Midea Earnings: Solid Results Reflect Operating Efficiency and Market Leadership; Shares Undervalued

After fine-tuning our model, we keep narrow-moat Midea’s fair value estimate at CNY 86 per share following its in-line 2023 earnings. Midea’s 2023 net profit rose 14% year on year to CNY 33.7 billion. We continue to like its operating efficiency and leadership position in the industry. We believe Midea is currently undervalued, underpinned by a decent three-year net income compound annual growth rate of 8% for 2023-26. Given its stable growth profile and strong balance sheet, we think it is a good candidate for a defensive investment portfolio.