China Consumer Appliances: AUX Electric Call Takeaways – Optimistic on Overseas Growth for 2026
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UBS hosted a call with AUX Electric (2580.HK, unrated) management to discuss market dynamics and pricing strategies. The company projects low-single-digit revenue growth and declining profits for 2025. Looking ahead to 2026, AUX anticipates double-digit overseas sales growth, low-single-digit domestic sales growth, and double-digit profit expansion.
To counter rising raw material costs, AUX has raised domestic prices by 5-6% and overseas prices by 10%, comparable to moves by Midea. The company hedges 60-70% of its overseas copper consumption and actively manages FX exposure. Export sales declined in Q3 and Q4 2025 due to overseas customer destocking, and industry planned output may fall by double digits in Q1 2026. However, destocking pressures are easing.
For 2026, AUX plans to enter new markets including Japan, Indonesia, and Argentina, while expanding its domestic distribution network by 30%. The company will not self-fund subsidies, opting instead to drive volume through product upgrades and enhanced services like 10-year warranties.
UBS maintains a cautious stance on the Chinese home appliance sector, expecting a post-subsidy downturn from Q3 2025 through 2027. The firm forecasts weak domestic demand in the first half of 2026, potential stabilization in the second half, and a recovery in 2027. UBS expects average selling prices to remain generally stable in 2026, as product mix degradation risks are likely offset by industry-wide price increases.