\u3000\u3000 Midea Group Co.Ltd(000333) Midea Group Co.Ltd(000333) )
Key points of investment review history, Midea’s acquisition of KUKA is gradual
1) Midea purchased 5.4% of KUKA’s equity in 2015, and held kuka94.5% of KUKA in 2017 for a consideration of 29.2 billion yuan 55% equity. In November 2021, the company announced that it plans to acquire the remaining 5.45% equity of KUKA. After the transaction is completed, KUKA will become a wholly-owned subsidiary of Midea overseas, and KUKA will withdraw from the Frankfurt Stock Exchange. 2) On March 25, the company announced that it would acquire the remaining 5.45% equity of KUKA with 80.77 euros per share and a total price of 150 million euros (equivalent to about 1.05 billion yuan). The company will consider matters related to this merger and acquisition at the general meeting of shareholders in May 22.
Comprehensive privatization will increase the proportion of revenue in China, which will be conducive to thickening the company’s performance in the long run
1) the company’s comprehensive merger and acquisition of KUKA will help to strengthen business coordination and increase localization rate. After the full privatization of KUKA, the company will further strengthen the internal resource coordination between KUKA and other b-end businesses such as Israeli Gaochuang, so as to improve the automation rate of the company’s operation. KUKA will increase its investment in business in China. It is estimated that KUKA’s revenue in China will account for 30% in 2025. After KUKA’s delisting in Frankfurt Stock Exchange, it will no longer have any financing needs, and more energy and funds will be used for new product research and development. 2) KUKA achieved revenue of 18.4 billion yuan (including Swisslog) in the first three quarters of 2021, a year-on-year increase of + 25%. KUKA will turn losses into profits in 2021. It is estimated that the net interest and pre tax interest rate in 2021 will be 2%. With the improvement of KUKA’s localization rate and the reduction of its dependence on German imports, we expect KUKA’s profitability to be further optimized. In the long run, Midea’s incorporation into KUKA is expected to increase the company’s performance to a certain extent.
Profit forecast and valuation
Midea Group Co.Ltd(000333) is a global white power giant. With the increasing proportion of OBM in overseas business and the further improvement of channel efficiency in China, we think there is still room for further release of the profits of the company’s white power business Midea Group Co.Ltd(000333) through the advantages of the original deep cultivation of household appliances and the spillover of digital basic industries, the b-end business contributes a new growth point to Midea Group Co.Ltd(000333) contribution. We expect the company’s revenue to be 330.3/363.2/396.6 billion yuan in 21-23 years, with a corresponding growth rate of 16.20% / 9.96% / 9.22% respectively; The net profit attributable to the parent company was 28.7/316/35.6 billion yuan respectively, the corresponding growth rate was 5.48% / 9.90% / 12.95% respectively, and the corresponding EPS was 4.11/4.51/5.10 yuan respectively.
Risk tips
The price of raw materials rises; Intensified market competition; Downstream demand was lower than expected.
