"cash cow" midea group plans to be listed in hong kong on september 17, many predict →
2024-09-11
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china business news (reporter zhou zidi text/photo)on september 9, midea group, a leading household appliance company, announced that the company's h-share public offering in hong kong will start on that day and is expected to end on september 12. the h-shares issued this time are expected to be listed and traded on september 17. what are the considerations for midea group to go public in hong kong? can this move help the company's international development?
consumers are getting to know midea group's products.
why did the "cash cow" midea group go public in hong kong?
the announcement shows that midea group plans to offer 492 million h shares globally, of which 24.6068 million shares are initially arranged to be offered in hong kong, accounting for about 5% of the total global offering, and international offering accounts for about 95%, with an additional 15% over-allotment option. the price range is initially determined to be hk$52-54.8 per share. it is expected that the h shares will be listed and traded on the hong kong stock exchange on september 17.
in fact, it has been more than a year since midea group announced its listing in hong kong. it is understood that in august last year, midea group stated that it was conducting preliminary research on the issuance of securities (h shares) and listing overseas; in september of the same year, midea group announced its plan to issue h shares and list on the main board of the hong kong stock exchange; in october of the same year, midea group submitted its listing application to the hong kong stock exchange.
it is worth mentioning that midea group’s current market value in the a-share market exceeds rmb 400 billion, and it is labeled as a “cash cow”, “first-tier blue chip stock”, and “heavy holdings of funds”. why did midea group choose to go public in hong kong?
dong qiudi (pseudonym), a securities analyst close to midea group, revealed to china business news that midea group went public in hong kong for three reasons: first, midea group is determined to become an international enterprise and may conduct many mergers and acquisitions in overseas markets. the financing platform of hong kong stocks can make its overseas mergers and acquisitions smoother; second, midea group currently has many overseas employees and executives, and listing on the hong kong stock market can facilitate the company's equity incentives; third, listing on the hong kong stock market can make it easier for overseas investors to participate in investing in midea group.
shen meng, director of xiangsong capital, told china business news that as one of the largest home appliance companies in china, midea group's issuance of h shares in hong kong can enhance its status as an international financial center in hong kong.
can listing on the hong kong stock market help the company's international development?
it is understood that midea group's international business is progressing steadily. the semi-annual report released by the group shows that in the first half of this year, midea group's overseas market revenue reached 91.076 billion yuan, a year-on-year increase of 13.09%, higher than the 8.37% growth rate of the domestic market, and the overseas market revenue accounted for 41.92% of midea group's revenue, an increase year-on-year.
compared with another leading home appliance company, haier smart home, in recent years, haier smart home's overseas market revenue has accounted for half of the company's revenue, and in 2022, haier smart home's overseas market revenue exceeded its domestic market revenue, that is, overseas market revenue accounted for more than 50% of the company's revenue.
in fact, there have always been doubts from the outside world. compared with haier group, midea group entered the overseas market later, and oem products account for a large proportion of its exported products. its brand awareness in the overseas market is also weaker than that of haier group. will midea group's listing in hong kong be beneficial to its international business?
dong qiudi believes that listing in hong kong is more to pave the way for midea group's subsequent overseas expansion. for midea group, the real acquisition of well-known overseas brands is a milestone event.
liu buchen, an analyst of the home appliance industry, believes that midea group's listing in hong kong is neither a necessary nor a sufficient condition to support the company's overseas development. whether midea group can operate and develop well in overseas markets depends on whether its products are competitive and its brand is influential, rather than whether it is listed in overseas capital markets.
what problems does midea group still need to solve after listing?
in its prospectus for its listing in hong kong, midea group stated that investments in new business strategies, acquisitions and other forms of business integration may disrupt existing businesses and bring unexpected risks, and that expected benefits, synergies, cost savings or efficiency may not be achieved through acquisitions.
in addition, shen meng believes that from the current perspective, the hong kong stock market is relatively sluggish. after midea group is listed on the hong kong stock market, it will be subject to the supervision of the hong kong stock exchange, which will increase the operating costs and regulatory risks of its related affairs.
dong qiudi said that midea group's listing on the hong kong stock market can be understood as issuing additional shares to allow more people to share the company's value. this also means that the company's equity value in a shares will be diluted to a certain extent, which will lead to a decline in the company's a share price in the short term. in the long run, midea group's listing on the hong kong stock market may be beneficial to the company's long-term development, and the company can follow the precedent of haier smart home.
in terms of stock price, the reporter noticed that on september 9, midea group's a-share price fell by 3.06%; on september 10, midea group's a-share price fell by 0.56%.
liu buchen believes that in the inherent concepts of many consumers, midea is not considered a high-end home appliance brand, and this is where the company needs to focus on its future development.
