Analysis of Midea Group's 2026 Half-Year Report: The Transition from "Home Appliance Sales" to "Global Intelligent Manufacturing"
Hello everyone, I'm your financial analyst. Today, we're going to discuss the half-year report released by Midea Group, a leading home appliance company, on September 15, 2026.
For those who are not familiar with financial terms, words like "half-year report," "non-recurring net profit," and "OBM" can be quite confusing. Don't worry; I've broken down the news into easy-to-understand language to help you understand what Midea is currently up to, the stability of its financial situation, and how we should view this giant company in the future.
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Summary of Key Points: Understanding Midea's Current Situation in One Sentence
Midea is undergoing a transformation that can be described as "changing its engine."
Although the company's growth slowed down in the first half of the year due to weak domestic demand, rising raw material prices, and exchange rate fluctuations (revenue increased by 3.5%, and profit by 1.7%), Midea has not simply given up. It is focusing on two major initiatives:
1. Expanding internationally: It is upgrading its overseas operations from contract manufacturing to developing its own brands and local production, even setting up factories in countries like Thailand, Egypt, and Brazil to bypass trade barriers.
2. Diversifying its business: It is no longer solely focused on selling air conditioners and refrigerators to consumers (ToC) but is making significant investments in high-tech areas such as robotics, new energy, and data center cooling systems (ToB) in order to create a second source of growth.
In simple terms, Midea wants the market to see it not just as a home appliance manufacturer but as a global leader in intelligent manufacturing, capable of thriving through economic cycles.
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Detailed Analysis: Understanding Midea's Strategies from Five Dimensions
1. Shift in Strategic Focus: ToB Business Becomes the New Driver of Growth
[Easy-to-understand explanation: In the past, Midea made its money by selling air conditioners and refrigerators. Now, it is generating revenue from selling "industrial components" and "solutions" to businesses.**
The report highlights that Midea's ToB business revenue has increased from 18.5% in 2020 to 26.8% in 2025, meaning nearly 30% of its total revenue comes from non-home appliance sectors.
- Why is this important? The home appliance industry is cyclical and heavily influenced by the real estate market. ToB businesses, such as data center cooling and thermal management for electric vehicles, are more stable and in demand.
- Current situation: Although the revenue from its industrial technology segment declined in the first half of the year, Fang Hongbo emphasized that this is a strategic move to ensure long-term growth.
- Metaphor: Midea is like a restaurant that used to operate a small stall, with more customers during peak times and fewer during off-peak periods. Now, it has established a "central kitchen" and supplies equipment to other restaurants, ensuring a steady income stream and greater resilience.
2. Upgrading Overseas Operations: From Exporting to Local Manufacturing
[Easy-to-understand explanation: Midea is no longer just selling products made in China abroad; it is now building factories, using local brands, and hiring local workers.
This is one of the most significant announcements from the report. Midea's OBM (Original Brand Manufacturer) business accounts for more than 50% of its overseas smart home revenue.
- What is OBM? OBM means manufacturing products under its own brand globally. For example, the TEKA brand of home appliances you buy in Europe is actually produced by Midea.
- Why localize?
- Avoiding trade barriers: With increasing trade protectionism, tariffs, and geopolitical risks, local manufacturing reduces these challenges.
- Cost and efficiency: Being closer to markets improves logistics and flexibility.
- Specific actions: Midea is establishing five overseas supply chain delivery centers in Thailand, Egypt, Indonesia, Brazil, and Vietnam, with expansions in air conditioning and refrigerator production, respectively.
- Metaphor: Instead of sending goods from China, Midea is setting up local operations, using local resources and expertise to reduce costs and risks.
3. The Truth Behind the Slower Growth in the First Half of the Year
[Easy-to-understand explanation: Midea's growth was slower due to several challenges:
- Weak domestic demand,
- Unstable overseas environments,
- Rising costs of raw materials (such as copper and plastic), which impacted profits.
- Key points: Despite these challenges, Midea still managed to grow. This shows its strong cost control and market presence. For the second half of the year, the company plans to enhance its exchange rate hedging and cost management strategies.
4. Future Growth Drivers: Robotics and New Energy as Key Areas
[Easy-to-understand explanation: Air conditioners and refrigerators are its core businesses, but Midea is investing in robotics and new energy as future growth drivers.
Fang Hongbo mentioned that the company will continue to focus on these areas.
- What are these areas? Robotics (through KUKA acquisitions) and new energy technologies (such as thermal management for electric vehicles and energy storage).
- Why now? The home appliance market is reaching its limits, so Midea needs to explore new growth areas. It has a strong presence in robotics (with KUKA) and new energy technologies.
- Metaphor: Midea is like a restaurant that relies on its classic dishes but is also developing new, more profitable dishes to sustain its success.
5. Shareholder Rewards: Active Stock Repurchase and Cancellation
[Easy-to-understand explanation: Midea believes its stock is undervalued and is buying back shares to increase their value for remaining shareholders.
The company plans to repurchase between 6.5 billion and 13 billion yuan of its A-shares this year and will cancel them, increasing the earnings per share (EPS) and potentially boosting the stock price.
- Why cancel shares? By reducing the total number of shares, the EPS will increase, theoretically boosting the stock price.
- Progress: As of the end of August, Midea has spent 8.02 billion yuan to repurchase approximately 99.8 million shares, indicating its financial strength and confidence in its stock value.
- Metaphor: It's like buying back undervalued shares and destroying them to make each share more valuable for shareholders.
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Conclusion and Outlook
Midea Group's strategy is clear:
1. Defending its position: By localizing operations and hedging against risks, Midea aims to protect itself from external factors.
2. Expanding into new growth areas: It is focusing on ToB businesses to diversify its revenue sources.
3. Reinvesting in shareholders: Through substantial share repurchases, Midea aims to enhance shareholder value.
Implications for Investors and Consumers:
- For investors: Midea is no longer just a traditional home appliance company; it is a global, technology-driven enterprise. Its performance may be affected by macroeconomic factors, but its investments in robotics and new energy are key long-term opportunities.
- For consumers: Home appliances from non-Chinese brands you buy abroad may be made by Midea, and smart home devices may use advanced robotics and IoT technology.
In summary: Midea is using its existing profits to invest in new areas and building a strong foundation for future growth. Although it faced challenges in the first half of the year, its financial stability and strategic direction indicate a promising future.