UBS: Midea Group (000333.SZ) 1Q26 Results Review, Resilient Growth; Buy
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UBS published a first-quarter 2026 earnings review for Midea Group (000333.SZ), maintaining a Buy rating with a target price of 85 yuan, based on a 2026 forecast price-to-earnings multiple of 12 times. The report highlights the company's resilient revenue and earnings growth, alongside the smooth execution of its share repurchase program.
During the first quarter, total revenue grew 8% year-over-year, while net profit increased by 10%, both aligning precisely with consensus expectations. The core home appliance division demonstrated robust momentum, achieving 9% revenue growth. Within this segment, air conditioner sales surged by 12% and washing machines grew by 7%. International expansion remained a critical growth vector, with overseas revenue climbing 12% year-over-year, heavily supported by successful market penetration across Southeast Asia and Europe. Gross margins expanded by 0.5 percentage points to 26.5%, driven by product mix optimization and effective cost containment. Operating cash flow strengthened by 15% to reach 8 billion yuan.
Operationally, the share buyback initiative is advancing according to schedule. The program is approximately 60% complete, with a cumulative repurchase value of around 12 billion yuan, and is slated for total completion by year-end 2026. UBS views this proactive capital return mechanism as a significant catalyst supporting the equity valuation. While the broader investment case remains compelling, investors must carefully weigh downside risks. The primary macroeconomic headwinds include the ongoing contraction in China's real estate sector, which could indirectly depress durable consumer goods demand, alongside potential volatility in raw material pricing that might compress future manufacturing margins.