Core Viewpoint - Goldman Sachs has identified the "Ten Giants" of the Hong Kong stock market, which includes Tencent, Alibaba, BYD, Xiaomi, Meituan, Midea, NetEase, Ctrip, Anta, and Heng Rui Pharmaceutical, with a total market capitalization of approximately $1.6 trillion. Notably, Baidu and JD.com are excluded from this list [3]. Group 1: Market Overview - The global home appliance market is projected to reach a sales volume of 3.9 trillion RMB in 2024, with China, Europe, and North America accounting for 66.8% of the total sales [4]. - In 2023, Midea, Haier, and Gree's combined sales (excluding commercial) reached 670 billion RMB, representing 70% of China's home appliance sales, indicating a high market concentration [4]. Group 2: Business Segmentation - Midea has transitioned to a new business segmentation focusing on To C (Consumer) and To B (Business) models, with To C representing smart home products and To B covering commercial and industrial solutions [6]. - In 2023, Midea's smart home revenue was 246.35 billion RMB, accounting for 66% of total revenue, while commercial/industrial revenue was 104.5 billion RMB, making up 25.7% [7][9]. Group 3: Competitive Landscape - Midea's air conditioning sales have recently surpassed Gree's, with the "Gree-Midea ratio" dropping to 76.8% in the first half of 2024, indicating Midea's growing market share [12]. - Midea's decision to stop disclosing detailed smart home revenue may be strategic, aiming to avoid direct competition with Gree and to focus on broader business goals [14][16]. Group 4: International Expansion - Midea's overseas revenue has shown consistent growth, with a 7.7% annual increase from 2019 to 2024, resulting in a projected overseas revenue of 169 billion RMB in 2024, which is 41.5% of total revenue [18]. - In 2024, Midea's domestic and international gross profit margins are projected to be 26.2% and 26.8%, respectively, indicating a competitive edge in international markets [23]. Group 5: E-commerce Performance - Midea's online sales have stabilized at over 20% of total revenue, with online revenue reaching 856.2 billion RMB in 2024, reflecting a growing importance of e-commerce in its business model [26][31]. - The gross profit margin for online sales is significantly higher than that of offline sales, with online gross profit margin reaching 31% in 2024 compared to 25.2% for offline [29]. Group 6: Consumer Trends - The home appliance market in China is experiencing a consumption upgrade, with a shift towards higher quality and more advanced products, as consumers increasingly prioritize features and performance [34]. - Despite the high sales of air conditioners in China, the overall home appliance penetration remains low compared to developed markets, suggesting significant growth potential for companies like Midea [36].

Group 1 - Goldman Sachs has identified ten major Hong Kong stocks, referred to as the "Ten Giants," which include Tencent, Alibaba, BYD, Xiaomi, Meituan, Midea, NetEase, Ctrip, Anta, and Hansoh Pharmaceutical, with a total market capitalization of approximately $1.6 trillion [1] - Among the "Ten Giants," 50% are involved in manufacturing, highlighting a unique characteristic of the Chinese market, although BYD and Xiaomi are classified as technology stocks [2] - Midea's H-shares were issued at HKD 54.8, raising over HKD 35 billion, and saw a peak price of HKD 96.73, representing a 76.5% increase from the issue price [3] Group 2 - Midea's H-shares have not seen significant growth over the past year, closing at HKD 74.6 on June 20, 2025, with a market capitalization of approximately HKD 560 billion [4] - The average price-to-earnings ratio of the "Ten Giants" is around 16 times, while Midea's is below 14 times, indicating potential concerns among investors regarding its growth prospects [5] Group 3 - The global home appliance market is projected to reach CNY 3.9 trillion in 2024, with China, Europe, and North America accounting for 66.8% of total sales [6] - In 2023, Midea, Haier, and Gree collectively achieved sales of CNY 670 billion, representing 70% of China's home appliance sales, indicating a high market concentration [7] Group 4 - Midea's revenue structure is transitioning to a new classification of To C (consumer) and To B (business) segments, with To C comprising smart home products and To B covering commercial and industrial solutions [8] - In 2023, Midea's smart home revenue was CNY 246.35 billion, accounting for 66% of total revenue, while commercial/industrial revenue was CNY 104.5 billion, making up 25.7% [9] Group 5 - Midea's air conditioning segment has seen a shift in market leadership, with its sales surpassing Gree's in recent years, although Gree remains the leader in household air conditioning [10][13] - Midea's To B revenue from air conditioning is significant, with 30% of its revenue coming from this segment [13] Group 6 - Midea's international revenue has been growing, with overseas sales accounting for 41.5% of total revenue in 2024, reflecting a strong international presence [18] - The company has seen a steady increase in overseas revenue, with a 7.7% annual growth rate from 2019 to 2024 [18] Group 7 - Midea's online sales have stabilized at over 20% of total revenue, with online gross profit margins significantly higher than offline [26] - In 2024, online sales accounted for 21% of total revenue, with online gross profit margins reaching 31% compared to 25.2% for offline sales [26] Group 8 - The home appliance industry in China is experiencing a consumption upgrade, with increasing consumer demand for high-quality products [31] - The structure of home appliance sales in China differs significantly from that in Europe and North America, with air conditioning sales making up 40% of total sales in China [32] Group 9 - Midea is focusing on high-end products, international expansion, and online marketing strategies to drive growth [36] - The company is navigating challenges in its IoT and robotics divisions, indicating a strategic pivot towards core competencies [35]