China’s largest home appliances company, benefitting from the premiumisation trend

China’s largest home appliances company has a comprehensive product portfolio that includes air conditioners, refrigerators, washing machines and small home appliances.

The company’s strong emphasis on research and development has improved its product quality over the years; and its market share in most home appliance categories in China ranks it among the top three. The stock is currently trading on 7% FCF yield. Kuka and Toshiba acquisitions offer future growth opportunities – they contribute more than 10% to revenue, but minimal profit.

Market leader, gaining share (FY2022)

Robust cash flow generation

Source: FactSet, company annual report, FSSA Investment Managers, as at 30 June 2023. Operating cash flow (OFC) measures cash generated by a company's business operations. Free cash flow (FCF) is the cash that a company generates from its business operations after subtracting capital expenditures.

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