UOB Kay Hian
April 30, 2025
Midea Group Posts Robust Q1 2025 Results, Accelerates Global Expansion and Announces Annto Spin-off
Midea Group Overview: Leading the Charge in Smart Home and Industrial Solutions
Midea Group Co., Ltd. stands as a technology-driven global powerhouse in smart home and commercial & industrial solutions. Its product portfolio spans a diverse range of home appliances for consumers as well as compressors, motors, commercial air conditioners, industrial robots, and supply chain solutions tailored for enterprise clients.
Stock Snapshot and Major Shareholders
- Sector: Consumer Discretionary
- Ticker: 000333 CH
- Shares Issued: 7,004.1 million
- Market Cap: RMB 564.8 billion (USD 77.7 billion)
- 3-Month Avg Daily Turnover: USD 383.3 million
- 52-Week High/Low: RMB 83.67 / RMB 58.90
- Major Shareholder: Midea Holding (31.01%)
- FY25 NAV/Share: RMB 30.56
- FY25 Net Cash/Share: RMB 14.06
Price as of report: RMB 74.20
Target Price (raised): RMB 111.90 (previously RMB 106.50)
Upside Potential: +50.8%
Q1 2025 Results: Strong Profit Growth Surpasses Expectations
- Revenue: RMB 128,428 million (+20.6% year-on-year)
- Gross Profit: RMB 33,121 million (+15.9% yoy)
- Gross Profit Margin: 25.8% (down 1.0ppt yoy)
- EBIT: RMB 12,815 million (+13.4% yoy)
- EBIT Margin: 10.0% (down 0.6ppt yoy)
- Attributable Net Profit: RMB 12,422 million (+38.0% yoy)
- Net Margin: 9.7% (up 1.2ppt yoy)
- Core Net Profit: RMB 12,750 million (+38.0% yoy)
- Core Net Margin: 9.9% (up 1.3ppt yoy)
Segment Performance Highlights
- Energy Solution & Industrial Technology: RMB 11.1 billion (+45% yoy)
- Intelligent Building Technology: RMB 9.9 billion (+20% yoy)
- Robotics & Automation: RMB 7.3 billion (+9% yoy)
Key Financials and Forecasts
| Year to 31 Dec (RMBm) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
373,710 |
409,084 |
450,145 |
492,207 |
536,734 |
| EBITDA |
42,785 |
45,706 |
49,005 |
53,755 |
59,132 |
| Operating Profit |
35,436 |
37,882 |
41,567 |
45,809 |
50,678 |
| Net Profit (Reported/Adjusted) |
33,720 |
38,537 |
43,928 |
47,923 |
52,540 |
| EPS (Fen) |
492.0 |
542.0 |
573.8 |
626.0 |
686.3 |
| PE (x) |
15.1 |
13.7 |
12.9 |
11.9 |
10.8 |
| P/B (x) |
3.2 |
2.6 |
2.4 |
2.3 |
2.1 |
| Dividend Yield (%) |
4.7 |
5.4 |
5.8 |
6.4 |
7.0 |
| Net Margin (%) |
9.0 |
9.4 |
9.8 |
9.7 |
9.8 |
| ROE (%) |
22.1 |
20.3 |
19.5 |
19.7 |
20.1 |
Global Expansion Initiatives and Segment Growth
- Smart Home Solutions: Revenue rose 17% yoy in Q1 2025, with retail sales of COLMO and TOSHIBA brands soaring by 55% yoy.
- International Expansion: Midea established a new APAC headquarters in Thailand and set up a Saudi centre, enhancing its global footprint.
- Robotics & Automation: KUKA China achieved order growth of over 35% yoy. KUKA also secured system integration projects in Europe (notably Spain and Slovakia), with total order value exceeding EUR 50 million.
Annto Supply Chain Technology Spin-off: Unlocking Value
- Midea proposes to spin off its subsidiary, Annto Supply Chain Technology, for a Hong Kong Exchange listing, with the issuance size not exceeding 20% of the enlarged share capital post-issuance.
- Annto, incubated by Midea, is an integrated and intelligent supply chain provider with a nationwide network of over 8 million sqm warehouse space in 130+ Chinese cities.
- 2024 performance: Revenue of RMB 18.7 billion (up 15% yoy), net profit of RMB 380 million (up 32% yoy).
- Midea currently holds 73% equity in Annto and will retain control post-spin-off.
Earnings Revision and Risks
- UOB Kay Hian raised 2025/26 earnings forecasts by 1% each, with revenue forecasts also up 1% for both years.
- Gross margin and selling/distribution expense ratios remain unchanged in estimates.
- Risks:
- Slower-than-expected overseas sales.
- Potential contagion from ongoing trade wars.
Valuation and Investment Recommendation
- Recommendation: Maintain BUY
- Target Price: Raised 5% to RMB 111.90
- Implied Valuation: 19.5x 2025F PE, 17.9x 2026F PE
- Current Valuation: 12.9x 2025F PE, 11.9x 2026F PE
Detailed Profit & Loss, Balance Sheet, and Cash Flow Analysis
| Year to 31 Dec (RMBm) |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
409,084 |
450,145 |
492,207 |
536,734 |
| EBITDA |
45,706 |
49,005 |
53,755 |
59,132 |
| EBIT |
37,882 |
41,567 |
45,809 |
50,678 |
| Pre-tax Profit |
46,690 |
53,221 |
58,061 |
63,655 |
| Net Profit |
38,537 |
43,928 |
47,923 |
52,540 |
| Operating Cash Flow |
60,512 |
41,283 |
45,374 |
50,324 |
| Net Cash Inflow/(Outflow) |
(4,692) |
7,448 |
10,217 |
13,714 |
| Ending Cash & Cash Equivalent |
140,410 |
147,858 |
158,075 |
171,790 |
| Shareholders’ Equity |
216,750 |
233,966 |
251,441 |
270,764 |
| Net Debt/(Cash) to Equity (%) |
(49.2) |
(45.5) |
(45.9) |
(46.9) |
| ROE (%) |
20.3 |
19.5 |
19.7 |
20.1 |
Profitability, Growth, and Leverage Metrics
- EBITDA Margin (%): 2024: 11.2, 2025F: 10.9, 2026F: 10.9, 2027F: 11.0
- Pre-tax Margin (%): 2024: 11.4, 2025F: 11.8, 2026F: 11.8, 2027F: 11.9
- Net Margin (%): 2024: 9.4, 2025F: 9.8, 2026F: 9.7, 2027F: 9.8
- ROA (%): 2024: 7.1, 2025F: 7.1, 2026F: 7.3, 2027F: 7.6
- Turnover Growth (%): 2024: 9.5, 2025F: 10.0, 2026F: 9.3, 2027F: 9.0
- EBITDA Growth (%): 2024: 6.8, 2025F: 7.2, 2026F: 9.7, 2027F: 10.0
- Pre-tax Profit Growth (%): 2024: 15.9, 2025F: 14.0, 2026F: 9.1, 2027F: 9.6
- Net Profit Growth (%): 2024: 14.3, 2025F: 14.0, 2026F: 9.1, 2027F: 9.6
- EPS Growth (%): 2024: 10.2, 2025F: 5.9, 2026F: 9.1, 2027F: 9.6
- Debt to Total Capital (%): 2024: 16.7, 2025F: 14.5, 2026F: 14.0, 2027F: 13.9
Conclusion: Midea Group Remains a Standout Growth Story
Midea Group’s outstanding Q1 2025 results, ongoing global expansion, and strategic spin-off of Annto Supply Chain Technology underscore its position as a leading innovator in both the smart home and industrial technology sectors. With robust earnings growth, a healthy balance sheet, and significant upside potential, Midea remains a compelling investment opportunity for investors seeking sustained growth and exposure to both domestic and international markets.
