China air-conditioner:Previewing the 2018cold year,what are industry experts saying?

Evet: we joied a coferece hosted by Chia IOL (a Chiese homeappliaces research agecy) ad iteracted with over 20idustry experts o2017-Sep-19。

    (1) Air coditioer volume growth i 2018cold year (CY),

    (2) lower-tier cities &e-commerce the growth drivers ad

    (3) the adoptio of ew refrigerat。

    Growth: Most coferece participats expect a growth i air coditioerretail volume for the 2018CY, after a extremely strog 2017CY. Havigsaid that, some believe the growth will be very mild at low sigle digit pptYoY while some expect low-tees ppt YoY growth (ote 2017CY growthwas c. 20% YoY, accordig to GFK). Nearly all participats we iterviewedsaid September is a critical momet to gauge 2018CY as distributors areplacig iitial orders.。

    Growth drivers: Lower tier cities ad e-commerce are widely cosidered asgrowth drivers. We also sese surgig demad for residetial cetral aircoditioers (maily 1+1).。

    New refrigerat: few doubt Chiese govermet’s covictio iimplemetig R410A or eve R290. But most feel puzzled due to the lackof the idustry stadard.。

    Valuatio ad risks。

    Our primary valuatio methodology is DCF, which captures the future cashflow of white goods compaies. We also use PE multiples as cross-checks.Upside risks iclude a recovery of the macro ecoomy ad property market.Dowside risks iclude a macro ecoomic slowdow, a weak property market,hikes i raw material prices ad fierce competitio.。