– and Focuses on Value Growth
According to the data from Wind, the mass consumption index has been on a continuous downward movement since May this year with the cumulative decline being over 10% during the year, and showed a fluctuating decline trend in the past three years, which is currently in an overall undervalued state, and has a comparative advantage in terms of market valuation. Well, the U.S. Federal Reserve has released the signal of an interest rate cut in September, which is expected to add some leeway in domestic monetary policy. Meanwhile, against the expected backdrop of the policy actively promoting the implementation of reforms and stable growth to boost the fundamentals, the leaders in the mass consumption industry represented by Midea Group have registered stable growth in results and made continuous dividends distribution, with enhanced returns to shareholders and outstanding investment appeal.
Being speeding up the process of its global expansion, Midea Group has currently completed its IPO in the H share stock market and become listed on the main board of the Hong Kong Stock Exchange today, achieving the milestone of “A+H” dual listing. Not long ago, Midea Group published its 2024 Interim Report, which not only recorded double-digit growth of 10% and 14% in revenue and profit attributable to parent company to RMB218.1 billion and RMB20.8 billion respectively, both of which hit record highs, but also yielded unusually brilliant results in its ToB business, and strong growth was recorded in its overseas business, which grew by 13% year-on-year and far exceeded that of its domestic business, thus realising a further upgrade of its “global impact”.
Going global to accelerate the spillover of its industrial chains and create a sample of Chinese enterprises’ global expansion
At present, the home appliance market of China has entered a mature stage, with the average per household ownership of major categories of products being close to a reasonable level, and the consumption demand being dominated by upgrading of existing products. The competitive landscape is stabilising, and the room for market share expansion is limited. In view of that, global expansion is the general trend in the industry. Midea, which has successfully transformed itself into a globalised technology group in recent years, has significant advantages in terms of scale, R&D, manufacturing, channels and marketing, and there may be a promising future for it to go global.
The value of the global home appliance industry chain is distributed in a “smile-shaped” manner, with the demands from European and American markets are mainly upgrade, while in emerging markets, there is significant room for the penetration rate to increase, the export side has therefore relatively large growth potential for Chinese enterprises. Currently, global impact is one of the core strategies for Midea Group, and the Company has taken the route of branding overseas and relocating capacity concurrently to build a second “home court” overseas, and adheres to the OBM (Own Brands) priority strategy to develop exports and shape new growth momentum.
By building a global R&D, manufacturing and sales network, Midea Group has been enabling the penetration of its brand in a multi-dimensional and all-round way, unleashing the spillover effect of the industrial chain and strengthening its globalisation development capability. Midea has set up 17 overseas R&D centers in 10 countries abroad, integrating global R&D resources and forming a global technology R&D capability with complementary advantages. The Company has established 22 overseas production bases, realising production and delivery globally, and enjoying growth opportunities in overseas markets, with its products having been exported to more than 200 countries and regions around the world, and the Company has established online and offline sales networks in many markets overseas, with about 5,000 after-sales service outlets. Its overseas OBM business, mainly Toshiba, Midea and Comfee brands, is also growing rapidly and its OBM products have demonstrated strong competitiveness in many overseas markets.
The results of the intensive efforts in overseas markets are clearly reflected in the operational data and financial performance. Benefiting from the continuous development of its overseas smart home business and the enhancement of user experience, in the first half of 2024, the smart home apps of Midea had over 1 million newly registered users overseas and 3.1 million registered users, with the average number of monthly active users increasing by nearly 150% year-on-year. At the same time, the Company insisted on digital transformation, using digital tools to empower overseas terminal retail, with more than 1,500 new digital terminal outlets. In addition, the Company also launched e-commerce business overseas to boost the development of its own brand, with e-commerce sales revenue having increased by more than 50% year-on-year in the first half of 2024.
Although facing multiple risks and challenges in its development in overseas home appliance market due to multiple factors such as macroeconomic fluctuations, drastic changes in exchange rates and persistently high inflation, Midea Group adhered to the consumer-centric product orientation, strengthened localised operation overseas, and promoted the strong growth of its overseas business against the trend, realising a revenue of RMB91.1 billion in the first half of the year, accounting for 42% of the total revenue of the Company, which made it be the second largest A-share listed company in terms of overseas revenue.
For such beautiful results, the outside world has fully saw the ability and confidence behind the global impact of the Midea Group, and in the boom of going global for Chinese enterprises, the Company has successfully created a global expansion sample of high-quality development. With the inventory level of mainstream overseas home appliance consumer markets continuing to decline, sea freight charges have gradually dropped since the second half of 2022, home appliance export sales are expected to continue with a high degree of prosperity, and the benefits of going global are evident. It is just a beginning for Midea Group to benefit from such move.
Enhancing Both Quality and Quantity of ToB Business, and Extending Growth Resilience by Diversified Layout
Midea Group’s global impact is not just quantity enhancement for going global, but also a premiumization strategy in a way to seek quantity growth in ToB business (Commercial & Industrial Solutions business). During the ToB business’ transformation, Midea Group actively cultivates new quality productive forces, steps up efforts in four major segments, and continues to promote industrial upgrading with technological innovation, endeavoring to lengthen the second growth curve that drives the Company’s continuous results growth, and to enrich the Company’s intrinsic value.
Regarding the Energy Solutions & Industrial Technology segments, Midea emphasises on growth and creation and continues to expand its business boundaries and achieve accelerated growth. In the first half of 2024, Midea filed more than 680 new patent applications, was granted more than 2,700 patents for inventions, and was awarded one Gold Prize and two Merit Prizes for the Tenth Guangdong Provincial Patent Award, as well as one Silver Prize for the Tenth Anhui Provincial Patent Award. Its R&D achievements have won numerous awards in the industry, and the “High Torque Density and Low Torque Ripple Direct Drive Permanent Magnetic Motor” technology led by Midea, which can provide smaller and quieter motor solutions for air-conditioning products, has been recognised as internationally leading level.
Regarding the Intelligent Building Technology segment, Midea has six major product manufacturing bases and seven research and development centers around the world, with a sales network covering the global market, and has formed the largest professional intelligent building product matrix and service network with a complete range of products in China. According to online industrial data, in the first half of 2024, Midea continued to rank first in the industry in terms of sales scale in the domestic central air-conditioning market, and topped the list in the industry in terms of market share for core products such as unit air conditioner and module air conditioner, with a market share of approximately 36% and 13% respectively, and was among the top in the industry in the domestic multi-connected market.
Regarding the Robotics & Automation segment, according to MIR statistics, in the first half of 2024, KUKA China’s orders in the consumer electronics industry increased significantly, and the domestic market share of KUKA’s industrial robots further increased to around 7.8%. As China’s manufacturing industry accelerates its overseas expansion, KUKA China has made full use of its overseas channel network and market access advantages to boost its overseas market development with locally developed robotic products in China, and its orders from overseas market in the first half of the year also increased significantly year-on-year, with its mobile robotics business accounting for close to 50% of its overseas revenue.
Supported by its technology leadership, the ToB business of Midea Group is making rapid progress, enabling Midea Group’s growth resilience to be more explosive. In the first half of 2024, the Company’s revenue from Energy Solutions & Industrial Technology amounted to RMB17.1 billion, representing a year-on-year increase of 26%; revenue from Intelligent Building Technology amounted to RMB15.7 billion, representing a year-on-year increase of 6%; and revenue from Robotics & Automation amounted to RMB13.9 billion. On the basis of the solid leading position of its ToC (Smart Home Solutions) business, the balanced development of ToC and ToB will gradually optimise the Company’s business structure through cyclical complementarities in multiple industries, and drive the overall profitability of Midea Group to continue to improve.
Focusing on comprehensive intelligentization and digitalization, its in-depth layout and effective execution in the international market and ToB business have pushed Midea Group to make achievements in both “going global and diversification”, and with its firm strategies, the Company is striding forward towards becoming a global B-end enterprise. Its listing on the Hong Kong Stock Exchange will also help the Company to further enhance its international image and open up broader space for its expanding in overseas markets and enhancing its overall competitiveness, thus enabling its market scarcity attributes and investment value to be ready to unleash.