How did third-quarter results compare with expectations?

  • Haier Smart Home reported third-quarter 2026 revenue of 69.7 billion yuan and net profit of 4.7 billion yuan, down 10% and 12% year on year, respectively. The figures were 3% and 2% below Goldman Sachs’ estimates, respectively; the bank considered the overall results broadly in line with its expectations.
  • Despite the decline in net profit, operating profit was broadly flat year on year. Spending was kept under control, easing the impact of pressure on gross margin.

Where did the revenue pressure mainly come from?

  • Goldman Sachs estimates domestic revenue fell about 20% year on year in the third quarter, mainly weighed down by weak domestic demand. Among major large-appliance categories, air conditioners performed the worst and were the main drag.
  • US demand was also weak. Taking the renminbi’s appreciation against the US dollar into account, Goldman Sachs estimates the company’s US revenue fell by a mid-single-digit percentage year on year. The bank believes North American demand weakened again after a brief recovery in the second quarter.
  • Overseas markets outside the US maintained positive growth, led by emerging markets, followed by Europe.

With gross profit under pressure, why was operating profit still flat?

  • Third-quarter gross margin fell 0.81 percentage points year on year. The company disclosed that domestic gross margin was affected by rising costs, price competition and a deterioration in product mix, while overseas gross margin was boosted by US tariff refunds.
  • The company disclosed 1.5 billion yuan in non-recurring gains arising from changes in laws and regulations; Goldman Sachs estimates that most of this was tariff refunds. By the bank’s calculation, excluding this gain would widen the year-on-year decline in third-quarter gross margin by about another 2 percentage points.
  • The expense ratio fell 1.7 percentage points year on year, mainly due to lower selling and research and development expenses. Under Goldman Sachs’ measure of gross margin less the expense ratio, operating margin rose about 1 percentage point year on year, keeping operating profit broadly flat despite the decline in revenue.

Why does Goldman Sachs still rate the shares a buy?

  • Goldman Sachs maintained its buy ratings on Haier Smart Home’s A and H shares, citing the potential for domestic market-share gains, an improved product mix driven by premium brands such as Casarte, and overseas product and channel expansion. The bank expects the company’s growth in overseas markets to continue to outpace the industry.
  • Goldman Sachs believes a higher share of premium products and improved domestic operating efficiency will support margin expansion, and expects potential improvements in US and European demand and margins to drive a valuation re-rating. Its 12-month price targets for the A and H shares are 27 yuan and 28 Hong Kong dollars, respectively.
  • The main risks to this assessment include weaker-than-expected global demand for large appliances, rising raw-material costs, and smaller-than-expected savings in marketing and channel expenses.