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Midea Group Co Ltd Class A 000333

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Stock XSHE Rating as of
CNY 68.24 +0.34 (0.50%)
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Company Report

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

Chokwai Lee

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.

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Price vs Fair Value

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000333 is trading at a 20% discount.
Price
CNY 68.39
Fair Value
CNY 46.00
Uncertainty
Medium
1-Star Price
CNY 665.60
5-Star Price
CNY 16.10
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Upgrade and replacement demand will continue to support sales of home appliances; and Midea should be a main beneficiary given its leading position in the industry.

Bears

China’s lackluster real estate sector will negatively affect demand for household appliances.

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News

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Trading Information

Previous Close Price
CNY 67.90
Day Range
CNY 67.13–68.56
52-Week Range
CNY 48.53–71.33
Bid/Ask
CNY 68.24 / CNY 68.27
Market Cap
CNY 475.75 Bil
Volume/Avg
22.0 Mil / 31.9 Mil

Key Statistics

Price/Earnings (Normalized)
13.63
Price/Sales
1.25
Dividend Yield (Trailing)
3.66%
Dividend Yield (Forward)
3.66%
Total Yield
3.66%

Company Profile

Midea Group Co., Ltd. is one of the largest household appliance manufacturers in China, producing air conditioners, refrigerators, washing machines and small household appliances. It is consistently ranked as one of the top three players in China by retail sales in most of the home appliance products. The firm is also involved in industrial automation systems through its 100% stake in Kuka, a leading global player in the industry based in Germany. Heating, ventilation, and air-conditioning, or HVAC, products accounted for 43% of Midea’s total revenue in 2023, followed by other consumer appliances (36%) and robotics and automation systems (9%). In addition, more than 40% of the group’s sales is ex-China.
Sector
Consumer Cyclical
Industry
Furnishings, Fixtures & Appliances
Stock Style Box
Large Core
Total Number of Employees
198,613
Website
http://www.midea.com

Competitors

Valuation

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Metric
000333
LII
JCI
Price/Earnings (Normalized)
 13.6325.1318.78
Price/Book Value
 2.9345.192.64
Price/Sales
 1.253.361.66
Price/Cash Flow
 11.7322.1415.18
Price/Earnings
000333
LII
JCI

Financial Strength

Metric
000333
LII
JCI
Quick Ratio
 0.560.610.63
Current Ratio
 1.121.430.97
Interest Coverage
 12.8715.227.36
Quick Ratio
000333
LII
JCI

Profitability

Metric
000333
LII
JCI
Return on Assets (Normalized)
 7.24%23.03%5.55%
Return on Equity (Normalized)
 21.67%442.69%14.71%
Return on Invested Capital (Normalized)
 12.34%37.71%9.63%
Return on Assets
000333
LII
JCI
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