Undoubtedly, in the domestic home appliance industry, especially in the field of white goods, Midea Group can be called the "dominant" position.

In terms of market value, as of the eve of the publication on May 7th, Midea Group's A-share market value reached 501.7 billion yuan, ranking first in the A-share home appliance sector.



In terms of performance, according to publicly available information on the official website, Midea Group ranked first in the industry with a total revenue of 373.7 billion yuan and a net profit of 33.72 billion yuan in 2023. Compared to the same period, Haier Smart Home had a revenue of 261.428 billion yuan and a net profit of 16.597 billion yuan; Alternatively, Gree Electric Appliances may have a total annual revenue of 205 billion yuan and a net profit of 29 billion yuan. Midea Group remains significantly ahead, especially as its revenue and net profit growth rate remain at the forefront.

According to the Frost Sullivan report, based on 2023 sales and revenue, "we are the world's largest home appliance company with a market share of 7.9% by sales.".

However, in this situation, according to the disclosure by the Hong Kong Stock Exchange on April 29, Midea Group submitted its listing application to the main board of the Hong Kong Stock Exchange, which is its second time submitting the application. The last time was on October 24, 2023, with an interval of less than a year. This demonstrates its determination to go public in Hong Kong. So, what are the considerations behind Midea Group?



Firstly, from the perspective of operating fundamentals, Midea Group has shown strong business momentum in the past three years, with revenue of RMB 343.36 billion, RMB 345.709 billion, and RMB 373.71 billion respectively from 2021 to 2023. During the same period, corresponding shareholder attributable profits were RMB 28.587 billion, RMB 29.553 billion, and RMB 33.722 billion, with net profit margins of 8.5%, 8.6%, and 9.0%, respectively.

Among them, the revenue in 2023 increased by 8% year-on-year, and the net profit increased by 14.1%. In terms of segmentation, its HVAC business revenue increased by 6.95% year-on-year, making it its largest business segment with a revenue share of 43.31%; Secondly, the consumer electronics sector saw a year-on-year growth of 7.51%.

According to Midea Group's annual report citing data from Ovi Cloud Network, Midea's products rank first in both online and offline market share in the domestic market in eight categories: household air conditioners, desktop pan microwaves, desktop electric ovens, electric heaters, electric fans, induction cookers, electric kettles, and air fryers.

Meanwhile, the revenue from the robotics, automation systems, and other manufacturing industries reached 37.257 billion yuan, a year-on-year increase of 24.49%, and the proportion of revenue increased to 10%., Especially as a world-renowned robot manufacturer, its subsidiary KUKA will benefit from the digital transformation of the global manufacturing industry, and its business has long-term growth potential.

In addition, on the evening of April 29th, Midea Group released its Q1 quarter report, indicating that it continues this growth trend. In the first quarter of this year, the actual operating revenue was 106.02 billion yuan, a year-on-year increase of 10.22%; Realized a net profit of 9 billion yuan, a year-on-year increase of 11.91%.

It can be seen that the current "giant" Midea Group is in a continuous "comprehensive flowering" and accelerating growth.

From the perspective of cash flow, Midea Group's year-end cash and cash equivalents balance from 2021 to 2023 were 40.55 billion, 51.132 billion, and 59.887 billion, respectively. At the end of Q1 2024, the balance of cash and cash equivalents was 62.656 billion yuan, ranking first in the industry with a cash flow of 1.99 yuan per share, which is sufficient to prove the adequacy of its cash flow.

Based on the above business fundamentals, it can be seen that it is not lacking in money. At the 2023 Midea Group shareholders meeting, Midea Group executives stated that the Hong Kong stock market listing is not for fundraising purposes, but "the fundamental reason is that the Hong Kong stock market has breakthrough, convenience, and speed." This facilitates its creation of new growth directions.

According to the prospectus, Midea Group's IPO in Hong Kong is intended to raise funds for global technology research and development, continuous construction of intelligent manufacturing systems, upgrading of supply chain management, improving global sales channels and networks, increasing overseas sales of its own brand, supplementing operating funds, and general corporate purposes.

In fact, at the performance briefing in May 2023, Midea Group President Fang Hongbo bluntly stated that the home appliance industry will experience an unprecedented winter in the next three years. On the one hand, the general environment has entered a stage of slow growth; on the other hand, the home appliance industry has long been the Red Sea market. In addition to the traditional three giants of home appliances, new forces such as the Internet are also constantly pouring in. And emphasize that the home appliance business has entered a stage of stock competition, with limited growth space, Midea Group must seek a second engine.

At the same time, in terms of industry gross profit margin, Midea Group, which ranks first in revenue scale, lags behind Haier Zhijia and Gree Electric Appliances in terms of sales gross profit margin.



In this way, increasing high-end intelligence and accelerating its entry into high-end markets both domestically and internationally has become the next important task for its home appliance business.

In fact, the discourse power of domestic home appliance enterprises in the global high-end market is increasing day by day. According to the "2023 China High end Home Appliance Market Report" recently released at the China High end Home Appliance Trends Forum, the contribution of China's high-end home appliance market has surpassed that of overseas markets. From January to October 2023, China accounted for 26.5% of the nine major home appliance and consumer electronics markets above $900 (excluding the North American market globally), while overseas markets accounted for 26.3%.

Lu Zhongyuan, former deputy director of the Development Research Center of the State Council, also stated at the meeting that the trend of high-end consumption has become more significant this year. The quality, variety, and design of home appliance products have rapidly improved, continuously meeting consumer upgrading needs and driving the rapid iteration of the home appliance industry chain.

In response, Midea Group stated that it will increase the proportion of high-end products in its layout next year and increase its focus on the commercial market.

In addition, the enterprise side business is the focus of Midea Group's search for incremental growth. It is reported that relying on the energy storage business of Kelu Electronics, Midea's commercial and industrial solution revenue has a compound growth rate of 15.4% from 2021 to 2023, and its total revenue proportion has increased from 21.4% in 2021 to 26.2% in 2023. It is expected that with the continuous development of energy storage markets in regions such as the United States, Asia, Africa, and South America, Kelu Electronics will add more incremental space. In addition, there is also the robot automation business mentioned above.