\u3000\u3000 Midea Group Co.Ltd(000333) Midea Group Co.Ltd(000333) )
Event: the company announced that it plans to use its own funds of 2.5-5 billion yuan to repurchase 3571471429000 shares at a price of no more than 70 yuan / share through centralized bidding. All the repurchased shares will be used to implement the company’s equity incentive plan or employee stock ownership plan.
Multi round purchase demonstrates long-term business confidence. In recent years, the company has launched several large repurchase plans: from July 2018 to January 2019, the company’s total repurchase amount was 4 billion yuan; From February 2019 to February 2020, the total repurchase amount was 3.2 billion yuan; From March 2020 to October 2020, the total repurchase amount was 2.7 billion yuan; In 2021, the total repurchase amount of the company was 13.66 billion yuan. The planned repurchase amount is the same as that in previous periods, and the shares reviewed will be used for equity incentive or employee stock ownership plan. The company’s perfect internal governance mechanism and sufficient incentive measures have always been the leading level in the industry. We believe that the company’s repeated share repurchase fully expresses the company’s confidence in its own long-term development, will fully stimulate the work enthusiasm of the management, further consolidate the company’s professional manager system, and realize the convergence of the company’s long-term operation and shareholders’ interests.
Stable operation and marginal improvement of profitability. According to the industry online data, in January 2022, the company’s domestic sales of air conditioners decreased by 2% year-on-year, and the domestic sales performance was better than that of peers; On the basis of the high of last year, the company’s export sales of air conditioners fell by 11.5% year-on-year. On the whole, after two years of rapid growth in export sales, the prosperity has declined; The company’s domestic sales operation is relatively stable. With the recovery of China’s consumer demand, the company’s domestic sales are expected to improve steadily. Affected by the continuous rise in raw material prices, the company’s gross and net profit margin declined in 2021. The company has actively responded to the disturbance of rising prices of raw materials by promoting new prices and channel transformation, and the profitability of the company has shown signs of month on month improvement. It is expected that with the stabilization of raw material prices, the profitability of the company will recover.
Profit forecast and investment suggestions. Under the interference of complex international factors in early 2022, the company’s short-term operation may be suppressed. However, in the long run, as the leader of the whole category of household appliances, the company has perfect governance mechanism, steady progress in high-end + globalization, and long-term development can be expected. It is estimated that the EPS from 2021 to 2023 will be 4.21/4.92/5.73 yuan respectively, maintaining the “buy” rating.
Risk warning: the price of raw materials may fluctuate sharply and the RMB exchange rate may fluctuate sharply.
