J.P. Morgan analysts initiated coverage of Midea Group's Shenzhen-traded shares with an overweight rating and a price target of 105 yuan ($15.50), representing a potential upside of over 20% from the previous Friday's close.
The analysts presented two possible growth trajectories for the Hong Kong-listed home appliance company: becoming an industrial giant like Siemens, potentially doubling market cap by 2030, or following a path similar to Panasonic with gains of only 25%.
Key Details
- Midea shares are up over 7% year-to-date, outperforming the Hang Seng Index which declined over 3%.
- Midea is among the 20 largest stocks in the Hang Seng Index by market capitalization, ahead of SMIC and Xiaomi.
- J.P. Morgan analysts stated: "The market is still paying for the old Midea — a high-quality appliance champion — but we think the new Midea is becoming a more interesting hybrid of [business-to-consumer] cash flow and [business-to-business] industrial tech."
Requirements for Industrial Transformation
According to the analysts, for Midea to become an industrial powerhouse, it must achieve three goals simultaneously:
- Become a global leader in commercial heating, ventilation, and air conditioning systems.
- Turn its German industrial robot subsidiary Kuka into an earnings driver by increasing its share in China's factory automation market from under 10% to at least 25%.
- Build a new business-oriented unit that generates at least 20 billion yuan in revenue by 2030, with potential candidates including data center liquid cooling, energy storage, or medical imaging units.
Current Performance
- Revenue from commercial and industrial solutions increased by 17.5% in 2025, accounting for over one-fourth of Midea's total revenue.
- "Smart home solutions" still constitutes the majority of the business.
- More than 40% of Midea's revenue comes from outside China.
Analyst Statements
The J.P. Morgan analysts noted that the question is whether Midea becomes a different kind of business valued on a different framework. They emphasized leveraging advantages amid increased competition in the appliance market.
"The old framework — subsidy, replacement cycle and margin — still matters, but it misses the more important transition: China B2C is becoming the funding base, overseas [original brand manufacturing] is becoming the growth engine, and B2B industrial tech could become the multiple-expansion driver."
Related Coverage
J.P. Morgan also initiated coverage of two other Chinese home appliance companies with overweight ratings: Haier's Hong Kong-listed shares and Zhejiang Supor's Shenzhen-listed shares.