China Home Appliance: To ride on a multi-year AC penetration up-cycle in Europe

Research evidence excerpt

China Home Appliance: To ride on a multi-year AC penetration up-cycle in Europe

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29 Jun 2026 09:50:00 ET │ 16 pages

China Home Appliance

To ride on a multi-year AC penetration up-cycle in Europe

CITI’S TAKE

We see the rising extreme-heat frequency as a structural driver in air-con

(AC) penetration up-cycle in Europe (where household penetration is

only ~20% vs. ~90% in the US/Japan). This presents an upside surprise for

Midea (which has European own-brand with local distribution) in 2Q-

3Q26E, further to the market’s low expectation on China biz (due to a high Xiaopo Wei, CFAAC

comp base). As YUM China has recently lost its appeal in cash return after +852-2501-2472

its PH brand acquisition (See Citi’s Jun 23 note: YUM China: Investor xiaopo.wei@citi.com

skepticism on acquisition of PH brand in China), we see Midea as the best

Vincent Young

cash return proxy among big-cap China consumer stocks. Our unchanged

+852-2501-2738

pecking order in the home appliance sector: Midea (Buy) > Haier vincent.young@citi.com

(Buy) > Gree (Buy). Midea is also one of our top picks in China Consumer

Discretionary sector (see Citi’s Jun 23 note: China Consumer – Key

conclusions from Citi Consumer Corp Day).

Midea: the best proxy for the European AC up-cycle — Per our estimates, Midea’s

HVAC sales in Europe amounted to ~Rmb20bn in 2025 (including ~Rmb10bn ToC

sales & ~Rmb10bn ToB sales), or ~4.4% of its group sales in 2025. Given widespread

heatwaves in Europe, its innovative PortaSplit products (which do not require bulky

window hoses and complex professional installation) have seen strong sales lately,

off a ~Rmb1bn annual sales base in 2025, in our estimate. Per management, on its

OBM market feedback, Midea pre-stocked 2-3x last year’s PortaSpilt vol ahead of the