Haier Smart Home: 1Q26 Results In-Line; Sales Dragged by China and US, OPM Resilient
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Haier Smart Home reported 1Q26 revenue of RMB 74 billion and net profit of RMB 4.7 billion, representing year-over-year declines of 7% and 15% respectively. These results were broadly in line with UBS expectations. Performance was dragged down by persistent weakness in core markets, specifically China and the United States, alongside foreign exchange losses exceeding RMB 1 billion. Excluding the US market, which was heavily impacted by blizzards and tariffs, first-quarter operating profit actually grew by over 10% year-over-year.
In China, sales fell by a high single-digit percentage. Overseas sales declined 3% overall, with the US-based GEA brand experiencing a high single-digit drop in dollar terms due to weather-related shipment disruptions. Conversely, Europe and emerging markets demonstrated robust growth, highlighted by a 17% increase in South Asia and 12% growth in Southeast Asia.
Operating margin remained resilient year-over-year, supported by domestic cost-cutting initiatives and retail transformation efforts. Management expects continued pressure in 2Q26 from sluggish domestic demand and rising raw material costs, though foreign exchange losses should narrow sequentially.
UBS revised its 2026-2028 earnings forecasts downward by 8-9% and reduced its DCF-based target price from RMB 30.00 to RMB 26.30, reflecting an increased WACC assumption. UBS maintained its Buy rating, citing an attractive valuation of 13 times 2026 estimated earnings and a supportive 6% dividend yield.