The Zhitong Finance App learned that Bank of America Securities released a research report stating that it will lower the target price of Hisense Home Appliances (00921) H shares by 4% to HK$23.4 to maintain a “neutral” rating; Hisense's home appliance export performance is still flexible, but the Chinese market is facing greater pressure. In view of declining revenue and increased cost inflation in the Chinese market, the bank lowered Hisense Home Appliances 2026 and 2027 forecasts by 9% and 9% respectively; lowered the target price of Hisense Home Appliances (000921.SZ) A shares by 3% to RMB 25.2. The valuation benchmark changed from 2026 to the 2026/27 average, and took into account the appreciation of RMB and the expansion of the A/H share premium.
The bank expects that Hisense Home Appliance's third-quarter revenue will decline due to weak revenue in China (further worsening from the low unit level in the second quarter), but this will be offset by relatively steady export growth (similar to double-digit growth in the second quarter). A less favorable product portfolio, lower ability to absorb cost pressure than peers, and meager profit margins all contribute to increased profit volatility.
The bank expects Hisense Home Appliance's profit decline in the third quarter to be close to 34% in the second quarter. Given the low base (its annual adjustments for wholesale raw materials to third parties have been fully included in the fourth quarter of 2025, but will return to normal levels in 2026), revenue and profit margins may have improved compared to the previous quarter. The bank reiterated its “neutral” rating for Hisense appliances because the company is more susceptible to real estate cycles and cost inflation than its peers, has lower profit margins and is more dependent on central air conditioning; this factor has already been reflected in the valuation.