Galaxy Securities: Maintaining a "recommended" rating for Midea Group, high dividend yield will drive the company's valuation improvement.
Galaxy Securities research report pointed out that Midea Group's operating income in Q1 2025 was 127.8 billion yuan, an increase of 20.5% year-on-year; net profit attributable to the mother was 12.4 billion yuan, an increase of 38.0% year-on-year, exceeding market expectations at that time. It is expected that due to the negative impact of the US tariff policy on exports, the overall revenue growth rate of the home appliance industry in Q2 2025 will slow down compared to the previous quarter. The company will also be affected by this, but overall growth will still be maintained at a good pace. It is expected that the company's operating income growth rate in Q2 2025 will be between 7-9%, and net profit attributable to the mother will increase by 10-15%. Considering the company's competitiveness in the home appliance business and growth prospects in the industrial business, it is expected that even if the prosperity of the home appliance industry declines in the coming quarters, the company will still be able to maintain steady growth. Taking into account that the company's dividend payout ratio in 2024 has been increased to 69%, even if it remains stable, the dividend yield for 2025 corresponds to 5.5%, maintaining the company's profit forecast. It is expected that the net profit attributable to the mother will increase by 14.6%/11.5%/11.0% respectively in 2025/2026/2027, corresponding to PE multiples of 12.5x/11.2x/10.1x. It is believed that as risk-free interest rates decline, the company's high dividend payout ratio will drive the company's valuation higher, maintaining a "recommended" rating.
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