The stock price keeps falling! Haier Smart Home, a dramatic change in performance

Does AI’s Low-Level Annual Report Errors Hint at Internal Management Lapses?

As the annual report season arrives, some companies with underwhelming performance are dropping sharply, showing the market a clear decline.

Recently, many listed companies’ annual reports have caused their stock prices to plummet dramatically.

The most typical example is Pop Mart. After releasing an underperforming 2025 financial report at noon on March 25, the stock plunged over 22% in the afternoon, and dropped another 10% the next day.

Since Pop Mart is traded in Hong Kong stocks without daily price limit restrictions, its declines are just relentless.

Annual Reports Released, Haier Smart Home Continues to Fall

On the A-share side, home appliance giant Haier Smart Home recently released its financial report, which also saw consecutive declines.

On March 26, Haier Smart Home announced its 2025 annual report: total revenue for the year exceeded 300 billion yuan for the first time, reaching 302.35B yuan, up 5.71% year-over-year; net profit attributable to shareholders was 19.55B yuan, up 4.39% year-over-year.

After the report was released, on March 27, Haier Smart Home fell 3.81%, and on the 30th and 31st, it declined another 2.88% and 0.97%, respectively.

On March 26, alongside the earnings announcement, Haier Smart Home also announced plans to buy back shares worth no less than 3 billion yuan and no more than 6 billion yuan, for employee stock ownership plans.

Since the buyback is not aimed at cancellation, it has sparked some controversy.

It is worth noting that Haier Smart Home’s annual report also contained some basic errors.

According to public reports, the 2025 annual report contained multiple fundamental mistakes that should not have occurred, specifically:

1. Signature page error: The signature appeared on the wrong page.

2. Mixed measurement units: Different units were used inconsistently, causing confusion.

3. Missing signature in the shareholder letter: The “Letter to Shareholders” section lacked the proper signature.

4. Unusual phrasing: The chairman used first-person narration multiple times in the “Letter to Shareholders,” which is uncommon in large listed company annual reports.

As a home appliance giant with a market value of 200 billion yuan, the presence of multiple basic errors in Haier Smart Home’s annual report suggests that the company seems to lack rigor in this critical information disclosure process.

In fact, before the financial report was released, Haier Smart Home had already fallen significantly. In March, its stock declined 16.81%, far behind the Shanghai Composite Index’s -6.51%, Shenzhen Component Index’s -7.02%, and ChiNext Index’s -3.79%.

In reality, Haier Smart Home’s net profit for 2025 hit a record high, and the annual cash dividend payout ratio increased to 55%, up 7% from 2024.

The company’s cash flow and debt ratio were also stable: in 2025, net operating cash flow was 26B yuan, down 1.20% year-over-year; the asset-liability ratio was 57.41%, the lowest since the end of 2016.

In terms of expenses, in 2025, Haier Smart Home’s selling expenses increased by 0.8% year-over-year, management expenses rose by 13.41%, while financial expenses decreased by 105.24% due to currency appreciation and increased exchange gains.

Performance Reversals in Q4, Rising Raw Material Costs

But these are only part of the fundamentals. Behind the sharp drop in Haier Smart Home’s stock price was a major turnaround in Q4 2025.

In the first three quarters of 2025, Haier Smart Home’s revenue was 234.05B yuan, up 9.98%; net profit attributable to shareholders was 17.37B yuan, up 14.68%.

In the traditional and highly competitive home appliance industry, achieving double-digit profit growth still looks decent.

However, in Q4, Haier Smart Home’s revenue fell to 68.29B yuan, down 6.72% year-over-year and 11.95% quarter-over-quarter; net profit attributable to shareholders was 2.18B yuan, down 39.15% year-over-year and 59.17% quarter-over-quarter; excluding non-recurring gains, net profit was 1.71B yuan, down 45.14% year-over-year and 67.03% quarter-over-quarter.

In Q4 2025, Haier Smart Home’s gross profit margin and net profit margin were 24.79% and 3.40%, respectively, down 3.09 and 3.51 percentage points from the previous quarter, with net profit margin less than half of the previous quarter.

Looking at Q4 2025 alone, revenue was the first decline since Q4 2021, but what’s even more striking is the 67.03% quarter-over-quarter drop in non-recurring net profit, losing two-thirds.

As a manufacturing company, rising raw material costs like non-ferrous metals in 2025 also impacted gross margins. In 2025, Haier Smart Home’s gross margin was 26.7%, down 1.1% from 2024. The company stated that the main reasons were the sustained increase in copper and other bulk materials in Q4, as well as industry-wide price declines driven by fierce domestic competition.

As a global company, Haier Smart Home’s overseas business in 2025 was also affected by regional protectionism, non-trade barriers, supply chain reconfiguration, and slow recovery of European appliance consumption.

To hedge against raw material price fluctuations, Haier Smart Home announced plans for commodity hedging. The specific scale involves contracts not exceeding 5.63 billion yuan, with a rolling 12-month validity period, using self-owned funds. The hedging products are limited to copper-related commodities.

Regarding copper prices, Shanghai copper futures surged 18% in Q4 2025, and again in January 2026, but fell over 4% in February and more than 7% in March. If copper prices continue to decline, it would be beneficial for Haier Smart Home.

The home appliance industry’s intense competition is well known; price wars are not sustainable long-term. Haier Smart Home recognizes that increasing R&D investment and moving toward high-end products is the way to break the deadlock.

Can a Focus on High-End Products Reverse the Downward Trend in Q1?

In its annual report, Haier Smart Home mentioned the word “high-end” 61 times. By the end of 2025, the company had accumulated over 112k patent applications worldwide, including more than 73k invention patents.

However, the financial report shows that R&D investment in 2025 decreased. The company spent 112k yuan on R&D, down 571 million yuan from the previous year.

In its high-end layout, the most famous brand is Casarte. In 2025, Casarte achieved double-digit revenue growth and continued to set records for high-end market share.

Casarte refrigerators in the over 15k yuan segment hold over 50% market share; washing machines over 10k yuan have an 84% share; air conditioners over 15k yuan account for 53%.

Casarte targets the high-end, premium market; the core Haier brand targets the mass market and is the company’s main revenue pillar; the Young-oriented Leader brand, with hit products like the “Lazy Three-Tube Washing Machine,” has driven brand revenue to over 10 billion yuan for the first time, a 30% increase, becoming a key growth driver for the company’s youth-oriented strategy.

From Haier Smart Home’s 2025 operational approach, the company emphasizes young consumers, shifting from traditional broad advertising to precise, efficient, user-centered marketing.

Haier Smart Home developed its own “Digital Marketing Large Model,” deeply integrating AI technology into the entire marketing process, enabling intelligent upgrades from user insights to content creation.

Overall, Haier Smart Home has many bright spots in its operations, but the significant decline in Q4 2025 performance still dragged down its stock price. Now that Q1 2026 has passed, whether the company can reverse the unfavorable Q4 trend will be answered in the upcoming quarterly report.

Author’s note: Personal opinions only, for reference.