household. The industry has shifted from incremental expansion to a stage of intense competition within the existing market. Does this imply the company faces significant industry competitive pressure?
Is the Stock Undervalued? Dividend Attributes and Overseas Strategy as Counterweights
Currently, Haier Smart Home Co.,Ltd. trades at a trailing P/E ratio of around 10 times, with a P/E percentile of only 2.76%, far below the 90.59% percentile of the CSI 300. Against the backdrop of generally high market valuations, does the company's low valuation percentile highlight greater investment value?
Firstly, the company's dividend yield in recent years has not been low, averaging around 5%.
On April 14, the company stated that as a public company listed in A+H+D markets, it strictly complies with laws, regulations, and listing rules, maintaining an independent and sound corporate governance structure. Transactions between the company and Haier Group and its affiliates are all priced based on market principles, undergo strict review processes, and are disclosed in a timely and complete manner as required, with no actions harming the listed company or minority shareholders' interests. The development of the listed company relies on group support. Since 2009, Haier Group and its concert parties have increased their holdings in Haier Smart Home Co.,Ltd. multiple times, with the total increase exceeding 2 billion yuan, reflecting confidence in the company's long-term development potential. Haier Smart Home Co.,Ltd. is committed to safeguarding the interests of all shareholders. The company consistently returns value to investors through cash dividends and share buybacks. It has newly formulated a shareholder return plan for the next three years (2026-2028). According to the latest plan, the dividend payout ratio for 2026 will not be less than 58%; for 2027 and 2028, it will not be less than 60%. Concurrently, the company is implementing a buyback plan for its A-shares of not less than 3 billion yuan and not more than 6 billion yuan (with a repurchase price not exceeding 35 yuan per share), demonstrating confidence in its intrinsic value and sincerity towards shareholders through concrete actions.
In May 2026, the company had cumulatively repurchased over 18 million A-shares through centralized bidding, accounting for approximately 0.20% of its total share capital. The highest purchase price was 21.70 yuan per share, the lowest was 19.95 yuan per share, with a total payment of 392,163,438.80 yuan. From the start of this buyback implementation on March 27, 2026, to the end of May 2026, the company had cumulatively repurchased 49,442,500 shares, about 0.53% of total share capital. The highest purchase price was 22.40 yuan per share, the lowest was 19.95 yuan per share, with a total payment of 1,045,035,731.81 yuan.
Based on the above, it can be inferred that Haier Smart Home Co.,Ltd. may possess attributes of a dividend-paying asset.
Simultaneously, overseas expansion has become a new primary growth driver for the company. In 2025, Haier Smart Home Co.,Ltd. generated domestic revenue of 146.036 billion yuan, a year-on-year increase of 3.05%, while overseas revenue reached 154.545 billion yuan, growing 8.15% year-on-year. This indicates that overseas growth has already surpassed domestic market growth.
Research reports indicate that the penetration rate of major home appliances in regions like Southeast Asia is significantly lower than in China. Taking Southeast Asia as an example, its white goods penetration rate is still at the level China was at before 2010. Looking at the 2023 home appliance penetration rates in seven Southeast and South Asian countries, there is a substantial gap of 40 to 68 percentage points between the current penetration rates for air conditioners in countries like India (37%), Indonesia (12.5%), and the Philippines (21.7%) and their long-term potential.
The overseas journey of Haier Smart Home Co.,Ltd. is a model of "globalization of self-owned brands" for Chinese manufacturing. The company's strategic core is "self-owned brand creation and localized operation." Through a three-stage leap of "export → localization → global brand," it has ultimately built a global network covering R&D, manufacturing, branding, and channels.
The first stage involved creating its own brands, refusing OEM (1990s - 2010). The company formally launched its internationalization strategy in 1998, initially choosing emerging markets like Southeast Asia. In 1999, it established its first overseas industrial park in South Carolina, USA, achieving "localized production and localized sales," a crucial step in overseas manufacturing.
The second stage can be summarized as capital going global, using mergers and acquisitions to build a global brand portfolio (2011 - 2019). This involved strategic acquisitions to rapidly obtain top brands, core technologies, and channel networks in mature markets, completing its layout in major global markets.
In 2011, the company acquired the white goods businesses of Japan's Sanyo Electric (AQUA) in Southeast Asia and Japan, successfully entering the Japanese and Southeast Asian markets and gaining local channels. In 2012, it acquired over 90% of New Zealand's Fisher & Paykel, obtaining a premium kitchen appliance brand and technology, and gaining dominance in the Australia-New Zealand market. In 2016, it acquired the US home appliance business of General Electric (GEA) for approximately $5.58 billion, setting a record for the largest overseas acquisition in China's home appliance industry. This move instantly provided a premium North American brand, mature channels, and an R&D system, propelling the Haier group to the top market share position in North America. In 2019, it acquired Italy's Candy Group, strengthening its European market presence and entering markets like Eastern Europe through value-for-money brands.
Currently, the company focuses on globalized production capacity and deep localized operations. Building on globalized brands and channels, it deepens the integrated "R&D, manufacturing, marketing" localized operation model, enhances supply chain resilience, and prioritizes the development of high-growth emerging markets.
During the 2025 period, the company's overall overseas revenue achieved steady growth. Emerging regions experienced high-speed growth by introducing mid-to-high-end products locally, with the washing industry in Southeast Asia growing over 25%. The Japanese market saw revenue growth exceed 5% driven by new high-end heat pump products. In Europe, Candy turned a profit during the period due to product platform upgrades and improved management efficiency. In North America, strengthening localized production capacity and supply chain resilience helped increase market share. Market share steadily improved across global regions: In the Americas, according to AHAM data, GE washing machines held a 26.7% market share in the US in 2025, with large-capacity American-style front-loaders continuing to lead the market. In Europe, a multi-brand strategy helped navigate energy efficiency standard upgrades, raising overall share to 12.5%, ranking second; among these, French-style front-loaders entered the top three in the French market. In the Australia-New Zealand market, Haier washing machines broke through a 22% share, ranking first. In Asia, in Southeast Asia, market share in Vietnam reached 21.2%, ranking first; in Japan, the dual-brand market share was 17.7%, rising from third to second place; in Pakistan, Haier has maintained the top market share position for many consecutive years.
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