China Home Appliance: Paid to wait, but the wait just got longer; downgrade Haier A/H to Neutral

J.P. Morgan argues that the recovery in China home appliances is proving slower, bumpier and less visible than expected. Recent industry data and distributor checks point to weaker-than-expected demand in both China (especially AC) and overseas (such as the US), with softer end demand feeding into channel destocking and lower company shipments; AVC data show the domestic retail decline widened to 13% in September from 9% in August. The broker cuts 2H26E/FY27E earnings for the Big 3 by roughly 10-16% on lower revenues, and now expects the Big 3's recurring net profits to decline 9% in 2H26 (previous: +9%) and rebound 7% in FY27. The sector's cash return, backed by strong balance sheets and management commitments, is unchanged, so the near-term framework should shift from recovery/growth to yield, earnings visibility and downside protection. Midea (OW, PT Rmb100) remains the preferred pick on more sustainable dividend policy, better earnings visibility and medium-term B2B optionality;