Domestic Subsidies Conducive to China Home Appliance Makers' 2024 Results; We Still Prefer Midea

China's National Development and Reform Commission shared the impact of government subsidies on home appliances on Nov. 19 and vowed to ramp up support. In particular, domestic home appliance and audiovisual equipment sales surged by 40% year on year in October, with 90% of home appliances sold being first-class energy-efficient. We believe that subsidies should drive material improvements in home appliance sales in the fourth quarter, and we've factored in mid- to high-single-digit 2024 domestic revenue growth for top manufacturers such as Midea and Haier. While we expect the government to extend subsidies in 2025, we keep our long-run forecasts unchanged amid uncertainty about their scale. We also think demand brought forward by current subsidies may compress subsequent sales. Hence, we maintain our fair value estimates on our China home appliance coverage. Our preferred name remains Midea as we like its product mix upgrade, effective cost optimization, and the 5% upside to our valuation.