Midea Group Investment Quality Review (000333.SZ)

Quality score: 82/100 Valuation position: current price/base FV 0.97 Final signal: WATCHLIST

Core Conclusion

Midea Group remains WATCHLIST. The business clears the quality threshold with an 82/100 score, but the current price of CNY87.60 is close to base FV of CNY90.10 and does not yet provide the required margin of safety. Conservative/base/optimistic FV is CNY54.58/CNY90.10/CNY114.45.

Business And Quality

Five-year revenue CAGR is 7.5% and latest-year FCF is CNY42.20bn. The score is supported by scale, repeatable cash flow, balance-sheet resilience, and a five-year FCF/Net Income ratio of 1.16. Segment margin and some governance details still need continuing confirmation from formal disclosures.

Financial Audit

The review uses fiscal 2021-2025 in CNY with a CNY 10Y government-bond yield of 1.7% dated 2026-07-31. Five-year average OCF/Net Income is 1.39, and latest net cash is CNY17.77bn. If goodwill, receivables, financial assets, or working-capital swings expand, the balance-sheet adjustment should be revisited first.

Valuation

The valuation is anchored on normalized FCF, a 10% required return, a sustainable-growth assumption, and separate treatment of cash, financial assets, debt, and dilution. Price/base FV of 0.97 fails the buy gate and is far from a 2x base-case signal.

Buy And Monitor

Current action is watchlist. Upgrade requires price/base FV below 0.70, quality score of at least 75, and stronger evidence that any market pessimism is temporary rather than structural. Track revenue trend, FCF/Net Income, ROIC, net cash/debt, dividends, buybacks, and governance disclosure.

Risks

Risks include appliance demand weakness, margin pressure, working-capital volatility, financial-asset marks, and capital-allocation execution. Two consecutive reporting periods with FCF/Net Income below 0.60 would force a lower normalized FCF and quality score.

Sources

Sources are public quote and financial data platforms, company filings or IR, ChinaBond for the CNY risk-free rate, and public FX data where applicable. Research only, not personalized investment advice.