According to our hypothesis, in 2025, Midea Group will become a trillion-level company.
Since January this year, Midea's stock price has been quite depressed. As an industry closely linked to the real estate boom, home appliance companies generally face headwinds in the capital market.
However, short-term pressures aside, as one of the representative companies of "Made in China", the market position of Midea Group is undergoing major changes.
Midea Group (000333. SZ) and Gree Electric (000651.SZ) are known as the "Made in China Double Male" and have been vying for the status of "King of White Goods" for years. Capital markets and large institutions have paid more attention to Gree for many years, and now their eyes are increasingly focused on midea.
There are two numbers that support this.
One is the change in the total number of shareholders, in the first half of 2021, the total number of common shareholders of Midea was 520,500, and the total number of common shareholders in the third quarter was 455,600. While there has been no major change in the total number of shares, the significant reduction in the total number of shareholders can be understood to some extent as a reflection of institutional entry. In particular, the shareholding ratio of "Hong Kong Securities Clearing Company Limited", which represents foreign capital, increased by nearly 2% from 16.89% in the first half of 2021 to 18.61% in the third quarter.
Another more obvious indication of the market's attitude is the price-earnings ratio, as of the close of March 28, the capital market gave Midea a price-earnings ratio of 13.62 times, and Gree Electric Appliances 7.76 times.
After the analysis of the Chinese edition of Barron's Weekly, It is believed that Midea has long ceased to be just a white goods leader, and its business sector has expanded to robots, building automation, etc., or that midea's industry layout in addition to ToC's home appliance field, while turning to ToB, the future ToB business will contribute considerable revenue to the United States.
1
From ToC to ToB
The most obvious sign of Midea's transformation of ToB is that on the last day of 2020, Midea re-planned its organizational structure and divided its business segments into five segments: smart home business group, industrial technology business group, building technology business unit, robotics and automation business unit and digital innovation business.
The smart home business group is based on the traditional home appliance industry in the United States, adding smart home appliances, smart home and related industries and ecological chains around it;
The business of the industrial technology business group is mainly for the manufacture of high-precision core components, such as motors, chips, industrial control, heat dissipation, etc., and currently has a number of world-renowned brands such as Meizhi, Welling, Meiren, Toshiba, Hekang, Nissier, Dongling and Gaochuang;
Building Technology Division, which mainly provides energy, HVAC, elevator, control and other products and complete solutions and services for buildings and public facilities;
The Robotics and Automation Division, which focuses on the factory of the future, provides solutions for industrial robots, logistics automation systems and transmission systems, as well as related solutions for medical, entertainment and new consumer fields, etc. The core strength of this business unit is KUKA, one of the top four robot companies in the world;
Digital innovation businesses include intelligent supply chains, industrial Internet, etc., as well as Wandong Medical, which will be acquired in 2021.
Among these business groups, except for the smart home business group, which is a ToC business, the other four are ToB businesses.
As we all know, the growth of the home appliance industry is heavily dependent on the real estate industry, and after the real estate has entered the so-called "black iron" era, the development of the home appliance sector will also be affected.
The adjustment of Midea's organizational structure means that in the new market environment, its expectations for the growth of the ToB business have increased.
In fact, Midea's layout of the ToB business has been for several years. As early as 2016, Midea established Meiyun Zhishu to provide digital manufacturing solutions; in 2017, Midea acquired KUKA; in 2018, it proposed the "new generation of man-machine" strategy and released the industrial Internet platform M.IoT; in 2020, Midea began to establish a global innovation park in Shanghai; in December 2020, Midea acquired Lingwang Elevator, forming an HVAC and Building Division on the basis of the original HVAC, and so on.
Although the traditional home appliance business is still an absolute long for Midea's revenue so far, at the end of the third quarter ended September 2021, Midea's ToB business accounted for 23% of the company's total revenue, an increase of 35% year-on-year. UBS expects its ToB business to contribute 26% of Midea's total revenue by 2024.
For the growth of the ToB business, Midea's management also has high hopes.
In the first three quarters of 2021, Midea's building technology department generated revenue of 14.4 billion yuan, an increase of 37.5% year-on-year, and is expected to achieve revenue of 20 billion yuan for the whole year. Midea's goal is that in the next five years, the annual revenue of the business will reach 100 billion yuan, and the five-year revenue will increase fivefold, which means that the building technology business unit will become the fastest growing division of midea. At the same time, Midea expects that in the next five years, the annual net profit of the building technology division will reach 10 billion yuan.
This figure means that the net profit of the Ministry of Science and Technology in the next five years will even reach less than one-third of the current annual profit of midea. As of the first three quarters of 2022, Midea Group's net profit was 23.693 billion yuan.
The industrial technology business group generated revenue of 14.8 billion yuan in the first three quarters of 2021, an increase of 138% year-on-year. Midea's management aims to achieve an annual output value of 100 billion yuan by 2025. In 2020, the output value of the Ministry of Industrial Technology is 30 billion yuan. The Robotics and Automation division, the main growth wants to be in KUKA.
In the first half of 2021, Midea's various businesses distributed profit margins
Image source: Midea Group earnings report
Midea's goal is to become a technology group, unlike pure technology companies, Midea's goal is to achieve a business model from product hardware sales to "solution + hardware + service + operation sales" and improve the synergy between various departments.
The latest positioning of Midea's competitor, Gree, is a diversified, technology-based global industrial group, and its business segments are mainly divided into two, one is a consumer goods sector based on the field of home appliances, and the other is an industrial equipment department that includes high-end equipment, precision molds, conductor devices, precision casting, basic materials, industrial energy storage, renewable resources, etc. However, at this time, Gree is in the throes of channel reform and corporate governance reform.
It can be said that at this point, the former "Made in China Double Male" has a different positioning and direction.
In the third quarter of 2021, Midea's revenue increased by 24.98% to 173.81 billion yuan. Net profit attributable to listed companies was 15.01 billion yuan, up 7.76% year-on-year, and non-net profit was 14.64 billion yuan, up 8.76% year-on-year.
Cash flow from operating activities was 20.176 billion yuan, an increase of 9.62% year-on-year, and total assets were 380.211 billion yuan, an increase of 5.5% year-on-year. As of the end of the third quarter of 2021, Midea's cash and cash equivalents were 6.662 billion yuan.
Below, the Chinese edition of Barron's will provide further analysis of Midea's various business units.
2
Smart home, towards the overall solution
The smart home business group based on the traditional home appliance business is still the main source of Midea's income, contributing about 70% of its revenue.
The business group can be divided into two levels, the first layer is consumer home appliances, and the second level is software promotion - data middle office, technology middle office support under the support of the Meiyun sales business platform, Internet of Things ecological IOT, industrial Internet of Things platform "Meiqing" platform.
Midea's chief information officer Zhang Xiaoyi told barron's Chinese edition that Midea's reform of the sector began as early as 2014, when the online channel of the home appliance market quickly eroded the market share of offline channels, and Midea realized that it must be reformed, and gradually explored a set of reform programs. It is now called, "One beauty, one system, one standard."
One of the reform directions of the United States is to promote the verticalization of channels. At present, more than 90% of Midea's offline monopoly system retailers can place orders directly from Midea's companies. At the same time, in order to improve the vertical efficiency of channels, Midea canceled dealer warehouses and established central warehouses in various places. All orders are placed from the central warehouse, for which a smart logistics department has been formed.
At the same time, Midea is also increasing cross-category deep collaboration at the terminal sales level, that is, "one Beauty" for users to ensure the consistency of user services and experience.
In terms of promoting smart home, Midea's IoT and Huawei Hongmeng have cooperated to promote the transformation of whole house intelligence and interconnection. As of June 2021, midea home appliances equipped with Huawei's Hongmeng system have reached 102 models.
So far, Midea's smart home business group has a number of well-known brands from the public to the high-end, including Toshiba, Midea, Comfee, Eureka, COLMO, Hualing, Beverly, Vantello, Little Swan, Cuckoo and so on.
Some of these brands have grown faster. In the first half of 2021, the operating income of Internet brand Cuckoo increased by 48% year-on-year, and the revenue scale of young brand Hualing approached 3.5 billion yuan, an increase of more than 150% year-on-year, which has surpassed the annual revenue of 2020.
Although, the "black iron" era of the real estate market has lowered people's perception of the home appliance industry. But in fact, in the first half of 2021, the retail scale of the domestic market of the home appliance industry increased by 13.1% year-on-year; the export of the home appliance industry increased by 35.8% year-on-year.
And with the impact of consumption upgrades, high-end home appliances have grown rapidly, such as the sales scale of floor washers in the first half of 2021 has reached 2.15 billion yuan, a year-on-year surge of 1336.1%; the domestic sales scale of integrated stoves has reached 10.1 billion yuan, an increase of 55.8% year-on-year, and the sales scale of clothes dryers is 2.74 billion yuan, an increase of 171.4% year-on-year.
UBS expects that although the slowdown in property completions may lead to a 4-6% decline in sales of major appliances in various categories in 2022, it can be offset by the potential acceleration in demand for renewal and increased penetration.
The Chinese edition of Barron's magazine believes that Midea, as a leading home appliance and has a full range of home appliance product lines, will benefit from the structural upgrading of home appliance consumption, and has a leading edge in building a smart home platform and providing integrated solutions to users. In view of this, Midea can maintain its market share and is even expected to increase, because the market will be more concentrated. At the same time, by streamlining channels and accelerating digitalization, Midea can improve operational efficiency, and it is expected that profit margins will be further improved.
However, Midea's large number of OEM products in the past, resulting in its poor market reputation and service needs to be improved, will partially drag down midea's expansion in the home appliance market, which will be a long-term problem.
In the first half of 2021, the revenue of the division was 183.2 billion yuan, assuming that the revenue in the fourth quarter was the average of the first three quarters, the revenue of the division for the whole year was 244.2 billion yuan. Since the division accounts for the absolute majority of the group's revenue and profit, the group's net profit margin of 9% is used as a reference for the net profit of the division, and the net profit of the department is calculated to be 16.488 billion yuan.
Among China's leading home appliance companies, the company whose main development direction is ToC business is Haier Zhijia (600690.SH) as of March 28, the company's price-to-earnings ratio of 16.45 times. It is assumed here that in the next five years, the price-earnings ratio of Midea's business can be equal to that of Haier Zhijia.
Referring to the average annual growth rate of China's home appliance industry of 13%, the profit margin of 9% of this part of the Midea business, and the current price-earnings ratio of 16.45 times of Haier Zhijia. The valuation of the division through 2025 is 589.478 billion yuan.
3
Growth leader, Building Technologies
At the recent Winter Olympics, the Building Technologies business group showed its strength. At this Winter Olympic Games, Midea Building Technology provided a complete overall solution for many venues and supporting buildings, including the Bird's Nest.
Midea Building Technology was formerly known as Midea Commercial Air Conditioning Equipment Co., Ltd., which was established in 1999, and its main products are central air conditioning. Up to now, the building technology division contains three levels, the first is the equipment level, mainly the central and elevator two single products, the second, known as the "Meikong smart building" building intelligent control platform. The third is the iBuilding digital platform built by the Building Science and Technology Research Institute.
So far, the central air conditioning market has been the main source of revenue and profit for the Building Technologies division, contributing about 85% of the segment's revenue. In the central air conditioning market, midea 's market share (Midea + CoolWind) increased from 7% in 2007 to 16% in the first half of 2021.
In 2020, Midea acquired Lingwang Elevator to expand its product layout. In November 2021, Midea Building Technology launched the elevator digital intelligence strategy.
The application scenarios of Midea's building technology will be mainly used in the following two areas:
First, rail transit. For example, Guangzhou Metro Line 21, Suzhou Metro Line 6, Shenzhen Metro Line 16, etc. use Midea's smart rail transit solutions. Taking Suzhou Metro Line 6 as an example, Midea Building Technology has created an ultra-efficient intelligent environmental control system solution for 31 stations across the line, which is expected to save an average of 9.3 million kWh per year, which is equivalent to reducing carbon dioxide emissions by 10,000 tons per year. In the first half of 2021, Midea's central air conditioning market share in the subway rail industry reached 35%.
Second, smart hospitals. Midea has created a "LIFE Flow" solution, focusing on four major medical scenarios, including outpatient emergency space, surgical technology space, inpatient ward and logistics command center.
Jing Sun, General Manager of Mekong Smart Building, is the Director of Smart Buildings and Digital Solutions at Johnson Controls China.
Johnson Controls is the world's leading company in construction equipment automation and the benchmark company of Midea Building Technology.
Midea Building Technology Research Institute was established in April 2021 with the goal of promoting digital transformation and technological innovation in the construction field, and Dean Meng Tao was formerly the R&D Director of Alibaba's Smart Building Business Unit. In January 2022, the Building Technologies Institute released the digital platform iBuilding. Although the current Internet platform companies such as Ali and Tencent are also doing building integration platforms, Midea's advantage lies in combining Midea's own professional experience in equipment manufacturing and building control to better grasp customer demands.
The future growth of the building technologies sector will mainly come from the development of the industry.
For example, although China's elevator industry has grown rapidly for more than 20 years, its per capita ownership is only 55.7 units per 10,000 people, which is significantly lower than that of developed countries. At the same time, unlike the domestic central air-conditioning market, Gree, Haier, and Hisense, which have accounted for 40% of the market share, the penetration rate of China's building automation system is only 30%, and it is still dominated by foreign brands - Johnson Controls, Honeywell, Siemens, Schneider Electric, etc.
In 2021, Meikong launched the building automation brand KONG, compared with foreign brands, Meikong's advantage lies in more localized software and system design for domestic customers, as well as more meticulous and timely after-sales operation and maintenance services.
Under the dual carbon target, the intelligent control of buildings will be further enhanced, and the requirements of information and data security will also give domestic brands an advantage.
As of the close of trading on March 28, Johnson Controls P/E ratio is 29.71 times. Assuming that the building automation division achieves an annual profit of 10 billion yuan for the company's management in 2025, the valuation of the division in 2025 is 297.1 billion yuan based on Johnson Controls' current price-to-earnings ratio.
4
Industrial technology, optimistic about new energy
Midea's industrial technology group started from air conditioning compressors, and this business group operates a number of brands, including Meizhi, Welling, Meiren, Toshiba, Hekang, Nichiel, Dongling and so on.
The development of the Industrial Technology Division epitomizes the huge supply chain management system of Midea, which is China's largest purchaser of bulk raw materials for electric motors, with an annual purchase volume of 10 million drive motors.
The most concerned business in the industrial technology group is midea's layout in the field of new energy vehicles, and in the field of new energy vehicles, Midea focuses on the three core system areas of automobiles, namely auxiliary/automatic driving systems, thermal management systems, and drive systems, aiming at the core components matrix of automobiles.
On February 16, Midea set up a new base for new energy vehicle parts in Anhui Province, with a total investment of 11 billion yuan, and its main products include electric compressors for energy vehicles, drive motors for new energy vehicles and electric power steering (EPS) motors. Midea is expected to form an annual output capacity of 60 million sets after completion of the project, achieving an annual output value of 40 billion yuan. In addition, according to the announcement, Midea plans to invest $1 billion in research and development of new energy auto parts in the next decade.
China is in a phase of rapid increase in the penetration rate of new energy vehicles, UBS expects China's new energy vehicle sales to be 5.5 million/6.2 million units in 2022/2023, corresponding to a penetration rate of 25%/27%, while the increased penetration rate of new energy vehicles is a positive catalyst for Chinese suppliers.
Midea recently set a target of 100 billion yuan for the industrial technology division to reach an output value of 100 billion yuan in 2025, and the output value of 2020 is 32.5 billion yuan.
Midea's expansion of industrial technology business around mechanical and electrical products can refer to the development path of Siemens. At present, the Siemens Group mainly includes three major parts, namely 4 industrial divisions (digital industry, intelligent infrastructure, transportation, Siemens health), Siemens financial services and investment companies. At present, the Digital Industry Division has become Siemens' largest source of revenue and profit.
As of March 28, Siemens' price-to-earnings ratio was about 17 times. In 2020, Siemens' net profit margin on sales was 7%. Taking this as a reference, assuming that Midea's output value is sales, Midea's industrial technology department will be valued at 119 billion yuan in 2025.
5
Robotics and automation, the value of KUKA has not yet been demonstrated
The Robotics and Automation Division is another of Midea's promising divisions. The division is in the spotlight because it has one of the world's most advanced robotics companies, KUKA. In 2017, Midea acquired KUKA, a company mainly engaged in the production of industrial robots, industrial automation and warehouse automation.
Founded in Germany in 1898, KUKA has developed into one of the world's four largest robot companies after more than 100 years.
In the third quarter, Midea's Robotics and Automation division revenue increased by 33.8%, which was explained in the financial report as a result of the growth in the business scale of its subsidiary, KUKA Group. The growth of the KUKA Group's business was mainly due to the recovery of the global economy, the increase in investment in industrial automation in downstream customers and the improvement of its own efficiency.
Some institutions say that this segment is the core of all of Mei's ToB businesses because of its high revenue share and weak profitability.
In the first three quarters of 2021, the revenue of the robotics and automation division was 18.4 billion yuan, accounting for 8% of the company's revenue, higher than the industrial technology division of 14.8 billion yuan and 6%, also higher than the 14.4 billion yuan and 6% of the building technology division, and significantly higher than the 5.9 billion yuan and 2% of the digital start-up business.
But so far, the robotics and automation sector has still not been profitable. In 2020, the segment generated revenue of 21.6 billion yuan and an operating profit loss of 1.1 billion yuan.
Institutional research shows that KUKA's main customers are European and American automobile companies. Since being acquired by the United States in 2017, the traditional automotive industry in Europe and the United States has not been in a recession, especially after 2020, it has faced negative effects such as the epidemic, the impact of new energy vehicles, and the shortage of automotive chips, and the revenue and profit of KUKA have declined from 2018 to 2020. After the acquisition of KUKA by Midea, part of the amortization expense was confirmed, resulting in the segment profit of Midea's robot business in 2017/2018/2019/2020 being -17.11/-4.43/-4.35/-1.127 billion yuan, respectively, so KUKA was not reflected in Midea's valuation.
Since 2021, as the global economy has picked up, KUKA's performance has improved, especially in China. Kuka China accounted for 17% of revenue in the first three quarters of 2021. Midea aims to increase this percentage to 30% by 2025.
In the first half of 2021, the number of new business opportunities in KUKA China increased by nearly 50% year-on-year, and the proportion of new customer orders increased to 15%. While maintaining its leading position in the automotive field, KUKA has greatly increased the proportion of orders and shipments in the electronics, machinery, arc welding and laser industries, and IN THE FIRST HALF OF THE YEAR, KUKA shipments increased by more than 80% year-on-year.
In November 2021, Midea announced its intention to fully acquire and privatize its controlled KUKA stake. On March 26, Midea announced that it will spend 150 million euros (about 1.049 billion yuan) to acquire the remaining shares of KUKA, and the purchase price has been evaluated. Upon completion of the acquisition, KUKA will become a wholly-owned overseas subsidiary of Midea and will be delisted from the Frankfurt Exchange.
The agency interprets this initiative as conducive to focusing on business operations and improving the collaboration and sharing of midea's internal resources in the field of robotics and automation business. At present, KUKA's Chinese R&D team has taken shape and has released six new products, accounting for nearly 10% of the overall orders in the first half of the year.
For the value of KUKA, some institutions have suggested that the use of KUKA in the United States cannot be ignored. KUKA was the first robot manufacturer in the world to bring sensitive and lightweight robots to the production floor and became the first manufacturer to cover everything from collaborative robots to mobile robots and industrial heavy robots. As of July 2021, Midea's robot usage density has exceeded 320 units per 10,000 people, and plans to achieve the target of 530 units per 10,000 people by 2023. The agency believes that the improvement in operational efficiency in the United States in recent years is due to the support of KUKA and will continue to be so in the future. KUKA's technology in Midea will be used in the future for external customers.
The agency expects that the profitability of the ToB business may converge towards the ToC business by 2024 as KUKA's profit margin improves.
From the perspective of the industry, the industrial robot business is developing rapidly in China, according to the statistics of Rui Industry (MIR), the size of China's industrial robot market in the first half of 2021 was 132320 units, an increase of 83.3% year-on-year. For the first time, China's robot density surpassed France's and increased to 187 units/10,000 people, but it is still lower than singapore, which is the first in the world, with a robot density of 918 units/10,000 people.
Considering the flexible demand of manufacturing, the exhaustion of the demographic dividend, the emergence of emerging markets, the development of innovative technologies and other factors, the application field of industrial robots will continue to expand.
In addition to KUKA, in early 2016, Midea acquired a 17.8% stake in 688165.SS, a Chinese industrial robot company. In January 2017, Midea acquired the Israeli company Tron Drive to further diversify its technology and product portfolio in motion control and automation solutions.
Taking the world's four largest robotics companies as a reference, KUKA's business is more similar to ABB's. The valuation of this business unit refers to ABB's current price-to-earnings ratio of 37 times.
Revenue increased by 25% in the first three quarters of 2021, and assuming that this growth can be maintained in the fourth quarter, the segment's revenue in 2021 will be 27 billion yuan. Given the rapid development of the robotics industry, it is assumed that the robotics and automation segment will maintain a 20% growth in revenue over the next four years and achieve a net profit margin of 9% for the ToC business. Then conservatively calculated, in 2025, the valuation of the sector is about 186.437 billion yuan.
6
Digital innovation business
The digital innovation business is mainly a variety of new businesses incubated and acquired by Midea in the process of transformation, including intelligent logistics companies Ande Zhilian and Wandong Medical.
In the first half of 2021, Midea's digital innovation business revenue totaled 5.9 billion yuan, up 63% year-on-year.
Among them, Ande Zhilian is the largest business unit. According to the announcement, in the first half of 2021, Ande Zhilian's revenue (including internal related party transactions) was 5.4 billion yuan and net profit was 35.43 million yuan.
As of the first half of the year, Ande Zhilian has established 140 urban logistics distribution centers across the country, which can cover more than 99% of the townships and towns in the country, the townships that can be delivered within 24 hours, accounting for 53% of the total number of townships and towns in the country, and the townships that can be delivered within 48 hours, accounting for 91% of the total number of townships in the country.
Ande Zhilian has served nearly 2,000+ enterprises in industries including home appliances, 3C electronics, and FMCG.
It is worth mentioning that this business unit is also the vanguard of the internal institutional innovation of the United States. Ande Zhilian, Meiyun Zhishu, Meizhi Optoelectronics, and Meizhi Zhongheng, all of which have been incubated by Midea, have implemented diversified employee stock ownership plans to enhance the incentive level of core executives. This model also reflects Midea's flexible mechanism and well-motivated professional manager management culture. Among them, the application for spin-off and listing of Meizhi Optoelectronics has been accepted by the Shenzhen Stock Exchange.
In the future, these sectors may be split off and listed separately, not included in the market value of Midea Group.
7
Another way of looking at beauty: some variables that can't be ignored
From the above analysis of the US business sector, it can be seen that the ToB transformation of the United States has entered a mature stage, and with more in-depth development, the ToB business will play a greater role.
However, for Midea's valuation research, we still need to pay attention to, but are not limited to the following issues:
1. Overseas markets. Midea is a Chinese manufacturing enterprise with a very extensive international business layout. So far, Midea has about 200 subsidiaries, 28 R&D centers and 32 major production bases around the world, employing about 160,000 people, including about 30,000 overseas employees, and settling 22 currencies.
From the perspective of revenue, overseas revenue accounts for more than 40% of its total revenue, and its products are exported to more than 200 countries and regions. In the first half of 2021, Midea's export business scaled about 73.96 billion yuan, an increase of about 19.6% year-on-year.
Midea's many product categories are one of the world's largest manufacturers or brands, and the leading production scale allows Midea to achieve efficiency and cost advantages in the global market that are difficult to replicate by competitors in overseas markets.
But from another point of view, more than 200 markets on the one hand means that it is difficult to manage companies, and on the other hand, it means that the United States is vulnerable to the impact of the international market, especially the impact of current geopolitical risks on the United States, which requires special attention.
2, can not escape the double carbon problem. As an energy-consuming home appliance company, the double-carbon problem is a topic that Midea cannot escape, and it can also be said that Midea needs to assume more double-carbon responsibility. Although Midea has taken many measures, such as issuing a green strategy to build a full-process green industrial chain around the six pillars of "green design, green procurement, green manufacturing, green logistics, green recycling, and green services"; establishing a health technology research institute. However, China's double carbon target is shorter and the task is heavier than that of Europe and the United States, and as a related enterprise, mid-term may need to take more measures in the future. Whether there will be an impact on performance, and how much of it will be, remains to be seen.
3. R&D. Midea wants to become a technology group, and the importance of research and development is self-evident.
In the past five years, Midea has invested nearly 45 billion yuan in research and development, and 11 countries, including China, have set up 28 research centers, gradually forming a "2+4+N" global R&D network and establishing R&D scale advantages. In China, the Global Innovation Center of Shunde Headquarters and the Shanghai Global Innovation Park are the core; Overseas R & D center, German R & D center, Japan R & D center, Milan design center, give play to the location of technical advantages, integrate global R & D resources, form a complementary advantages of regional technology R & D center, into the establishment of a global R & D layout. The United States has more than 16,000 R&D personnel and more than 500 foreign senior experts.
In the third quarter of 2021, Midea Group's R&D expenses increased by 30.51%.
One aspect of what sets tech companies apart from consumer companies is that industries can easily be reshaped by the advent of a disruptive technology. Midea needs to maintain a high investment in research and development to achieve continuous technological progress.
4. Capital market performance
Since its listing in 2013, midea's cumulative cash payment will be close to 58 billion yuan, and 4 billion yuan of share repurchases will be completed in 2018, and the company has launched a repurchase plan for three consecutive years since 2019, which will continue to be used to implement the company's equity incentive plan and/or employee stock ownership plan. As of December 31, 2021, the repurchase amount implemented for the year has exceeded 13.6 billion yuan.
Midea's announcement said that as of March 25, 2022, Midea repurchased about 8.4742 million shares, and the total amount paid was about 486 million yuan.
Midea's performance in 2021 was weaker than the CSI 300 Index (-24% vs-5%), reflecting its downside risk to earnings in the downward cycle of real estate.
With midea's expansion into the ToB business, it is expected to be better able to withstand the downward cycle of real estate.
On March 5, CICC maintained its outperformance industry rating and target price of 89.90. Earlier, UBS Securities gave Midea a price target of $102 with a buy rating.
The Chinese edition of Barron's magazine predicts midea's estimates from a longer-term perspective, and based on the above analysis, it adopts a segment valuation method, and by 2025, Midea's market value will reach 1,192.015 billion yuan, becoming a trillion-level company. Assuming that the total share capital remains unchanged, it is still 6.994 billion, and the corresponding stock price is 170.42 yuan.
As of the close of trading on March 28, Midea closed at 55.8 yuan, with a market value of 390.29 billion yuan.
Wen | Barron's Chinese edition of the Market Value Research Center Wu Haishan
Editor| Kangjuan
(Yingfang Huang also contributed to this article)
Copyright Notice:
Original barronschina articles, not reproduced without permission.
(This article is for your informational purposes only and does not constitute the provision or reliance of investment, accounting, legal or tax advice.) ）
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