Goldman Sachs China Consumer Durables 1Q26 Wrap: Overseas the Key Growth Driver Into 2Q; Competition and Cost Inflation the Key Focus; White Goods Leaders More Resilient
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Goldman Sachs reviews China's consumer durables sector following 1Q26 results, highlighting divergent performance across the industry. Overseas markets emerged as the critical growth engine heading into the second quarter, with first-quarter overseas revenue surging 15% year-over-year, substantially outpacing domestic growth. However, intensifying domestic competition and rising cost inflation remain the primary concerns for the coverage universe.
Domestically, air conditioner prices declined 3% year-over-year, pressuring industry profitability. Cost inflation, driven by higher copper and aluminum prices, disproportionately impacts smaller players. White goods leaders leveraged their scale advantages and hedging strategies to mitigate these pressures effectively. Midea and Haier posted 8-10% revenue growth and 12-15% net profit growth, outperforming peers. Conversely, Gree Electric saw flat revenue with only 5% net profit growth. The small appliance segment faced fierce price wars, with Supor's revenue declining 2%.
Looking ahead to 2Q26, Goldman expects overseas revenue to maintain 10-15% growth. Domestic air conditioner pricing may continue to soften, though the decline could narrow to 1-2%. A 5% RMB appreciation against the US dollar could erode export profits by 3-5%.
Goldman maintains a Buy rating on Midea with a target price of RMB 85 and on Haier with a target of RMB 32, while retaining a Neutral stance on Gree with a RMB 45 target. Key downside risks include softer domestic demand and further raw material price escalation.
Key exhibits
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
