China home appliances:4Q17channel observations,washing machine and refrigerator upsides

Washing machine: sustainably strong

    QH’s washing machine domestic sales saw a major acceleration in 4Q17(vs.up c. 20% in 9M17), again driven by lower-tier cities and Casarte. QH’s 2018washing machine growth target implies a meaningful acceleration, echoing theaccelerating market share gain we witnessed by QH and Midea (Figure 9).

    Kitchen appliances: Tier 1cities more resilient, while Tier 3& 4accelerating

    Robam: we forecast 4Q17sales growth to be largely in line with DBe of 24%YoY. Although growth from Tier 1cities has slowed down since 2H17, wewitnessed some resilience in 4Q17(up high single-digit ppt YoY, similar to thatin 3Q17), while growth in Tier 3& 4cities could have accelerated in 4Q17.

    Channel and logistics: penetration into lower tier cities

    As suggested in our Singles’ Day channel checks, air con. e-commercecontinues to accelerate in 4Q17, while W&R and kitchen appliances’ hasdecelerated. More investments are now made in physical branded stores inTier 3& 4cities (leading to QH and Robam’s strong performance, in our view).