Foxconn Midea

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Midea's share price has changed 135.2％ in last 5 year, For the 52 weeks ending 12/11/2016, the stock of this company was up 54.8% to 29.78 CNY. During the past 13 weeks, the stock has risen 14.8%. it can be seen in the graph (figure 6.1.2) that this company had a downturn in the second half of 2015, which is received the impact of the cool summer, summer inventory coupled with the subsequent off-season led to the main product sales decline. Midea's share price continued to rise after the stock cut was successful this year, and then the news of the acquisition of Kuka in March affected the stock price surge. The acquisition of KUKA will be completed next year, this acquisition is optimistic about the market, with Toshiba next year's net profit is expected to increase, Midea's stock is expected to continue to rise

Social Concerns

Midea is committed to abide by business ethics, comply with social ethics, and actively take social responsibility. As of 2015, Midea Group has donated a total of more than a few billion to the community, covering flood relief, medical services, culture and people's livelihood, social welfare and other public welfare undertakings（Midea CSR 2014）. Moreover, there is very little negative news that conflicts with environmental sustainability. Midea Water Purifying Co. Ltd. (MWP) began the Lean On Me program in Beijing to set up water purifying systems (midea.com 2014), not only to benefit children's health, but also to convey the idea of ​​cherishing water to the next generation. In order to promote the brand of "Best Employer" and improve the welfare system of the Group, Midea Group established the "Midea Group Support Fund" in 2006 (people.com 2014). When employees suffered major illnesses or unexpected accidents, may apply for Midea Group Assistance Fund.

However，Midea's English CSR has not been updated since 2011, and it is argued that Midea does not focus on showing its social responsibility to the international community, while Midea's charity activities are too limited to domestic local communities .

Future Outlook

Made in China 2025 (MiC2025) is a government-based initiative to comprehensively upgrade Chinese industry. The initiative draws direct inspiration from Germany’s “Industry 4.0” plan ((Jeffrey et al 2016)). Midea’s strategy to acquire a major stake in Kuka, the leading robot make, would lead Chinese investor to the heart of Germany’s “Industry 4.0”, also in a bid to drive growth, thanks to Kuka’s leading market position in robotics and automation. the Chinese government favors this acquisition to help meet its target that by 2020, local manufacturers can satisfy 45% of domestic robotics demand, as Kuka currently enjoys a 15% share of the robotics market in China (Yuanta 2016).

Meanwhile, Midea is also criticized As it is the new into the robot market, current sales mainly from electrical appliance market, there is no historical-related business as a reference, with greater uncertainty, will bring greater risk to investment. Moreover, compared with other competitors in the same industry, Midea is too concentrated in the same country, so when China's huge economic changes, the company will inevitably receive big influence.

FINAL RECOMMONDATION & LIMITATION

This report has examined the prospects of three company we believe worthiest to invest in, from both an accountability perspective and in terms of business strategy, social concerns, based on our client, Rihanna’s criteria. In order to meet our client's minimum expected earnings of 5%, we used Solver function calculate three allocation object with highest return, lowest standard deviation and maximum Sharpe ratio. By analysed all three in multiple aspect, all of those three have positive financial performance and effective corporate strategy, hence we recommend Rihanna to invest in the Midea, Yasukawa and Boeing respectively at 4%, 11% and 85% of the total portfolio. Converted to numbers, $ 400,000 will be invested in Midea, £ 1,100,000 in Yasukawa, and finally £ 8,500,000 in Boeing.

We collects data from a wide range of sources，include analyst’s report，news，database and company’s annual report or website. All data has been used can not be guaranteed 100％。 We understand bias exits when company reveal their own information, and media sometimes not objective enough in choosing news to release. While our ratio analysis is based on Thomson Research, result may vary to others since each analyst may choose differently estimate methods. while in the auditor's external and internal testing and verification process, the auditor's independence, estimated use and the use of personal judgments caused widespread bias.However, our 9 companies are based in multiple countries and areas, cultures and accounting rules might be applied differently. To keep our limitations at a minimum, databases from Yahoo Finance and Thomson Reuters were chosen for main historic data source

In the calculation part, CAPM has been applied to calculate the estimate return, There are multiple points of CAPM to be criticized, such as the using of Beta to explain the expected returns , risk-free borrowing and lending is unrestricted, and it assume investors care only about the risk and return of single period return (Berk & DeMarzo, 2011).