Goldman Sachs Midea Group (000333): Proposed Partnership with Electrolux to Expand the US Market Announced

Goldman Sachs notes that Midea Group's proposed strategic partnership with Electrolux to restructure North American refrigeration and laundry operations carries significant long-term strategic value. The collaboration establishes three joint ventures. Midea will acquire a 65% stake in a Mexican refrigeration manufacturing JV and a 45% stake in a South Carolina laundry facility, while sales operations will be evenly split at 50/50. CFIUS has approved the transaction, with operations expected to commence in the third quarter of 2026. The partnership provides Midea with established US manufacturing capabilities and access to Electrolux's mature distribution network. This is strategically important, as Midea's branded market share in US refrigeration and washing machines currently sits below 1%, compared to Electrolux's 13% and 4% shares, respectively. While the United States represented only a high-single-digit percentage of Midea's total 2025 revenue, the company's branded sales there have recently grown at double-digit compound annual rates. The short-term financial impact remains limited; the joint ventures' projected capital expenditures of SEK 1.1 billion over three years is modest relative to Midea's overall capital budget. However, Goldman Sachs expects the incremental scale and operational efficiencies to gradually enhance Midea's organic manufacturing expansion and profitability in the region. The firm maintains Buy ratings on both Midea's A-shares and H-shares, with 12-month target prices of RMB 98 and HKD 111, respectively.