Midea Group (000333): plans to implement large-scale share repurchase at a price of not more than 65 yuan to maintain the buy proposal

Midea Group (000333): plans to implement large-scale share repurchase at a price of not more than 65 yuan to maintain the buy proposal
The company announced on February 22, 2020 that it intends to repurchase social public shares of no more than 40 million 杭州桑拿网 shares and no more than 80 million shares at a repurchase price of no more than 65 yuan / share.Based on the calculation of the maximum number of repurchases of 80 million shares and the maximum repurchase price of 65 yuan per share, it is estimated that the amount of repurchase will not exceed 5.2 billion yuan.The repurchase period is within 12 months after the election of the board of directors.All the repurchased shares will be used to implement the company’s share incentive plan and employee stock ownership plan. Comment: Increase in the size of repurchase: Before the announcement of the repurchase program, the company implemented three repurchases in 2015, 2018, and 2019, respectively.The proportions are 0.69%, 1.43%, 0.89%.The size of this repurchase will not exceed 5.2 billion, and the share of repurchased shares is expected to reach 1.14%, the repurchase scale has increased again. The repurchase has a positive impact on the short, medium, and long-term: (1) We believe that the company’s continuous large-scale repurchase will help the company to reflect the value of the company and also demonstrate the company’s confidence in long-term development.65 yuan / share, higher than the 55 yuan / share in the last repurchase program, and 54 compared with the current overall.28 yuan / share also has 19.With a 7% premium, continued repurchases will drive forward recovery.(3) In 2019 and the share repurchase plan, share incentives and employee shareholding plans will be implemented, which will be beneficial to the combination of the interests of the company’s shareholders and the management team and help the company’s long-term development.(4) The company’s current assets and liabilities decreased by 63.4%, monetary funds are about 52.4 billion, repurchase expenses will not have a significant impact on the company’s operations and financial scale. Impact of the epidemic situation: At present, the company actively promotes the resumption of work and production. By chartering and chartering, the employees of the factory are safely returned to the factory. The return rate of employees has continued to increase, and the production end has certain guarantees.However, due to the epidemic’s control of transportation and offline retail terminals, offline sales will take time to recover. The company’s short-term increase in online channel sales speed is expected to make up for offline sales.From a first-level perspective, we believe that the company’s demand for household appliances such as air conditioners, refrigerators, and washing machines has expanded. Demand will be relatively concentrated after the epidemic, and the biggest impact of changes in Q1 is expected to be limited. Earnings forecast and investment recommendations: Considering the impact of the epidemic on short-term home appliance consumption, we have slightly lowered our earnings forecast for the company. We expect the company to achieve a net profit of 233 in 2019, 2020 and 2021.200 million, 256.0 billion, 302.800 million, a year-on-year increase of +15.3%, a year-on-year increase of +9.8%, a year-on-year increase of +18.3%) (Originally the company was expected to achieve a net profit of 233 in 2019 and 2020.200 million, 261.700 million, a year-on-year increase of +15.3%, +12 year-on-year.2%), the EPS is 3.36 yuan, 3.77 yuan, 4.36 yuan, P / E is 16X, 15X / 12X, the current estimate is relatively reasonable, and the large repurchase again shows confidence, we maintain the “buy” investment recommendation. Increased risk: outbreak of epidemic impact exceeds expectations; demand growth; raw material prices rise; exchange rate changes