Midea Reports Steady 1Q26 Results with B2B Business Leading Growth

Overview

Nomura published its review of Midea Group's 1Q26 results, noting the company achieved steady growth amid industry headwinds. B2B businesses (Building Tech, Robotics) grew significantly faster than B2C, becoming the near-term growth driver. The company stabilized margins through forex hedging and launched a share buyback to enhance shareholder returns. The firm maintains Buy rating with RMB 98.50 target price, implying 21% upside.

Core views

Performance: 1Q26 revenue reached RMB 131bn (+2.5% y-y), net profit RMB 12.7bn (+2.0% y-y), achieving stable growth on high base. Gross and net margins remained flat y-y, offsetting rising material costs and forex losses. Business Mix: B2B led growth with Building Tech (+10%) and Robotics (+12%) outperforming; B2C domestic sales faced near-term pressure but overseas showed recovery signs from April, with H2 expected to benefit from low base effect. Shareholder Returns: Current buyback plan of RMB 650mn-1.3bn (1.58% of market cap) plus dividends imply ~7.3% FY26F total shareholder return, making it attractive. Valuation: Target price based on 16x FY26F P/E (+1SD above historical mean), with current price at 13.2x, below target valuation level.

Analysis framework

The firm conducted segmental growth comparison analysis, highlighting B2B's near-term advantages; positioned valuation using P/E relative to historical range (+1SD), combined with shareholder return (buyback + dividends) for comprehensive appeal assessment. The analysis implies cyclical view on home appliances: B2C demand slowed by domestic property market while B2B benefits from infrastructure and automation upgrades.

Methodology notes

• Valuation MethodPE/PEG valuation

  Target price based on 16x FY26F P/E, +1SD above historical mean

  Comparing current P/E with historical valuation range to assess potential undervaluation. 16x P/E represents above-average valuation reflecting institutional recognition of stable growth.

• Industry Analysis FrameworkSupply-demand framework

  Faster B2B vs B2C growth reflects structural demand differences

  Building Tech and Robotics benefit from infrastructure investment and automation demand, while B2C appliances face property cycle pressure, showing intra-industry demand divergence.

Asset mapping & comparison

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

• Midea Group (000333.SS)

  Direct beneficiary, with B2B growth and buyback enhancing shareholder returns

  Strengths

  Diversified business mix, forex hedging capability, high shareholder returns

  Weaknesses

  Near-term pressure on domestic B2C sales

  Comparison

  Report calls it 'China's most resilient home appliance stock' deserving higher valuation than peers

  Risks

  Commodity prices, price competition, macroeconomic deterioration

Key data

• 1Q26 RevenueRMB 131bny-y +2.5%
• 1Q26 Net ProfitRMB 12.7bny-y +2.0%
• B2B GrowthBuilding Tech +10%, Robotics +12%Significantly higher than B2C's low single-digit growth
• FY26F Shareholder Return7.3%Including buyback and dividend expectations
• Target P/E16.0xBased on FY26F earnings, +1SD above historical mean

Impact & implications

The report argues Midea has the most robust fundamentals in China's home appliance sector, with its balanced growth, profitability, and shareholder return model deserving premium valuation. B2B's near-term growth advantages can partially offset B2C weakness, supporting full-year growth outlook. High shareholder returns make it attractive for long-term investors.

Risks

• High commodity prices
• Intensifying industry price competition
• Further macroeconomic deterioration

What to watch

• H2 recovery pace in domestic B2C sales
• Sustainability of B2B growth momentum
• Buyback execution and potential new buyback plans