1

Midea Group

IR presentation

2017.04

2

Corporate Snapshot

1980s 1997 2008 2016 2017E

Milestones

US$29Bn

Revenue

(2017E)

1980s –1997

1998

1999

2010 2004

2001

2007

2008 – 2013

2004

1992

2008

2015– 2016

2017

Organic growth

in HVAC / SDA

Vertical integration & horizontal

consolidation in China

Global expansion to

international markets

Organic

growth of

domestic

business

• Introduced commercial

A/C to China

• Acq. of Macro, Toshiba

A/C compressor factory

Started two JVs with

Indesit on dishwashers

and motors

Listed motors

asset in Welling

Acq. of Hualing and

Royalstar; started

Refrigerators and

Laundry business

Acq. Of Little

Swan

Acq. of Magnetron

from Sanyo

Factory in

Vietnam

Acquisition of

Chongqing

General Chiller

Established Welling

Holding and started

appliances motors

business

Entered home

appliances

market

Series of JVs with Carrier

in China, Egypt, LatAm,

India and Philippines

JV with Bosch

JV with SIIX

JV with Yaskawa

JV with Cuchen

Acq. Of Toshiba Lifestyle

Acq. Of Clivet

Acq. Of KUKA

Acq. Of STX

Successful transition into a multi-product and global operation group

US$24Bn

Revenue

(2016)

3.4

4.2

5.1

6.5

2013 2014 2015 2016

Cash Dividend Amount

4

Return to Shareholders

Since IPO in 1993:

Revenue: RMB 936mn RMB 159.8bn

Earnings: RMB 144mn RMB 15.9bn

Accumulated dividend distribution: RMB 32.5bn

Stable dividend distribution to shareholders every year

RMB Bn

FY 2015, US$ Bn

Market Cap and rankings

+

5

Overview

FY 2016

$24 billion Export to

200+

Revenue Countries/Regions

Ratings

A-/A3/A-

S&P/Moddy’s/Fitch

Fortune 2016

481/216

Revenue/Profit

# 1 Global Consumer Appliances Player by Revenue

Market cap: > RMB 200bn

Ranking among A-share companies: 21+

Ranking among A-share companies (excl.

financial and energy companies)： ~5

Ranking among Shenzhen stock exchange:

top 3

6

AC Compressor Motor Micro-machine Electronic Controller

Robotics

System Solution

Logistics Automation

Motion controller &

Driver Freezer Compressor

Supply ~300m units of consumer appliances to customers and ~300m units of key components to manufacturers

Consumer appliances, HVAC and robotics and industrial automation systems

Kettle

Water

Purifier

Vacuum

Cleaner

Heater Fan

Juicer

Rice Cooker

Induction

cooker

Hood

Cooktop

CMR

Microwave

Dish

Washer

KA

French Doors

Refrigerator

Washing Machine

Dryer

In-line Water

Heater

MDA SDA

Split A/C

Standing A/C

Movable A/C

Central A/C

System

RAC

Roof-top

U.S. Ducted

VRF

Chillers

CAC Robotics&

Industrial Automation

Key Components

Magnetron

Product Portfolio

Most of categories’ market share rank among top 3 in the Chinese market

No.1 No.2 No.1 No.1 No.2 No.2 No.3 No.3 No.3 No.1

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Market Position

0%

10%

20%

30%

40%

50%

60%

InductionCooker

MicrowaveOven

PressureCooker

Rice Cooker Kettle Residential AC Washer Water Heater Refrigerator Hoods

Revenue Breakdown

Diversified product portfolio; international sales account for over 40%

Air Conditioner

45%

Refrigerator 10%

Washing Machine

11%

Small Appliances

30%

Motors 3%

Logistics 1%

China 57%

Outside of China 43%

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Source: 2016 Semi-Annual Report

2016 Main Business Turnover Breakdown

In addition, KUKA has 15 manufacturing sites worldwide, including 2 in China.

Vietnam (1) Residential AC, Washing Machines,

Refrigerators, Rice Cookers, Fans

Thailand (1)

Refrigerators, Washing Machines,

Rice Cookers, Microwave Ovens

Italy (1) Commercial AC

Belarus (1)

Microwave Ovens, Water Heaters

Argentina (1)

Residential AC

China (17)

Japan (2)

Rice Cookers, Fans, Induction

Cookers

Egypt (1)

Residential AC,

Commercial AC

India (2)

Residential AC,

Washing Machines

Residential AC,

Commercial AC

Brazil (1)

9

Manufacturing Footprint

Inside / Outside of China: 17 / 12 production facilities; ~90,000 / ~15,000 employees

Residential AC, Commercial AC, Refrigerators,

Washing machines, Microwaves, Stoves, Ovens,

Dishwashers, Vacuum Cleaners, Water Heaters,

Small Appliances, Compressors, Motors, etc.

10

Corporate Governance

Becoming a modern enterprise managed by professional managers

11

Midea Group

SDA Motor Logistics Midea Electric (List

Co)

Midea Holding Strategic

Investors Management

59.85% 21.15% 19.00%

Issue Shares

Share swap

Midea Group

(List Co)

SDA Motor Logistics Midea Electric

Midea Holding Strategic

Investors Management

35.49% 12.54% 11.27%

Others

40.70%

58.83% 41.17%

Prior to IPO

After IPO

Shareholders of

Midea Electric

In 2012, professional manager team came on board

Hongbo Fang (Paul) Chairman & President

Joined Midea in 1992

In 2013, Midea Group launched IPO

Fengtao Zhu (Frank) VP & GM of Kitchen Appliances

Joined in 1993

Jinliang Wang (Kim) VP & Head of Domestic Marketing

Joined in 1995

Ziqiang Hu (Zack)

VP & Chief of Central Research

Joined in 2012

Yanmin Gu (Andy) VP

Joined in 2000

Feide Li (Fred) VP & Head of Operations

Joined in 1999

Mingguang Xiao (Peter) CFO

Joined in 2000

Board composition:

5 executive + 2 non-executive + 4 independent

Bitong Yin (Berton)

VP & & GM of Residential AC

Joined in 1999

Peng Jiang (Galen) Board Secretary

Joined in 2007

Management Handover

Organizational Chart

Business Units + Platforms + Corporate Functions, Great Synergies

Financing

Center

Procurement

Center

M-Smart

Institute

Midea

International

After-sales

Service

Annto

Logistics

E-Commerce

Central R&D

Institute

Corporate functions:

Consumer & Marketing, Product & Lean Manufacturing, Finance, IT, Strategy & Development,

Corporate Operation, Human Resource, Auditing, Legal

Resid

en

tial A

C

Midea Group

12

Kit

ch

en

Ap

pli

an

ces

To

sh

iba L

ife

sty

le (

TL

SC

)

Lau

nd

ry

Refr

igera

tor

Sm

all

Ap

pli

an

ces

Co

mm

erc

ial A

C

En

vir

on

men

tal

Ap

plian

ces

Wate

r H

eate

r

Part

s &

Co

mp

on

en

ts

Ro

bo

tics &

Au

tom

ati

on

“Partners”

Program

• Three terms of “Partners” Program (ESOP)

• For key senior management.

• From “professional managers” to “business partners”.

• Four terms of share option plans for about 3,600 employees

• Accumulatively account for 8% of TSO

• Majorly management in R&D and manufacturing

Share Option

Plan

Restricted

Shares Plan

• First term of restricted shares plan for 140 employees

• Account for about 0.5% of TSO

• Majorly senior management in the business units

Long-term Incentive Plans to Align Interests of Shareholders and Management

Incentive Schemes

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Strategic Transformations

Significant margin improvement and strong cash generation capabilities

Key Financial Changes

2011 2016 对比

Revenue (RMB Bn) 134.1 159.8 +19%

Net Earnings (RMB Bn) 6.7 15.9 +137%

Net Cash / Debt (RMB Bn) * -5.1 69.5 +~75Bn

Cash flow from Operating Activities (RMB Bn) 4.1 26.7 +550%

Revenue per employee (RMB Mn) 6.7 13.4 +100%

Number of Employees (‘000) 200 120 -39%

Net Asset (RMB Bn) 30.2 69.0 +128%

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* The calculation of Net Cash here includes Notes Receivable.

Strategic Focuses

Leading

Products Efficiency

Driven Global

Operations

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• Manufacturing Efficiency

• Assets Turnover Efficiency

• Automation & Informatization

• De-capacity & de-stocking

• Technical Innovation

• Increased Investment

• Excellent Quality

• Customer Focus

• Global Positioning

• Local Operation

• M&A

• OBM business growth

Leading Products

R&D investment R&D personnel Talent Structure Patents

17

23bn RMB in last 5 years

3.8% of total revenue

Rank 7th in China

(1st in industry)

6bn RMB ≥50%

27% in 2011

55% in 2016

68% in 2018 (planned)

300

20 doctors in 2012

300 doctors in 2016

300 foreign experts

5,427

32,000 patent application

in last 5 years

Rank 1st globally in

consumer appliance

67%

60%

2011 2016

Debt asset ratio

30

4

0

2012 2015 2016

Cash Conversion Cycle

Efficiency Driven

Investment on automation & IT; reduction on overcapacity, inventory, leverage

6.1 8.3

11.6 13.6

15.9

6.0% 6.8%

8.2%

9.8% 10%

2012 2013 2014 2015 2016

Net Earnings Net Margin

Unit: RMB Bn

26 days reduction

4 days reduction

7 pct decline

Automation

Rmb 7bn

632 IT Project

Rmb 3bn

Product

categories:

6432

SKU:

>4,000

2,000

Channel stock:

167.7

(Rmb bn)

Fixed Assets:

2418

(Rmb bn)

Automation & Informatization, Made To Order (T+3 model)

Investments Reductions

Growth in earnings & margins Shortened cash conversion cycle Decrease in debt asset ratio

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Proven Partner with Leading Global Brands

To achieve global allocation of capital and global operations

Global Operation

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JV cooperation in China,

India, Egypt, Philippines

and South America

JV cooperation in China

with Bosch Thermo-

technology

JV cooperation in

HVAC and

compressors

JV cooperation in

Belarus on kitchen

appliances

JV cooperation in

China with Yaskawa

on robotics

94.55% Stake in Kuka and

cooperation in robotics

JV cooperation in motion

control and robotics

JV cooperation on

Commercial Ac

Joint development with

Siix in China on PCBs

Midea International

• Communication platform between China HQ and

international subsidiaries

• 19 settlement currencies, 21 nationalities of employees

• International business account for 50% of revenue 2017F

HQ

Globalization

Subsidiaries

Localization

Global

standardization

Local

Differentiation

Strategic Cooperation

Acquisition of 80% stake in Clivet, a European leading company

based in Italy

Improve market share in the European as well as global markets

Significant synergies in manufacturing and technologies of large

commercial air conditioners

Transaction completed on 31 October 2016

Acquisition of 80% stake in Toshiba home appliances businesses

Being licensed to use the Toshiba brand worldwide for 40 years

Obtained over 5,000 IP assets

Significant synergies in brand, channels, R&D, supply chain, etc.

Transaction completed on 30 June 2016

+ +

Transaction completed on 6 Janurary 2017

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Acquisition of a controlling stake in Servotronix, a leading

Israeli high-tech company

Another milestone of Midea’s expansion in industrial

automation and intelligent manufacturing

Provide comprehensive motion control solutions, from

encoders, servo drives to multi-axis motion controllers, for a

wide variety of industries including industrial robots

Transaction completed on 9 February 2017

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20

Acquisition of 95% stake in KUKA AG

Midea “Smart Home” and “Intelligent Manufacturing” Strategy:

• Improve manufacturing competency through automation

• Improve logistics automation

• develop smart devices and service robotics

Corporate Vision

World’s leading technologies group in

consumer appliances, HVAC systems, and robotics & automation systems

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Appliances Smart Appliances Smart Home Solution

HVAC Residential HVAC Commercial HVAC Industrial

Robotics &

Industrial Automation Robotics Commercial Robotics Residential

Building Blocks: Compressor, Motor, Magnetron, Motion controller, Encoder, Driver, PCBs

Big Data

Cloud Computing

Artificial intelligence

Key Enabler

Business Update

22

Revenue & Margins

Steady growth in sales and improvement in margins

If excluding the impact

from TLSC, it would

be 15.8% for 2016

with YoY -0.2%.

26.4%

28.6%

16.1% 16.5%

2015 2016

Gross Margin SG&A&Fin cost ratio

* Inclusive of revenue of RMB7.5Bn and net profit of

RMB32Mn from TLSC.

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139

160

14 16

9.8% 9.9%

2015 2016

Total Revenue Net Profit

Net Profit Margin

*

Unit: RMB Bn

Cash & Cash Flow

Abundant cash-in-hand; strong cash generation capabilities

* Net Cash ＝Monetary Asset－Interesting Bearing Liabilities

69.9 64.9

26.8

86.5

69.5

26.7

Monetary asset Net cash Cash flow from operating activities

2015 2016

*

23.7%

7.1%

-0.3%

If excluding the cash flow

from financial operations,

it is RMB 29.7Bn for 2016,

with a YoY increase of

+14.3%。

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Unit: RMB Bn

Cash Conversion Cycle

Cash conversion cycle has been largely shortened

4

25

45

66

1

27

41

67

Cash Conversion Cycle Account Receivable Days Inventory Turnover Days Account Payable Days

2015 2016

* The monthly weighted average of cash conversion cycle for 2016 is -4 days.

If excluding the impact of

TLSC, the cash conversion

cycle for 2016 is 0 days.

3 days

2 days

4 days

1 day

25

Unit: Day

*

T h a n k Yo u !