Midea Group (000333): Steady growth price war rumors will not break

Midea Group (000333): Steady growth price war rumors will not break
1H19 results were higher than we expected the company’s 1H19 results: revenue 1537.80,000 yuan, an annual increase of 7.8%; net profit attributable to mother 151.90,000 yuan, an increase of 17 in ten years.4%.Corresponds to 788 in 2Q19.30,000 yuan, an annual increase of 7.8%; net profit attributable to mother is 90.60,000 yuan, an increase of 17 in ten years.9%.The gross profit margin of exports increased significantly, and the performance was slightly higher than our expectations. The price reduction promotion of domestic sales of air conditioners has expanded significantly.Market competitiveness price war affects profitability.However, we can see that the profitability of air conditioners is good, the operating profit margin of consumer appliances has increased significantly, and the rumors of a price war are not credible. 1H19 business analysis: 1) China’s domestic appliance replacement 2.1%, exports increased by 5.Under the background of 5%, the company achieved a significantly higher growth rate than the industry.2) HVAC revenue increased by 11.8% to 714 ppm, segment profit increased by 11.4%.3) 杭州桑拿网 Consumer electronics revenue was 58.4 billion yuan, and segment profits increased by 26.8%, operating margin improved.4) Overseas gross profit margin increased 4.6ppt was mainly affected by the depreciation of the RMB and the increase in the proportion of Toshiba brand business.Domestic gross profit margin increased by 0 in the short term.7ppt, the price of air conditioners is reduced, so the gross profit margin caused by the increase and decrease has increased significantly.5) KUKA’s earnings declined, but the impact was not significant. 1H19 financial analysis: 1) Gross profit margin increased 2.3ppt, the cost rate increased by 1.2ppt, so operating profit grows by 15 per year.3%, higher than revenue growth.2) The cash flow is healthy. The net cash flow from operating activities is USD 218 million, + 186% per year. Funds in hand 1075 billion (monetary funds + wealth management).3) In June, the merger of Little Swan will be absorbed, and the scale of losses and benefits of minority shareholders will decrease in the second half of the year. Development Trend The company’s adverse market growth mainly relies on the competitive advantages of the entire industry chain, as well as product leadership, efficiency-driven, and global operations strategies.The leading edge will continue to expand in the second half of the year. Earnings Forecasts and Estimates Due to higher-than-expected results, we raised our 2019 / 20e EPS forecast by 2% / 2% to 3.43 yuan / 3.94 yuan.We maintain our Outperform rating, but we raise our target price by 4 due to upward earnings forecasts.3% to 65.10 yuan corresponds to 19.0 times 2019 P / E ratio and 16.5 times the 2020 P / E ratio, which is 23 compared with the same period last year.3% upside.Currently, it can correspond to 15 of 2019/2020.4 times / 13.4x price-earnings ratio. Risk market fluctuations have resulted in lower-than-expected revenue.