Midea Group(SZ:000333) Hua Er Jie Jian Wen·2025-09-05 06:23Core Viewpoint - Midea Group is providing a "safety cushion" for investors against market uncertainties through strong Q2 earnings and generous shareholder returns [1] Financial Performance - Midea's Q2 revenue and profit increased by 11% and 15% year-on-year, surpassing market consensus by 1% and 6% respectively [1] - The company raised its full-year sales growth target from "mid-to-high single digits" to "high single digits to double digits" based on strong first-half performance [1][8] - Q2 gross margin contracted by 1.5 percentage points, but net profit margin expanded by 0.8 percentage points due to a 1 percentage point reduction in SG&A expenses and a 1.3 percentage point increase in other income [3] Shareholder Returns - Midea announced an attractive shareholder return plan aiming for a total return rate of 6-7%, including a 15% interim dividend and a commitment to a 70% annual payout ratio [1] - The company also plans a stock buyback program totaling between 6.5 billion to 13 billion RMB by 2025 [1] Market Dynamics - Domestic sales growth accelerated from 10% in Q1 to 15% in Q2, driven by a hot summer and a favorable competitive landscape, with air conditioning sales up 25% [5] - In contrast, overseas sales growth sharply slowed from over 30% in Q1 to low single digits in Q2, attributed to preemptive inventory stocking and tariff fluctuations [6] Business Segmentation - Midea's industrial technology segment, contributing 26% to total sales, is emerging as a second growth engine, with Q2 sales up 16% year-on-year [7] - The industrial technology business includes smart building services (up 28%), new energy (up 15%), and robotics and automation (up 8%) [7] Analyst Ratings and Price Target - JPMorgan raised Midea's target price from 80 RMB to 82 RMB and maintained a "neutral" rating, citing the robust shareholder return plan as a strong support for the stock price [1][9] - The bank adjusted its earnings forecasts for 2025 and 2026 upwards by approximately 3% due to improved sales projections [8]