Midea Group: Slight Tweaks to 2026-27 Estimates After In-Line 2025 Results
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Morgan Stanley has updated its risk-reward analysis on Midea Group (000333.SZ) following largely in-line 2025 results. The firm slightly trimmed its 2026 and 2027 earnings per share forecasts by 1% and 2% respectively, primarily reflecting lower financial costs. Sales growth assumptions remain unchanged at 6% for 2026 and 7% for 2027.
Profitability is expected to remain stable in 2026 as raw material pressures are offset by efficiency gains. In 2027, net margin should expand by 0.3 percentage points driven by favorable product mix shifts. Key earnings drivers include air conditioner volume growth of 2% in 2026 and 5% in 2027, alongside steady average selling price increases of 2% to 3%.
The firm maintains an Overweight rating with an unchanged target price of RMB 99, based on a sum-of-the-parts relative valuation method. With the stock currently trading at RMB 79.66, the target implies 24.28% upside potential. Bull and bear case scenarios remain at RMB 123 and RMB 50 respectively. Morgan Stanley highlights that both pricing power and technology diffusion present positive risk-reward themes. The company trades at an attractive discount to the broader consumer sector, while B2B diversification and consumer appliance trade-in policies provide solid earnings support. The annual shareholder meeting in late May serves as a near-term catalyst.