Midea stock faces earnings-quality test after Q3 profit gains

Midea Group's third-quarter review has shifted attention from headline profit growth to the durability of earnings. A research note published by Huachuang Securities on November 8 said domestic demand remained under pressure, while overseas sales, building technologies and robotics provided support. The analysis was published by Futubull.

Headline Profit Masks Mixed Q3 Trends

Midea reported third-quarter revenue of RMB 107.32 billion, down 4.1 percent from a year earlier. Net profit attributable to owners rose 25.9 percent to RMB 14.95 billion, but non-GAAP net profit fell 15.7 percent to RMB 9.19 billion.

Huachuang Securities attributed the gap between reported and adjusted profit mainly to changes in the fair value of financial assets and gains on disposals. The note also pointed to foreign-exchange effects, with related hedging gains classified as non-recurring. Gross margin declined by 0.5 percentage points to 26.0 percent.

For the first nine months, revenue reached RMB 367.36 billion, an increase of 1.2 percent year over year, while net profit attributable to owners rose 9.3 percent to RMB 41.39 billion. The figures show that investment gains supported the reported result even as underlying consumer demand weakened.

Diversification Meets Domestic Pressure

The research note described a wide performance gap across Midea's businesses. Building Technologies generated RMB 30.9 billion of third-quarter revenue, up 10 percent year over year, while Robotics and Automation revenue also increased 10 percent to RMB 24.9 billion. Industrial Technologies revenue fell 13 percent to RMB 18.3 billion.

Domestic appliance demand was the main drag, particularly in air conditioning, as government subsidies provided less support than in the prior year. Huachuang Securities expects overseas proprietary-brand sales to remain a growth driver and sees further potential in building technologies, robotics, data-center thermal management and liquid cooling.

The analyst also expects Midea's domestic direct-to-consumer reform to reduce channel layers and improve inventory and shipment structures over time. The shift could support efficiency, but the near-term outlook for domestic demand remains uncertain.

Lower Forecasts Raise The Next Test

Huachuang Securities cut its earnings-per-share forecasts for 2026, 2027 and 2028 to RMB 6.21, RMB 6.32 and RMB 6.75 from RMB 6.26, RMB 6.66 and RMB 7.25. The research house maintained an Outperform rating and lowered its DCF-based target price to RMB 105, citing weaker domestic demand, foreign-exchange effects and other cost pressures.

Midea stock traded at 11.72 euros on Lang & Schwarz at 09:32 CET on Friday, November 13, 2026.

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