(Yicai) March 31 -- Shares of Midea Group rose after the world's biggest maker of home appliances said it sold the rest of its holdings in Xiaomi for around CNY901.8 million (USD124 million) last year, ending its over 10 years investment in the Chinese electronics giant.

After earlier jumping by as much as 4.4 percent, Midea [SHE: 000333] closed 2.1 percent higher at CNY78.50 (USD10.82) a share in Shenzhen today. Xiaomi's stock [HKG: 1810] ended down 3.6 percent at HKD49.20 (USD6.33) in Hong Kong. It has climbed 43 percent so far this year.

Midea earned about CNY92.8 million (USD12.8 million) from the sale of Xiaomi shares last year, the Foshan-based firm said in an annual earnings report on March 28.

Midea and Xiaomi allied through a cross-holding arrangement in 2014, with the home appliances maker investing CNY1.3 billion (USD179 million). However, Midea began trimming its stake after Xiaomi went public in Hong Kong, cashing out CNY876 million in 2020 and CNY59.2 million in 2023.

Based on the disclosed figures, Midea has earned CNY1.8 billion from selling Xiaomi shares, or a CNY500 million return on its investment.

Midea's decision may have been based on the belief that Xiaomi's stock price had reached its expected target level, Yu Fenghui, an advisor at the Top 100 Hong Kong Listed Companies Research Centre, told Yicai. It could also be due to Xiaomi rapidly expanding its home appliances business, turning it into a direct competitor, so selling the stake could help ease potential conflict of interest, Yu noted.

Thanks to Xiaomi's successful entry into the electric vehicle market, its share price more than doubled last year. The upward trend continued at the start of this year, with the stock hitting a record high of HKD59.45 on March 19 after the firm reported record annual earnings. However, the price began to drop after the company said it raised about HKD42.5 billion (USD5.5 billion) from a discounted share placement on March 25.

Midea's net profit jumped 14 percent to CNY38.5 billion (USD5.3 billion) in the 12 months ended Dec. 31 from the previous year, while its revenue rose 9 percent to CNY407.1 billion (USD56.1 billion), according to the company.

Xiaomi's net profit surged 35 percent to CNY23.7 billion, the firm said in an annual earnings report released on March 18. Its revenue also jumped 35 percent to CNY365.9 billion thanks to strong phone, Internet of Things products, and EV sales, it added.

Smartphone revenue at Xiaomi jumped 22 percent to CNY191.8 billion, while income from IoT products, such as smart appliances, soared 30 percent to CNY104.1 billion. Revenue from internet services rose 13 percent to CNY34.1 billion, while that from EVs topped CNY32.1 billion.

Editor: Martin Kadiev