Midea Group Investment Quality Review (000333.SZ)
Data timestamp: 2026-07-24 22:04 UTC
Quality score: 82/100
Valuation position: current price/base fair value (FV) 0.94
Final signal: WATCHLIST
Core Conclusion
Midea remains a WATCHLIST name. The business clears the excellent-company threshold, but the current price is close to base FV, so the case still depends on repeatable FCF, balance-sheet protection, and a lower price/FV ratio before upgrading.
- Quality: 82/100, supported by five years of FCF, ROE, and a positive balance sheet position. The main deductions are limited segment margin disclosure and governance/accounting items that still need primary filing follow-up.
- Price: the current price is CNY84.50 and market value is about CNY644.37 billion. Conservative/base FV is CNY54.59/CNY90.12 per share.
Business Breakdown
The consolidated core business revenue rose from CNY343.36 billion in 2021 to CNY458.50 billion in 2025, a 7.5% five-year CAGR. Segment margin or segment profit was not disclosed in the structured source. The latest annual FCF was CNY42.20 billion, which is the main driver for the quality score and FCF multiple range.
Management outlook was not available as a quantified field in this pass. Formal tracking should continue to verify annual reports, results calls, and company IR disclosures.
Quality Gate
Midea scores 82/100. The model scores business model quality 7/10, moat 13/20, cash flow 20/20, capital return 13/15, balance sheet 10/10, growth quality 8/10, and management/accounting 11.4/15. FCF/Net Income averaged 1.16 and OCF/Net Income averaged 1.39, while five-year average ROE was 21.9% and average ROIC was 12.6%.
Management and accounting score is 76/100, converted to 11.4/15. Shareholder alignment, capital allocation, incentive dilution, accounting quality, and related-party disclosure all remain watch items rather than upgrade evidence.
Financial Audit
The valuation uses fiscal 2025, 2024, 2023, 2022, and 2021. Quote and financial currency are both CNY, with FX at 1.0000. The risk-free-rate date is 2026-07-24.
2025 revenue/net profit/OCF/capex/FCF were CNY458.50/CNY43.95/CNY53.35/CNY11.14/CNY42.20 billion. FCF/Revenue was 9.2% and FCF/Net Income was 0.96. The five-year FCF series was CNY42.20, CNY52.67, CNY51.59, CNY27.31, and CNY28.27 billion. Latest cash was CNY85.25 billion, debt was CNY67.48 billion, and net cash was CNY17.77 billion.
Valuation
CNY 10Y government yield was 1.7% from ChinaBond on 2026-07-24. The valuation anchor is normalized FCF, using sustainable growth, a 10% required return, quality haircuts, and a separate balance-sheet bridge.
| Scenario | Core Assumption | Multiple Basis | Fair Market Value | FV/Share | Price/FV | Weight | Next Check |
|---|---|---|---|---|---|---|---|
| Conservative | Normalized FCF CNY42.20bn with heavier haircut | g 2.0%, 9.2x | CNY416.30bn | CNY54.59 | 1.55 | 30% | FCF durability |
| Base | Five-year FCF and current operating state continue | g 4.0%, 15.6x | CNY687.25bn | CNY90.12 | 0.94 | 50% | Revenue and ROIC trend |
| Optimistic | Quality rerating without exceeding cap | g 5.0%, 20.0x | CNY872.95bn | CNY114.48 | 0.74 | 20% | Competition and capital allocation |
Balance-sheet bridge: cash contributes CNY76.72 billion at 90%, current financial assets CNY17.94 billion at 65%, non-current financial assets CNY1.69 billion at 35%, and debt subtracts CNY67.48 billion. Net adjustment is CNY28.87 billion.
The FCF multiple method shows price/base FV of 0.94, so the 2x gate is not met. Five-year average net profit was CNY34.87 billion and does not contradict the FCF anchor.
Buy And Monitor
Current action is to keep Midea on watch. Upgrade needs price/base FV below 0.70, quality score at least 75, and stronger mispricing evidence. Tracking priorities are revenue trend, FCF/Net Income, ROIC, net cash/debt, dividend and buyback behavior, and governance disclosure.
Risks
FCF quality passes for now, but non-repeatable working-capital or capex effects would lower the base multiple and BUY threshold. Balance sheet passes, while larger debt or financial-asset haircuts would reduce FV. Accounting/governance and shareholder returns remain observation items because related-party, incentive dilution, dividend/FCF, and buyback-price evidence still need follow-up.
Trigger points are two consecutive periods with FCF/Net Income below 0.60, a material net-debt increase or financial-asset impairment, or dividends, buybacks, and incentives that dilute ordinary-share value.
Research only. Not personalized investment advice.
Sources
Current price, market value, share count, and five-year financial baseline: public quote and financial data platforms, 2026-07-25. Annual reports, dividends, buybacks, governance, related-party, incentive, and risk disclosures: official disclosure venues or company IR, 2026-07-25. Risk-free rate: ChinaBond government yield curve, 2026-07-24.