Midea Group: Overseas and enterprise-end businesses offset sector headwinds; growth expected to accelerate in 2H

Overview

The report believes Midea Group is a high-quality name in China's home appliance industry that balances growth and shareholder returns. Although the high base effect from the trade-in policy may lead to a YoY decline in domestic consumer business sales in 2Q26, overseas business and enterprise-end businesses constitute differentiated growth engines. As comparison bases in domestic and overseas consumer markets decline, high temperatures in Europe stimulate demand, and the cost environment improves, the company's revenue and earnings growth are expected to accelerate in 2H26.

Core views

Midea's dual-engine strategy across consumer-end and enterprise-end businesses, globalization footprint, transition to overseas self-owned brands, channel expansion, and localization capabilities make it more resilient in growth than major peers. Building technology and robotics and automation capabilities are expected to support long-term growth, while management's emphasis on shareholder returns also supports valuation. Nomura keeps its FY2026-2028 revenue and earnings forecasts unchanged and believes the company should enjoy a valuation premium.

Analysis framework

The report uses fundamental analysis by business and region to assess the growth contributions of the domestic consumer business, overseas business, and enterprise-end businesses. It also incorporates comparison bases, weather-driven demand, raw material costs, expense control, and potential investment income to judge the earnings trend in 2H. For valuation, it uses a next-12-month P/E method, referencing historical average valuation and the CSI 300 Index.

Methodology notes

• Valuation methodsNext-12-month P/E method

  Target P/E valuation

  Based on FY2026 earnings forecasts, a 16.0x next-12-month target P/E is applied, corresponding to a target price of CNY 98.50; this multiple is about one standard deviation above the historical average.

• Fundamental analysisBusiness-segment growth driver analysis

  Dual-engine growth from consumer-end and enterprise-end businesses

  The domestic consumer business, overseas business, and enterprise-end businesses are analyzed separately to determine each business's contribution to revenue growth, counter-cyclical resilience, and long-term competitiveness.

• Earnings analysisMargin driver analysis

  Cost and expense improvements

  Operating margin trends are assessed based on changes in raw material prices and the company's cost control. Investment income from ChangXin Memory Technologies is treated as a potential additional upside factor rather than part of the base forecast.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Midea Group（000333.SS）

  Core recommended stock, Buy rating maintained

  Strengths

  Dual-engine growth from consumer-end and enterprise-end businesses, leading overseas footprint, faster transition to self-owned brands, diversified businesses, strict cost control, and emphasis on shareholder returns.

  Weaknesses

  The domestic consumer business is still affected by weak demand and the high base from the trade-in policy, with short-term growth relying on overseas and enterprise-end businesses to offset pressure.

  Comparison

  Compared with major home appliance peers, Midea's overseas business, enterprise-end businesses, and globalization capabilities are more prominent, and its growth sources are more diversified. Therefore, the report believes it should enjoy a valuation premium.

  Risks

  Rising commodity prices, intensified price competition, and further macroeconomic deterioration.

• ChangXin Memory Technologies（688825CH）

  Midea Group's investment target and potential source of investment income

  Strengths

  If investment gains are realized, they could boost Midea Group's profit and enhance shareholder returns.

  Weaknesses

  There is uncertainty regarding the timing and amount of gain realization.

  Comparison

  This investment income is a potential upside factor outside core operations.

  Risks

  Investment gains may not be realized, or asset value may fluctuate.

• CSI 300 Index

  Benchmark index for stock rating and relative performance

  Strengths

  Used to measure Midea Group's relative performance over the next 12 months.

  Weaknesses

  The index itself cannot reflect all of the company's operating risks.

  Comparison

  Midea Group achieved positive excess performance of 7.6 percentage points versus the CSI 300 Index over the past 12 months.

  Risks

  Overall market and macro trends may prevent the target price from being realized.

Key data

• RatingBuyMaintain Buy rating.
• Target priceCNY 98.50Based on a 16.0x next-12-month P/E.
• Closing priceCNY 85.47As of August 5, 2026.
• Implied upside+15.2%Calculated based on the target price and the closing price stated in the report.
• 2026E P/E13.9xBelow the 16.0x target P/E.
• Expected revenue growth in 1H26Low- to mid-single-digit YoY growthOverseas and enterprise-end growth is expected to partly offset pressure on the domestic consumer business.
• Market capitalizationUSD 88,194.5mnMarket data stated in the report.
• Share price performance over the past 12 months+19.7%In RMB terms; outperformed the CSI 300 Index by 7.6 percentage points over the same period.

Impact & implications

If the transition to overseas self-owned brands, channel expansion, and localization continue to deliver, Midea can maintain more stable revenue growth when domestic home appliance demand is under pressure. The combination of demand improvement and cost declines in 2H26 may drive simultaneous recovery in revenue and margins and support a valuation premium. Investment gains from ChangXin Memory Technologies provide additional, though not yet certain, upside to shareholder returns.

Risks

• Rising commodity prices may increase production costs and compress margins.
• Intensified price competition in the home appliance industry may weaken revenue growth and profitability.
• Further macroeconomic deterioration may suppress end demand in domestic and overseas markets.
• Demand stimulus from high temperatures in Europe may be weaker than expected, or low-base effects in domestic and overseas markets may fail to materialize.
• Investment income from ChangXin Memory Technologies is uncertain and cannot be guaranteed.
• If the company's earnings fall short of forecasts, the next-12-month target price may not be achieved.

What to watch

• The revenue decline in the domestic consumer business in 2Q26 and 1H26.
• Whether domestic and overseas consumer business revenue growth accelerates as expected in 2H26.
• Sales contributions from overseas self-owned brands, channel expansion, and localization strategy.
• Orders and revenue growth in enterprise-end businesses such as building technology and robotics and automation.
• Changes in raw material prices, cost control, and operating margin.
• Confirmation progress and actual amount of investment income from ChangXin Memory Technologies.
• Subsequent changes in shareholder return policies such as dividends and buybacks.