Midea Group (000333) Annual Report 2018 Review: Profitability Continues to Improve, Strategic Layout Is Clear

Midea Group (000333) Annual Report 2018 Review: Profitability Continues to Improve, Strategic Layout Is Clear
Matter: Midea Group released the 2018 annual report, and the combined company realized a total operating income of 2618.20 ppm, an increase of 8 in ten years.23%, net profit attributable to mother 202.31 ppm, an increase of 17 in ten years.05%, deducting the non-mother net profit 200.5.8 billion, an increase of 28 a year.46%; of which, 18Q4 companies achieved a total operating income of 544.1.5 billion, an increase of 0 in ten years.48%, net profit attributable to mother 23.31 ppm, an increase of 1 in ten years.97%. Comment: The competitive advantage is obvious and the industry consolidation is solid.In 2018, the company achieved revenue of 2618.20 trillion, ten years +8.23%; revenue in the fourth quarter was 544.1.5 billion, a small increase of +0 in ten years.48%, the domestic sales of air conditioners in the fourth quarter were under pressure, and the revenue growth rate was in line with market expectations.1) In terms of products, the report reports that the combined company’s entire category and global market synergy have continued to strengthen. HVAC, consumer electronics, robotics and automation systems have achieved revenues of 1093.9.5 billion, 1029.93, 256.78 trillion, respectively +14 per year.73%, +4.30%, -503%.According to data from Zhongyikang, the company’s market share of air conditioners, refrigerators, and washing machines increased by 0 in 2018.31, 0.54、1.48 units.In terms of consolidated business, 无锡桑拿网 Toshiba’s 2018 performance has improved significantly from last year and achieved its goal of turning around losses; KUKA’s poor performance has gradually dragged down the company’s overall performance in the fourth quarter.2) In terms of different channels, the company continued to improve its intelligent supply chain channels and achieved steady growth in online and offline business.In terms of the offline market, the company has formed a full range and three-dimensional market coverage. In 2018, the company’s main household appliance products in the offline market had a market share in the top four.In terms of the online market, in 2018, Midea’s entire network sales exceeded 50 billion and increased by more than 22%. In mainstream e-commerce platforms such as JD.com, Tmall, Suning Tesco, etc., it continued to maintain the number one industry share in the home appliance category. Optimized product structure, improved gross profit, and good cost control.In 2018, the company’s gross profit margin and net profit margin were 27.54%, 8.34%, an increase of 2 each year.51pct, 0.61pct, mainly benefited from the upgrade of the company’s product structure. In 2018, the average retail price growth of the company’s major categories of white goods and kitchen appliances exceeded the industry level.Reported volume The company’s expenses are well controlled and expenses remain at a stable level.The sales expense ratio, management expense ratio (including R & D), and financial expense ratio are 11 respectively.87%, 6.86%, -0.70%, ten years +0.82pct, +0.75pct, -1.04pct, the significant reduction in the financial expense ratio was mainly due to changes in exchange losses and gains.The company’s cash flow is good, and the net cash flow from operating activities increases every year.99%, sufficient funds in hand.Net cash flows from investing activities increase by 46 each year.34%, mainly due to the acquisition of subsidiary KUKA in the same period last year. The high-end layout has achieved initial results, and the long-term strategic direction is clear.The company continued its research and development in 2018, and the high-end strategic transformation has shown initial results.In October 2018, COLMO, a high-end brand of AI technology home appliances, was launched to strengthen the layout of the brand matrix. The industrial Internet platform “M.The construction of “IoT” has accelerated the company’s transition to a technology group.In addition, on March 12, 2019, the company has received the approval from the China Securities Regulatory Commission on the share swap and absorption of Little Swan. It is expected that the company will further leverage its synergies to enhance the company’s overall competitive advantage in the washing machine sector.The company’s key product capabilities and “T + 3” channel efficiency upgrades, “Smart Home + Intelligent Manufacturing” strategic breakthroughs and industry trends under the new cycle, changing operations, and strategic layout of robotics and automation open the company’s growth ceiling.The company’s long-term strategic planning is clear and the future potential is unlimited. Investment suggestion: We expect the company’s EPS in 19/20/21 to be 3 respectively.45/3.90/4.43 yuan (previous forecast: 3.40/3.88 / -yuan), corresponding PE is 16/14/13 times.As the leading company in the entire industry chain of the entire home appliance industry, the company has obvious synergy advantages, continuous improvement in operating efficiency, and high performance certainty.The company is gradually moving towards the emerging technology group. Integration, intelligence, and digital strategy are advancing steadily. Long-term development is worth looking forward to.In 2019, the company continued to launch equity incentive plans and employee shareholding plans, which are highly unified with shareholders’ interests and have an excellent corporate governance structure.In addition, benefiting from the expected improvement in house delivery and the gradual implementation of the stimulus policy for home appliances, we expect the company to start well in 2019.According to the 2018 profit distribution plan, the company’s cash dividend ratio (including repurchase) is as high as 62.09%.Based on the above, the target price is 62 yuan, corresponding to 18 times PE in 19 years, maintaining the “strong push” level. Risk warning: terminal demand is less than expected; raw material prices fluctuate sharply; overseas market expansion risks.