Midea's small home appliance business is favored

At present, the entire household electrical appliance enterprises are in fierce competition and far from the high profit margins pursued by the market. Then, why the market's premium to the Meimei Group will go far beyond the home appliance manufacturing and listed companies such as Hisense Electric (600060, stock), Qingdao Haier (600690, Shares) and Gree Electric (000651, stocks) and other prices? The market's over-expectation of its financial concept is the main reason for the higher valuation of Midea Group, but at the same time the risk will increase.

After the merger and acquisition of Midea Group, it was listed on the last trading day before the Mid-Autumn Festival. The opening reference price was 44.56 yuan per share on the same day, but the closing price fell by only 42.24 yuan. Something unexpected was yesterday's 9.37% rise in stock price. It closed at 46.2 yuan. As an integrated small household appliance leader, its share price action has attracted the attention of the market. The premium given by the market has gone far beyond the home appliance manufacturing and listed companies such as Hisense Electric, Qingdao Haier and Gree Electric Appliances.

Midea's dynamic price-earnings ratio is relatively high. Newly-listed Midea Group is comparable to Gree Electric Appliances in the same industry, and its refrigeration business is mainly located in the same region. According to the data, 53% of Midea Group's revenue comes from air-conditioning, but small household appliances account for 26% of the total income. In addition to about 6% of refrigerator and washing machine revenue, there are sub-sectors such as motor and logistics. Yesterday’s 46.2 yuan, the dynamic price-earnings ratio was 14.7. Times. Gree Electric air-conditioning 88.52%, small appliances 1.35%, yesterday's closing price of 26.39 yuan, dynamic price-earnings ratio of 9.9 times. The dynamic P/E ratio of Midea Group is nearly 5 times higher than that of Gree Electric Appliances, and is 8 to 9 times higher than that of other major household appliance companies. So what factor is the premium of this 5x P/E ratio?

Judging from the market rate, the U.S. group's undistributed profit per share is 13.1375 yuan, and Gree Electric's unsuccessful profit is 6.17 yuan per share. This factor is included in the stock price, which excludes the P/B ratio after the undistributed profit. Midea Group 1.955 times, Gree Electric is 2.73 times. Although the share price of Midea Group is high, after subtracting unsuccessful profit per share, the P/B ratio of each share is lower than that of Gree. The net asset yield of Midea Group is also slightly better than that of Gree Electric. This was 2.72% higher, which may be the reason why Midea’s small household appliances accounted for a relatively high revenue. This also reflected that big brokers are optimistic about the small group appliances of the United States. From the perspective of the debt ratio of assets, 61.82% of Midea Group is obviously much lower than Gree's 74.16%, and the pressure of interest is not so great, which is a normal level for a manufacturing company.

The United States Group has just listed, executives promised that the profit in 2013 will not be lower than 6.93 billion yuan, and the profit in the first half of the year will have reached 5.7 billion yuan. It is estimated that the possibility of exceeding expectations in the whole year is very great.

The United States and the Group can no longer have a higher premium. Of course, the United States and the Group also has the concept of finance, financial speculation is being sought after by the market, the United States Group's stock price should also include the market's expectations.

It can be said that small household appliances, higher-than-expected profits, and financial concepts are the main factors in the valuation of Midea Group over the industry. Midea Group is still a company that focuses on home appliance manufacturing. However, compared with the current valuation of blue chip stocks, the 14.7-fold P/E ratio has been very optimistic and has reacted ahead of schedule. Many estimates above this premium are difficult to achieve.

At present, the entire home appliance business is highly competitive and has low growth, which is far from the high growth and high profit margins that the market pursues. Whether the Midea Group can maintain its 15.65% return on net assets in the first half of this year is still unknown. Investors are generally less optimistic about such listed companies. For the financial concept pursued by the market, it is only a concept for the American group and there is no substantive content. The pursuit of funds will create a risk of overvaluation of the stock price. Investors cannot but watch out.

Analyst:

The price now includes some expectations that "the current stock price has a certain relationship with the valuation of Midea's overall listed assets injection", Galaxy Securities analyst Dong Siyi believes that the most striking thing in the injection of assets is the small home appliance business, "investors to the US small household appliances There is some confidence in the business growth outlook, and the current price includes the expectations of this part." Dong Siyi pointed out.

Another analyst also believes that Gree and Midea, as the leading enterprises in the refrigeration industry, will have more stable growth in the next few years, and they will change their business in the small household appliances business. The analyst pointed out that the share price of the United States is slightly higher than Gree. "There are really small household electrical appliances." Compared with Gree's small home appliance business, Midea is already the industry leader in many categories of small appliances. Expectations of growth are different and prices will naturally differ.

In addition to the imaginary space brought by the small household appliance business to the market, the news of the US application for a bank license is also a big plus. "If there are private banks in the Foshan area, the United States is more hopeful." One analyst believes that the stocks that have been tainted with the concept of banks have seen large increases in recent days. Gree still has no information in this respect.