Summary of Midea Group 3Q25 Conference Call Company Overview - **Company**: Midea Group (000333.SZ) - **Industry**: Home Appliances and HVAC Key Financial Performance - **3Q25 Results**: - Total revenue: Rmb112 billion, up +10% YoY - Net profit: Rmb12 billion, up +9% YoY - Revenue and net profit exceeded expectations by +2% and +6% respectively [1][7] - **Gross Profit Margin (GPM)**: Increased by 0.3 percentage points YoY to 26.7% - **Operating Profit Margin (OPM)**: Increased by 1.4 percentage points YoY to 10.6% [1][3] Business Segments Performance - **2C (Consumer) Business**: - Implied growth of ~10% in 3Q25, driven by resilience in overseas markets [2] - Domestic split AC, washing machines, and refrigerator shipments showed mixed results: -9%, +2%, and +5% YoY respectively [2] - **2B (Business Solutions)**: - Continued robust growth with double-digit percentage increases, particularly in intelligent building solutions [2] - Sales in energy solutions, industrial technology, and robotics grew by +21%, +25%, and +9% YoY respectively in 9M25 [2] Margin and Efficiency Insights - **Margin Improvement**: - GPM expansion primarily from the AC business due to pricing and product mix improvements [3] - OPM increase supported by efficiency gains, with a reduction in sales/admin expense ratio by 0.8 percentage points YoY [3] Cash Flow and Financial Health - **Operating Cash Flow**: - Generated Rmb20 billion in 3Q25, down from Rmb27 billion in 3Q24, attributed to support for distributors during DTC transformation [4] - **Balance Sheet**: - Maintains a healthy balance sheet with a high net cash position and strong cash flow generation to support CAPEX and shareholder returns [6] Investment Thesis - **Market Position**: - Midea is a leading player in China's HVAC and major appliances market, with rapid expansion into overseas markets and business solutions [8] - **Growth Drivers**: - Focus on intelligent building solutions as a significant long-term growth driver due to revenue opportunities and market consolidation potential [8] Valuation and Risks - **Price Target**: - 12-month target price of Rmb94 for A-shares and HK$101 for H-shares, based on a 16x exit multiple applied to 2027E EPS [9] - **Key Risks**: - Potential demand disruption in white goods due to weaker global macro conditions - Rising material costs impacting product margins - Execution risks related to premiumization strategy - Increased competition in the low-to-mid-end segment [10] Conclusion - Midea Group's strong performance in 3Q25, driven by both consumer and business segments, along with effective margin management and a solid balance sheet, positions the company favorably for future growth in the competitive home appliances and HVAC market.

Summary of Midea Group 2Q25 Conference Call Company Overview - **Company**: Midea Group (000333.SZ) - **Industry**: Home Appliances and HVAC Key Financial Results - **1H25 Performance**: Total revenue of Rmb252,331 million, net profit of Rmb26,014 million, representing a year-over-year growth of +16% and +25% respectively [1][6] - **2Q25 Performance**: Revenue and net profit growth of +11% and +15% year-over-year, respectively [1][7] - **Interim Dividend**: First interim dividend announced at Rmb0.5 per share, indicating a 15% payout ratio to interim EPS [1][6] Revenue Growth Drivers - **2B and Domestic 2C Growth**: Robust revenue growth driven by 2B (business solutions) and domestic 2C (consumer) segments, with 2B showing +21% growth in 1H25 [2][8] - **Regional Performance**: Domestic revenue grew by +14% and overseas by +18% in 1H25, with domestic growth supported by trade-in stimulus [2][8] - **Segment Performance**: Energy solutions and industrial technology sales grew by +29% and +24% year-over-year in 1H25 [2] Profitability Insights - **Gross Profit Margin (GPM)**: GPM declined by 1.0 percentage points to 26.2% in 2Q25, attributed to faster growth in the lower-margin 2B segment [3][7] - **Efficiency Gains**: Despite GPM decline, total profits grew faster than revenue due to efficiency improvements and contributions from other profit items [3] Cash Flow and Dividend Policy - **Cash Flow Generation**: Generated Rmb20 billion in net operating cash flows in 1H25, indicating strong cash flow generation capabilities [4][6] - **Dividend Policy Outlook**: The interim dividend is expected to normalize going forward as part of the company's strategy to enhance shareholder returns [6] Investment Thesis - **Market Position**: Midea is a leading player in China's HVAC and major appliances market, with expansion into overseas markets and business solutions [8] - **Growth Drivers**: Focus on intelligent building solutions as a long-term growth driver due to significant revenue opportunities [8] - **Valuation**: Target price set at Rmb92 for A-shares and HK$93 for H-shares, based on a 16X exit multiple applied to 2027E EPS [9] Risks - **Market Risks**: Potential risks include weaker global demand for white goods, rising material costs, execution risks in premiumization strategy, and increased competition in the low-to-mid-end segment [9] Conclusion - Midea Group demonstrates strong financial performance with robust growth in both domestic and overseas markets, supported by strategic investments in high-growth areas. The company maintains a positive outlook with a focus on enhancing shareholder returns through dividends and efficient operations.