Midea Group Co.Ltd(000333) (000333)
Conclusions and suggestions:
The demand for home appliances is still: (1) according to the current data of the real estate industry, from January to November 2021, the development investment increased by 6% year-on-year, the construction area increased by 6.3% year-on-year, and the completed area increased by 16.2% year-on-year. However, from the current policy level, with the “guaranteed delivery” The target and the marginal improvement of the capital policies for real estate enterprises and home buyers are expected to continue a good growth rate after completion, and the demand for home appliances in China is still increasing; (2) Recently, the state has introduced the policies of reducing reserve requirements and interest rates, as well as the strategy of expanding domestic demand, promoting the sustained recovery of consumption, and encouraging the renewal of rural household appliances, which are expected to boost the consumer demand for household appliances; (3) At present, there is a strong demand for dishwashers and new small household appliances. The company has many years of experience in dishwasher OEM and rich intelligent small household appliance product line, and has advantages in product structure. In conclusion, we expect that the income end of the company’s household appliances will still be worry free and will continue to grow steadily in the future.
The gross profit margin is ready for continuous improvement, Optimistic about the recovery of follow-up performance: (1) since May this year, the prices of main raw materials such as copper, glass, aluminum and plastics required for household appliances have gradually dropped from the high point, and the company’s Q3 single quarter comprehensive gross profit margin increased by 1.5 percentage points to 24.9% month on month (also increased by 0.1 percentage point year-on-year). Considering the measures of ensuring supply and price stability in China and the expectation of interest rate increase in the United States, it is expected that the price of raw materials will continue to fall and the gross profit margin of the company’s products will continue to improve; (2) the company continues to make efforts in the high-end line, such as Colmo’s revenue of more than 2.5 billion yuan in the first three quarters of this year (revenue of 1 billion yuan in 2020) is expected to reach 6 billion yuan next year. We expect that the continuous increase in the proportion of high-end product revenue will also improve the performance of comprehensive gross profit margin.
Profit forecast and investment suggestions: looking forward to the future, the consumer demand for household appliances is still, and the decline of raw materials and shipping costs will be conducive to the continuous recovery of the company’s profit margin. We expect the company to achieve net profits of 29 billion yuan and 31.76 billion yuan in 2021 and 2022 respectively, yoy + 4.9% and + 9.6%, EPS of 4.2 yuan and 4.6 yuan respectively, and P / E of 18x and 16x respectively. The company’s performance continues to recover. High proportion of dividends + large amount of share repurchase and cancellation are conducive to the embodiment of the company’s value. We maintain the investment proposal of “buy in”.
Risk improvement: the impact of the epidemic exceeded expectations; Sharp decline in demand; Rising prices of raw materials; Exchange rate fluctuation
