Midea Group’s (000333) Third Quarterly Report Commentary: Performance Exceeds Expectations Further Incentives

Midea Group’s (000333) Third Quarterly Report Commentary: Performance Exceeds Expectations Further Incentives
The report reads the company’s total revenue in the first three quarters of 2217.7 trillion, ten years +6.9%, net profit attributable to mother 213.200 million, +19 a year.1%; of which Q3 single-quarter total revenue was 674.4 ‰, +5 for ten years.9%, net profit attributable to mother 61.3 ‰, +23 a year.5%.  Main points of investment: Air conditioner maintains good growth. The main business continues to perform steadily. The company’s main business of Q3 increased by 6%, mainly due to the good performance of the air conditioning business.Q3 Midea’s average offline price of air conditioners was -8%, with a share of +4.6pct, average e-commerce price -11%, share +7.1 point, volume and price performance are in line with expectations; overall benefit from product upgrades, ice washing, small household appliances business is expected to maintain steady growth, Zhongyi Kang statistics Q3 Midea refrigerator average price + 10%, Little Swan / Midea washing machine average price + 9%, + 7%; KUKA is still in the adjustment period, Q3 revenue decreased by 2%, and order cancellation 16.At 7%, the Shunde plant will be gradually put into operation, and integration in China will be promoted. It is expected that it will gradually stabilize and pick up.  Gross profit margin increased steadily and profitability continued to increase. Although air conditioners continued to reduce prices, the company’s Q3 gross profit 北京保健按摩 margin continued to increase by 0, relying on raw materials and exchange rate dividends.4pct. At the same time, thanks to the increase in scale and optimization of cost control, the cost rate during the period decreased by 0.2pct, in which the sales expense ratio increased slightly by 0.3pct, the increase rate narrowed compared with the first half of the year, the overlap rate and minority shareholders ‘profit and loss decreased (the minority shareholders’ equity of Little Swan consolidated), and the final net profit attributable to the parent reached 9 in Q3.1%, ten years +1.3pct; other current debt at the end of the reporting period was 4.19 million yuan, +3 from the previous quarter.400 million, the cost accrual is still sufficient.  Trial implementation of employee shareholding plans of subsidiaries, the incentive mechanism further enriches the company’s announcement that it will pilot multiple employee shareholding plans for subsidiaries that comply with the Group ‘s “dual intelligence” strategy or other key developments, including but not limited to artificial intelligence, chips, sensors, Precision control and drive, industrial simulation systems, big data, cloud computing and other emerging technology areas, the company’s multi-level, normalized incentive mechanism is becoming more and more abundant, which will be conducive to the cultivation of emerging businesses and accelerate the transition to a comprehensive technology group.  Investment suggestion: Continue to benefit from the gradual dividends of operations, and maintain a short-term view of increasing holdings. Thanks to its efficient operating efficiency and the industry’s “leading price reduction, small and medium brand price increases” logic, it is expected that the air-conditioning business will maintain good growth and product upgrades will also promoteIce washing, small household appliances grow steadily; in the medium and long term, based on the company’s excellent governance structure and incentive mechanism, channel efficiency continues to improve and KUKA business synergies and integration, we also remain optimistic about the company’s performance; the company’s Q3 performance exceeded expectations and was revised upAnnual profit forecast, EPS is expected to be 3 in 2019-2021.48, 3.93, 4.39 yuan (original 3.35, 3.80, 4.25 yuan), corresponding to PE15, 14, 12 times, maintaining an increase in holdings.  Risk warning: air conditioning competition is intensifying and expenses are higher than expected, and raw material growth is higher than expected