Midea Group (000333): The online layout of air conditioners is changing rapidly and the share of Midea is rapidly increasing.


Midea Group (000333): The online layout of air conditioners is changing rapidly and the share of Midea is rapidly increasing.
The company’s recent situation Aowei Cloud Network monitors China’s 杭州桑拿网 home appliance retail market. Commenting on the poor demand for home appliance retail from April to May 2019, the segmentation of the air-conditioning retail market, the growth of the US retail market was mainly driven by the company’s complete industry chain competition and sales strategy in line with the trend. From market monitoring, Midea’s best performers are air conditioners and washing machines. Both markets have formed a duopoly pattern. Midea is one of the oligarchs. Midea ‘s online air-conditioning share has increased rapidly: 1) Mid-America ‘s market share has increased significantly after air-conditioning price reductions in late February.From April to May, Midea ‘s online retail sales of air conditioners increased by 63% / 51%, respectively, with the largest market share.2) Since March, the average online retail price of Midea is only higher than Oaks?200 yuan / set.This led to a marked increase in the growth rate of Oaks’ online retail sales, which increased by 12% in just one year in May.3) Midea can maintain profitability while reducing prices, mainly benefiting from T + 3 strategy and channel integration.The T + 3 strategy has resulted in low channel inventory in Midea. Currently, Midea ‘s retail air conditioners are produced in 1Q19, and their relative cost is low.In fact, Midea eliminated secondary distributors, optimized channel efficiency, and reduced channel markup rates. The online air-conditioning market structure will change: 1) Oaks has adopted the cost-effective strategy. In 2019, the online air-conditioning online market accounted for 26% of retail sales, ranking first.2) On June 10th, Gree reported to the State Administration of Market Supervision and Administration that Oaks produced and sold substandard air-conditioning products, and a number of products had false standard energy efficiency.3) We expect that Oaks will be affected by this incident and lose some online market share.Midea will be the biggest beneficiary because the product price is close to Oaks. Midea’s absorption merger Little Swan has not yet been completed, and we will not adjust the net profit and equity attributable to the parent company for the time being. It is estimated to maintain EPS forecast for 2019/203.46 yuan / 3.88 yuan.Maintain recommended level and target price of 62.40 yuan, corresponding to 18x / 16x 2019 / 20e P / E, a 21% increase in space.The company currently expects 15x / 13x 2019 / 20e P / E. Risk Market demand fluctuation risks; market competition intensifies risks.