Midea Group (000333): The performance is more certain than expected

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Midea Group (000333): The performance is more certain than expected
Investment thinking: appliance giants, full of certainty.”The only constant is change itself” is the philosophy of life.For the first time in the first quarter of 2019, the faster-than-expected performance growth proves that enterprises have strong stability and should enjoy a “certainty premium.”The company is ahead of its peers in terms of mechanism, management and execution (multi-level equity incentives deeply bind company shares with shareholders’ interests).We believe that 20-25xPER may be the center of long-term evaluation of Midea Group in the future, with a market value of 500 billion. 2019Q1 quarterly report analysis: performance growth exceeded expectations, profitability increased against the market: revenue: the company’s overall revenue reached 75.5 billion yuan, +7.5%.By business, according to third-party data and channel tracking, it is estimated that air conditioning revenue + 10-15% (mainly volume growth), refrigerator + 10-15%, washing machine + 8% (refer to Little Swan Q1), small appliances+ 0-5%, kitchen digits.By region, internal sales are expected to grow slightly faster than exports, with exports increasing by 5-10%; internal sales are positively affected by air-conditioning promotions and accelerated turnover, and overall growth is expected to be about 10-15%.In addition, the third and fourth tier growth is faster than the first and second tier, and the online is faster than offline, with e-commerce accounting for more than 35%.For KUKA, kukaQ1 earned 7.400 million euros, -1%, weak growth is mainly due to factors such as insufficient capacity and still in the integration period. Profit side: The company realized net profit attributable to mother 61.300 million, +16 per year.6%.Profit growth is significantly faster than income, and the expected range also maintains this trend.The average depreciation rate of RMB in Q1 2019 is around 7%, which has made a positive contribution to profits.Excluding foreign exchange factors, the growth rate of the main business is about 10%.Kuka is still in the integration phase. Through the gradual release of production capacity in the later period, profitability will improve, and Toshiba’s business has reversed losses to profitability.On the whole, the growth of the original main business is steady and upward, and KUKA and Toshiba are still in the integration period.Gross profit margin for the first quarter of 2019 was 28.4%, one year +2.7pct, net interest rate 8.7%, +0 per year.6 points.The improvement of profitability (at least benefit from improving the gross profit margin of external sales), mainly benefited from the company’s efficient turnover model, deepened the “T + 3” strategy, fully released the cost dividend, and allowed consumers to form positive feedback. Investment suggestion: The company ‘s operating guidance last year was to “pump up and sell expensive”, sku streamlined and promoted the high-end brand Colmo, and this year it also launched a “system sales” strategy and Internet brand Cuckoo.The brand matrix of Midea has been perfected. It is aimed at consumers at all levels. Through the deepening of retail transformation, the efficiency is continuously improved, and the growth path of the home appliance giant is still clear in the future.Maintain “Highly 成都桑拿网 Recommended-A” rating. Risk warning: KUKA Toshiba integration exceeds expectations, retail terminal demand exceeds expectations