UBS raises Midea Group's target price, emphasizing that its 2B business is being re-rated from a home appliance leader into an industrial asset portfolio

Overview

This report focuses on Midea Group's transformation from a traditional home appliance leader into a diversified industrial group. UBS believes the market underappreciates the breadth, complexity, and value of Midea's 2B businesses, so it explicitly identifies HVAC, robotics, and new energy as the group's new flagship assets and values them separately through an SOTP model. UBS maintains a Buy rating and raises the target price by 8% to Rmb98.00.

Core views

UBS's core view is that Midea's 2B businesses are likely to contribute more than one-third of the group's revenue and profit before 2030. In 2025, 2B businesses already contributed 27% of revenue, and UBS expects their 2025-30E revenue CAGR to be 13%, ahead of the 2C business's 6% and the group's overall 8%. Building Technologies benefits from overseas expansion, heat pumps, data center cooling, integrated building solutions, and after-sales services; KUKA benefits from higher share in China, growth in the U.S., and Midea's local supply chain support; and the new energy business has high growth potential thanks to investment in energy storage resources and potential M&A.

Analysis framework

The report uses a segment-by-segment decomposition and SOTP valuation framework, splitting Midea's businesses into core appliances, Building Technologies, robotics, new energy, and others, and combining 2025-30E revenue CAGR, segment margins, peer P/E multiples, regional demand, market share, supply-chain capability, and M&A synergies to assess transformation value.

Methodology notes

• Valuation frameworkSum-of-the-parts valuation

  Value different businesses separately using comparable-company P/E multiples and then sum them

  UBS's new Rmb98 target price is based on SOTP: core appliances are valued at Rmb60/share on 12x 2027E PE, Building Technologies at Rmb23/share on 25x 2027E PE, robotics at Rmb5/share on 30x 2027E PE, and new energy and other businesses at Rmb10/share on 18x 2027E PE.

• Growth analysis2025-30E CAGR segment forecasts

  Compare the growth rates of 2B and 2C businesses using five-year compound annual growth rates

  UBS expects 2B revenue to grow at a 13% CAGR in 2025-30E, 2C at 6%, and the group overall at 8%, so 2B revenue contribution rises from 27% to 33%.

• Peer comparisonGlobal peer P/E benchmarking

  Use valuation levels of peers such as Trane, Carrier, Fanuc, Yaskawa, Sungrow, and Sigenergy as reference multiples for each segment

  Building Technologies uses the global HVAC peer average of 25x 2027E PE, robotics uses the global robotics peer average of 30x 2027E PE, and new energy and other businesses, as a new entrant, use 18x 2027E PE, slightly below comparable companies.

• Industry dataUBS Evidence Lab and industry data validation

  Validate business assumptions using industry demand, market share, and regional growth data

  The report cites data from ChinaIOL, MIR, Eurostat, GGII, UBS Evidence Lab, and others to analyze submarkets such as HVAC, data center cooling, industrial robots, heat pumps, and elevators.

Asset mapping & comparison

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

• Midea Group / 000333.SZ

  Covered name

  Strengths

  It has mature home appliance cash flow, a growing 2B business platform, a global supply chain, AI-enabled manufacturing capabilities, and relatively high shareholder returns.

  Weaknesses

  The 2B businesses span regions and cycles, making the structure complex; some businesses still need to prove margin improvement and overseas execution capabilities.

  Comparison

  UBS benchmarks it against peers such as Trane, Carrier, Fanuc, Yaskawa, Sungrow, and Sigenergy using an SOTP approach.

  Risks

  Weak domestic home appliance demand, slower-than-expected overseas expansion, weak KUKA Europe business, restructuring costs, and slower-than-expected 2B margin improvement.

• Midea Building Technologies / HVAC

  Main growth engine for 2B

  Strengths

  It holds about a 21% market share in China's HVAC sales; has leading magnetic-levitation centrifugal chiller technology; and can provide integrated solutions spanning HVAC, elevators, energy management, building automation, and after-sales services.

  Weaknesses

  Domestic HVAC is affected by the property downturn, and domestic sales declined for two consecutive years in 2024/25.

  Comparison

  European heat pumps, Arbonia Climate, and Clivet form a second local market in Europe; market share in emerging markets remains low, leaving room for improvement.

  Risks

  Slower-than-expected recovery in European demand, subsidy policy changes, domestic property weakness, and weaker-than-expected channel buildout in emerging markets.

• KUKA / Robotics and automation

  Robotics and automation flagship asset

  Strengths

  One of the global top four industrial robotics companies and a leader in heavy-duty robots; China shipments exceeded 32k units in 2025, with market share rising from 8% in 2019 to 11% in 2025; Midea's local supply chain reduces costs by about one-third and shortens delivery lead times to 2-3 weeks.

  Weaknesses

  EMEA revenue CAGR was -3% from 2019-25, EBIT margin is below global peers, and short-term restructuring costs weigh on profits.

  Comparison

  Rising market share in China versus traditional leaders such as Fanuc, Yaskawa, and ABB in large six-axis and heavy-duty segments.

  Risks

  Downturn in the European industrial cycle, high dependence on automotive customers, long restructuring timeline, and limited short-term margin improvement.

• New energy

  Emerging high-growth business

  Strengths

  UBS expects FY30E sales of Rmb50bn and a 30% five-year CAGR, with growth supported by prioritized energy-storage resource allocation and potential acquisitions.

  Weaknesses

  As a new entrant, the business model, scale effects, and competitive positioning still need to be proven.

  Comparison

  Valuation references new energy peers such as Sungrow and Sigenergy, but uses a slightly lower 18x 2027E PE.

  Risks

  Intensifying energy-storage competition, pricing pressure, M&A integration risk, and returns on resource investment falling short of expectations.

• Data center cooling

  High-growth downstream opportunity in HVAC

  Strengths

  AI investment is driving data center capacity growth, and Midea can enter the market using chillers, liquid-cooling components, system energy-efficiency optimization, and benchmark customer resources.

  Weaknesses

  Current revenue is still small, at about Rmb1bn in 2024, or roughly 4% of MBT revenue.

  Comparison

  UBS expects 2025-30E data center cooling demand CAGR of 13% in China and 29% overseas, with liquid-cooling component market growth even faster.

  Risks

  Customer whitelist onboarding progress, liquid-cooling manufacturing base ramp-up, fragmented competition, and customized delivery risk.

Key data

• RatingBuyUBS maintains a 12-month Buy rating.
• Target priceRmb98.00Raised by 8% from Rmb91.10.
• Current priceRmb82.57Price as of 2026-05-15.
• 2B revenue contribution27% in 2025; 33% in 2030EUBS expects 2B revenue mix to keep rising.
• 2B revenue growth13% CAGR in 2025-30EAhead of 2C's 6% and the group's overall 8%.
• Midea Building Technologies revenue forecastFY30E Rmb70bn; 14% CAGR in 2025-30EDriven mainly by HVAC, overseas expansion, elevators, and after-sales services.
• 2B HVAC revenue forecastFY30E Rmb52bn; 13% five-year CAGROverseas sales CAGR of 19%, above domestic sales growth of 8%.
• Elevators and other products plus after-sales services revenue forecastFY30E Rmb19bn; 20% five-year CAGRGrowth as part of integrated building solutions.
• After-sales services revenue forecastOver Rmb2bn in 2025; Rmb8bn in 2030EExpected 30% CAGR in 2025-30E, with revenue share of MBT rising from about 6% to 12%.
• KUKA China revenue targetRmb10bn in 2025; Rmb20bn in 2030EImplying a 15% CAGR in 2025-30F.
• New energy revenue forecastFY30E Rmb50bn; 30% five-year CAGRGrowth may come from energy-storage organic expansion, resource allocation, and potential M&A.
• Shareholder returns6% dividend yield in 2026E with buybacksThe target price implies 15x 2027E PE and 10% 2027-30E EPS CAGR.

Impact & implications

The investment implication of the report is that Midea Group's valuation logic may expand from that of a single home appliance leader to that of an industrial asset portfolio. If 2B growth is delivered, Building Technologies, robotics, and new energy could improve the revenue mix, earnings resilience, and valuation multiples; meanwhile, a stabilization in domestic white-goods demand in the second half of 2026 could become a near-term catalyst.

Risks

• Domestic white-goods and HVAC demand remains dragged down by the property downturn and may recover later than expected.
• Recovery in European HVAC, heat pumps, and industrial robot demand may be weaker than UBS forecasts.
• KUKA restructuring costs and weakness in Europe may cause margin improvement to lag expectations.
• Channel expansion, service network buildout, and local supply chain development in emerging markets carry execution risk.
• Competition in new energy and energy storage is intense, and growth targets and margins may fall short of expectations.
• M&A synergies such as Arbonia Climate integration, improved European manufacturing efficiency, and channel synergies may be lower than expected.
• Data center cooling and liquid-cooling component businesses are still at an early stage, with uncertainty around customer access and project delivery.

What to watch

• Whether domestic white-goods demand stabilizes in the second half of 2026 and becomes a catalyst for the share price.
• MBT Climate's European heat pump sales, Arbonia channel synergies, and progress toward the Rmb20bn 2030 revenue target.
• Channel expansion, dealer count, and achievement of the Rmb7bn 2030 revenue target for A5, M5, and L5 in emerging markets.
• Data center cooling revenue growth, liquid-cooling manufacturing base ramp-up, and onboarding of major IDC clients onto the whitelist.
• KUKA China orders, expansion into non-automotive customers, and progress on AMR and large six-axis robot products.
• KUKA Europe restructuring cost reduction, Hungarian capacity relocation, and EBIT margin improvement.
• New energy business energy-storage revenue, potential M&A, and progress in Hiconics- and Clou-related businesses.
• After the 2027/28E revenue upgrades, whether the SOTP segment valuation assumptions are validated by subsequent performance.