Midea Group(SZ:000333)2024-05-05 02:00Investment Rating - The report maintains a "Buy" rating for Midea Group with an updated target price of RMB 93.24, indicating a potential upside of 33.6% from the current price of RMB 69.78 [1][2]. Core Insights - Midea Group has demonstrated strong performance in Q1 2024, with revenue and net profit both showing double-digit growth of 10.2% and 10.9% year-on-year, reaching RMB 106.5 billion and RMB 9 billion respectively. The gross margin improved by 3.2 percentage points to 27.3%, the highest since 2020 [1]. - The company's C-end business (smart home segment) saw an 11% increase in revenue, benefiting from product upgrades and high-end brand development. The overseas OBM (Own Brand Manufacturing) business also experienced significant growth, particularly in emerging markets [1][2]. - Despite the increase in gross margin, the company's expense ratio rose by 2.7 percentage points to 17.1%, primarily due to higher marketing and financial costs. Operating profit margin and net profit margin remained stable at 10.0% and 8.5% respectively [1]. Financial Summary - Revenue projections for Midea Group are expected to grow from RMB 373.7 billion in 2023 to RMB 409.3 billion in 2024, reflecting a year-on-year growth of 9.5%. Net profit is projected to increase from RMB 33.7 billion in 2023 to RMB 38.1 billion in 2024, with a growth rate of 13.4% [2][7]. - The report forecasts an increase in earnings per share (EPS) from RMB 4.93 in 2023 to RMB 5.59 in 2024, with a corresponding price-to-earnings (P/E) ratio of 12.5 for 2024 [2][7]. - The dividend yield is projected to rise from 4.4% in 2023 to 4.8% in 2024, indicating a positive outlook for shareholder returns [2][7].