China’s scorching hot summer has sparked a surge in air-conditioner sales, leading to a market-beating rally for Hisense Home Appliances Group. The company, one of the largest air-conditioner manufacturers in China, has seen its stock appreciate nearly 150% in Hong Kong this year, boosting its market value to around US$4.4 billion. This impressive performance has outperformed the broader market and made Hisense a standout performer.
Heatwaves across China have contributed to a significant increase in air-conditioner sales, which soared 12% to 90.9 million units in the first half of the year compared to the same period last year. This growth has outpaced the 4% gain in the wider home-appliance market, according to data provider All View Cloud. As heatwaves continue to grip the country, analysts believe the upward trend in air-conditioner sales will persist, further benefiting companies like Hisense.
The scorching temperatures caused by the El Nino weather phenomenon have prompted households in mainland China to install more air-conditioning units or replace older ones. This trend has boosted the fortunes of Hisense and other major industry players such as Midea Group and Gree, who have also experienced positive stock performance this year.
Analysts believe that the hot summer climate and low inventory levels have created a booming domestic air-conditioner market this year. They predict that the robust sales momentum will continue, ultimately enhancing Hisense’s profitability. Hisense itself expects its net profit in the first half of the year to increase by at least 110% to approximately US$182 million.
Investors have taken notice of Hisense’s strong performance and favorable outlook. At least 46 mutual funds in mainland China have increased their stakes in Hisense shares listed in Shenzhen, propelling the stock into their top 10 holdings for the first time. The growing interest in Hisense is evident from the fact that all 12 analysts tracked by Bloomberg recommend a buy on the stock.
In addition to the weather-driven demand for air-conditioners, Beijing’s recent stimulus signals to the property sector could provide a further boost to the home-appliance industry. The relaxation of property policies in certain cities is expected to stimulate demand for household appliances.
As a leading air-conditioner manufacturer in China, Hisense has a solid foothold in the market. Its annual reports reveal that home ventilation and air-conditioners account for a significant portion of its sales. With the ongoing heatwaves and the positive market conditions, Hisense’s future looks bright.
In conclusion, the extreme heatwaves in China have led to a surge in air-conditioner sales, benefiting companies like Hisense Home Appliances Group. The company’s stock has experienced impressive growth, outperforming the broader market. With high temperatures persisting and demand for air-conditioners expected to rise, Hisense’s profitability is set to continue its upward trend. Furthermore, Beijing’s support for the property sector could provide an additional boost to the home-appliance industry. As investors show increasing interest in Hisense, the company’s outlook remains promising.
