Midea Group

IR presentation

2017.01

1

2

Corporate Snapshot

3

Successful transition into a multi-product and global industry leader

Milestones

Return to Shareholders

4

RMB Bn

Stable dividend distribution to shareholders every year

5

Market Cap and rankings

Market cap: ~ RMB 200bn

Ranking among A-share companies: 26

Ranking among A-share companies (excl.

financial and energy companies)：4

Ranking among Shenzhen stock exchange: 2

+

Overview

FY 2015

$22 billion Export to

200+ Revenue Countries/Regions

Ranked

481st Fortune 2016

Credit ratings

A-/A3/A- S&P/Moody’s/Fitch

FY 2015, US$ Bn

# 1 Global Home Appliances Player by Revenue

2015 Revenue, US$ Bn

Leading Technology Group in consumer appliances, HVAC, robotics and automation systems

6

Product Portfolio

General SDA

Products

Kitchen

Appliances

Split A/C

Standing A/C

Movable A/C

Residential A/C

Major Domestic

Appliances

Side by Side

Refrigerator

Roof-top

U.S. Ducted

VRF

Mini VRF

Chillers

Commercial A/C

Dish

Washer

Electric

Oven

Microwave

Cooktop

Washing

Machine

French Doors

Refrigerator

Freezer In-line Water

Heater

Central A/C

System

Key Components

A/C and REF

Compressor

Electric

Motor

HVAC and

Appliance Motor

Hood

Electronic

Controller Magnetron

Range

Kettle

Water

Purifier

Vacuum

Cleaner

Heater

Fan

Juicer

Rice Cooker

Smart Washing

Machine

Robotics & Industrial

Automation

7

Market Position

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

Induction

Cooker

Microwave

Oven

Pressure

Cooker Rice Cooker Kettle

Water

Purifier

Residential

AC Washer

Water

Heater

Vacuum

Cleaner Refrigerator Hoods Gas Stove

Turnover Breakdown

8

Unit: RMB Bn

Source: 2016 Semi-Annual Report

2016H1 Main Business Turnover Breakdown

Air conditioner,

48%

Refrigerator,

9%

Wash machine,

10%

Small appliances,

28%

Motor,

3%

Logistics,

1%

Inside China,

56%

Outside of China,

44%

HVAC account for close to half of revenue; international sales account for over 40%

Manufacturing Footprint

9

Saudi Arabia

Residential AC, Washing

Machine, Refrigerator, Rice

Cooker, Fans

Vietnam (1)

India (2)

Egypt (1)

Brazil (2)

Argentina (1)

Microwave, Stoves

Belarus (1)

China (17)

Residential AC,

Commercial AC,

Refrigerators,

Microwaves, Stoves,

Ovens,

Disinfection cabinets,

Small Appliances,

Compressors, Motors

Lighting

Washing machines,

Vacuum Cleaners,

Water Heaters

Japan (2)

Rice Cooker, Fan,

Induction Cooker

Refrigerator, Wash Machine, Rice Cooker, Microwave Oven

Thailand (1) Residential AC Residential AC,

Commercial AC Residential AC

Residential AC,

Commercial AC

Italy (1)

Commercial AC

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

In addition, KUKA has 15 manufacturing sites and 12,300 employees worldwide,

including 2 sites and over 1,000 employees in China

10

Corporate Governance

Management Handover

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:

4 executive + 2 non-executive + 4 independent

A family enterprise managed by professional managers

Bitong Yin (Berton) VP & & GM of Residential AC

Joined in 1999

Peng Jiang (Galen) Board Secretary

Joined in 2007

Organizational Chart

12

Midea Group

Kit

ch

en

Ap

pli

an

ce

s

To

sh

iba L

ifesty

le (

TL

SC

)

Lau

nd

ry

Re

frig

era

tor

Liv

ing

Ap

pli

an

ce

s

Co

mm

erc

ial A

C

En

vir

on

men

tal

Ap

plian

ces

Wate

r H

eate

r

Pa

rts

& C

om

po

ne

nts

10 Business Units + KUKA

International

Business

Platform

E-commerce

Platform

M-Smart

Institute

Financing

Platform

Service

Platform

Procurement

Platform R

es

ide

nti

al A

C

Logistics

Platform Central R&D

Institute

10 Business Units + 8 Platforms + Corporate Functions = Great Synergies

KU

KA

Incentive Schemes

13

Midea Group

Controlling Shareholder

36%

Strategic Investors

4%

Management

4%

Other Shareholders

56%

Three terms of share option plans for employees.

Accumulatively account for 6% of TSO.

Majorly management in R&D and manufacturing.

Two terms of “Partners” Program (ESOP)

For key senior management.

From “professional managers” to “business partners”.

Share Option

Plan

“Partners”

Program

Clear Shareholding Structure & long-term incentive plans

14

Strategic Transformations

15

Key Financial Changes

2011 2015 Change

Revenue (RMB Bn) 134.1 138.4 3%

Net Earnings (RMB Bn) 6.6 13.6 106%

Net Cash / Debt (RMB Bn) * -5.1 64.9 +70 Bn

Cash flow from Operating Activities (RMB Bn) 4.1 26.7 551%

Revenue per employee (RMB Mn) 6.8 13.1 91%

Number of Employees (‘000) 196 105 -46%

Net Asset (RMB Bn) ** 30.2 56 85%

* The calculation of Net Cash here includes Notes Receivable.

** In addition, the dividend paid to the shareholders of the list company and JV partners amount to RMB 18Bn

in total in the last five years.

Significant margin improvement and strong cash generation capabilities

16

Leading

Products

• Focus on consumer-centric; improve product competitiveness

• Increase investment in R&D and innovation

• Spin off loss-making product categories; improve product mix

Global

Operation

Efficiency

Driven

• Set up International Business Platform (MIB)

• HQ globalization, subsidiaries localization

• Business model from OEM to OBM

• Joint Ventures, Mergers & Acquisitions

• Launch 632 IT project to standardize and streamline process

• Invest on automation of factories

• Promote Just-in-time manufacturing and destocking initiatives

• Consolidate business support to 6 platforms to create synergies

Strategic Focuses

Strategic focuses shifted to Products, Efficiency, and Globalization

17

Technology & Innovation

Top Global Innovator with increased R&D expenses, personnel and centers

18

Efficiency Driven

RMB 7Bn on

factory

automation

RMB 2Bn on

632 IT

project

Product

categories:

6432

SKU:

>4,000

2,000

Inventory:

1610Bn

RMB

Loan:

14.44Bn

RMB

Lean organization, lean manufacturing, made to orders (T+3 model)

Investments Reductions

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

19

Proven Partner with Leading Global Brands

JV cooperation in HVAC

and compressors

JV cooperation in Belarus

94.55% Stake in Kuka and

cooperation in robotics

JV cooperation in China with

Bosch Thermotechnology

Strategic JV with Little

Swan,

OEM business

Joint development with

Siix on electronic

controllers

JV cooperation in China,

India, Egypt, Philippines

and South America

JV cooperation on

Commercial Ac

JV cooperation in China

with Yaskawa on robotics

Globalization

HQ

Globalization

Subsidiaries

Localization

Global

standardization

Local

Differentiation

Midea International Business (“MIB”)

• A management platform with corporate functions

• An interface between HQ and overseas subs

• A “Special Economic Zone” within Midea Group

• 15 nationalities of less than 100 employees

OEM OBM

Functional Brand

Emotional Brand

Aspirational Brand

To achieve global allocation of capital and global operations

20

Recent Transactions

美的以5亿美元，受让

Midea + Toshiba

Acquisition of 80.1% stake in the

home appliances businesses of

Toshiba with a consideration of

c.US$500 million

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.

Closed on 30 June 2016

Midea + Clivet

Acquisition of 80% stake in Clivet, a

European leading company based in

Italy

Improve market share on the

European as well as global markets

Significant synergies in in product

offerings, market presence, supply

chain, manufacturing and

technologies

Closed on 31 October 2016

Midea + KUKA

Launched a voluntary tender offer at

EUR115 in cash per KUKA share;

Total consideration amounts to be

approximately EUR 3.7Bn

81.04% of shares tendered, plus the

13.51% shares acquired by Midea

prior to the takeover offer, results in

a total of 94.55% of all issued shares

of KUKA

In line with Midea Smart 2 Strategy

Closed on 6 January 2017

21

Future Strategies

New geographic expansion

Existing business

New business

“Leading Products” strategy

Focusing on strategic markets

Building, security, B to B business

22

Midea Corporate Strategy

HVAC Home

Appliance

Automation

Robotics Components New Fields

(Building Solution,

Water Treatment,

etc.)

Continuous

Transformation

Smart 2 Strategy Leading Positions

Intelligent Products Globalized Business Smart Home Smart manufacturing Leading

Products

Leading

Enterprise

Leading

Platform

Overarching platform underpinned by big data, services and ecosystem

Supported by infrastructure seamlessly incorporating logistics, finance and customer service platforms

23

Midea Automation Platform Strategy

Industrial / Logistics Automation Service Robotics

Software /

Systems

Hardware /

Product Design

Components

Industry

Applications

Enterprise

Software Cloud &

Big Data

Service-

based

Business

Model

Software

Eco-

system

Current Industry

Focus

Increased

General Industry

Penetration

Cobots Medium-sized Large-sized

Future Investment/Development Area

+

Joint Investment/Development Area

24

KUKA Overview

2015 Revenue: €3BN → 2020 Revenue: €4 - 4.5BN

KUKA Robotics 2015 Revenue(1): €910MM

2015 EBIT(1): €100MM

Swisslog 2015 Revenue(1): €621MM

2015 EBIT(1): €(46)MM

Product Cell Solution

KUKA Systems 2015 Revenue(1): €1472MM

2015 EBIT(1): €115MM

Industries Systems

Healthcare Warehouse

Logistics Automotive Reis

Technical

Solutions

Industrial

Robotics

Service & Medical

Robotics Aerospace

Au

tom

oti

ve

Ae

ros

pa

ce

Ele

ctr

on

ics

Co

ns

um

er

Go

od

s

Me

tal In

du

str

y

Lo

gis

tics

/ E

-

Co

mm

erc

e

He

alt

hc

are

Se

rvic

e

Ro

bo

tic

s

Top 5 Global Player in General Industry Robotics #1 Global Player in

Automotive Robotics

Serving a Variety of End Markets

Integrated software solutions and modular product platform

Robotics Expertise Application and Industry

Expertise

Systems and Process

Expertise

Note:

1. Segment financials excludes corporate expenses

25

The Chinese Automation Opportunity

China is Facing Rising Labor

Costs and Aging Demographics… …While Continuing to Act

as “Workshop of the World”

Rising Labor Cost Manufacturing wages (RMB per year)

17,966

51,369

2006 2008 2010 2012 2014

Aging Population

19%

12%

70%

55%

11%

33%

2010

2050E

Under 15 15–60 Over 60

Share of Global Handset Production

Share of Global Auto Production

75% 35%

42% 21%

Share of Global Electronics Robot

Shipment

Share of Global Auto Robot Shipment

Source: www.tradingeconomics.com

Source: KPMG, China 360, 2013 Source: IFR

…Though Its Robotics

Industry is Still in Infancy

26

The Chinese Automation Opportunity (cont’d)

Source: IFR

60

305

120

300

195

954 1,141 990 1,050 1,140

China U.S.

Chinese

Industrial

Robots

CAGR

(10–14)

69% 30% 72% 25% 44%

Industrial Robots Remain Underpenetrated in China Compared to the U.S.

Robots per

10,000

Manufacturing

Employees

Electrical & Electronics Automotive Food Processing Chemical, Rubber & Plastics Metal & Machinery

16x

4x

8x

3.5x

6x

Rich, Mature Industries in China

with Capital to Invest in Automation

27

Business Update

28

Revenue & Margins

Revenue growth recovered; both gross and net profit margin further increased

Note: Acquisition of TLSC was closed on 30 June 2016. Financial reports of TLSC has been consolidated since then.

29

Cash & Cash Flow

Abundant cash-in-hand; strong cash generation capabilities

* The calculation of Net Cash here includes Notes

receivables.

30

Cash Conversion Cycle

Cash conversion cycle became negative

Thank you!