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source | deepblue finance

written by | wu ruixin

the he father and son of midea group perfectly illustrate what "ice and fire" means.

recently, midea group announced that it will issue 492 million shares on the hong kong stock exchange, with an issue price between hk$52.00 and hk$54.80 per share, and is expected to be listed on september 17. based on this calculation, midea group will become the largest ipo in hong kong stocks in the past three years. by then, midea group will also become the second white goods giant to be listed on the "a+h" stock market after haier smart home.

judging from the prospectus, midea is not short of money and its performance continues to improve. in contrast, the performance of he jianfeng, the "prince of midea" who just resigned as a director of midea in june this year, is a bit embarrassing. on the eve of midea's listing on the hong kong stock market, gujia home furnishing, the "home furnishing leader" that he jianfeng took over, also released its financial report.

it is worth noting that at the end of last year, he jianfeng spent 8.88 billion yuan to acquire 29.42% of gu jiajia furniture's shares, with an average purchase price of 36.7 yuan per share. but now, gu jiajia furniture's share price has fallen to 22.57 yuan, which means that he jianfeng has suffered a floating loss of 38.5%, exceeding 3.4 billion yuan.

1

raising 24.7 billion yuan, the story behind midea's secondary listing in hong kong

he xiangjian's global ambitions

two months after obtaining ipo registration from the china securities regulatory commission, midea group's secondary listing in hong kong has finally made new progress.

in fact, midea group's secondary listing in hong kong has been going on for more than a year, and it has not been completely smooth sailing. for example, midea group actually submitted its prospectus for the first time in early october last year, but there was no hearing six months after submitting the materials, which made the prospectus invalid.

the purpose of midea's secondary listing has also attracted widespread attention from the outside world.

because, generally speaking, going public is for financing. and the amount of funds raised by midea's secondary listing this time is not low. although midea has not yet announced the final issue price, according to the previous ipo filing, the issue price per share is hk$52.00 to hk$54.80, and it plans to issue 492 million h shares globally. in other words, the maximum amount of funds raised can reach hk$27 billion, about rmb 24.6 billion.

but in fact, midea is not short of money.

the financial report shows that midea has maintained good growth in its performance in the nearly ten years since its listing. looking at the financial data of the past three years, from 2021 to 2023, midea's revenue was 343.461 billion, 345.709 billion, and 373.710 billion yuan respectively; net profit was 29.031 billion, 29.812 billion, and 33.747 billion yuan respectively, with net profit margins of 8.5%, 8.6%, and 9.0% respectively.

in the first half of 2024, midea group achieved revenue of 217.274 billion yuan, a year-on-year increase of 10.3% from 196.988 billion yuan in the same period last year; net profit was 20.804 billion yuan, a year-on-year increase of 14.11% from 18.232 billion yuan in the same period last year.

performance continues to improve, and midea's own cash reserves are also very sufficient. at midea's shareholders' meeting in april this year, midea also pointed out that the company had more than 280 billion yuan in cash last year, and said that it would guarantee dividends to shareholders and would also make some mergers and acquisitions.

what is the purpose of nami's secondary listing in hong kong?

the answer is: seek global markets.

according to midea's previous shareholders' meeting, the fundamental reason for the secondary listing in hong kong is that hong kong stocks are groundbreaking, convenient and fast. industry insiders analyzed that companies that "list first in a and then in h" can take advantage of the hong kong stock market to further enhance their market image and international reputation. in addition to funds, listing on the hong kong stock market can help companies introduce advanced international management systems and management methods as well as modern corporate governance structures, making them gradually become companies that are in line with international standards and have international vision and genes.

so far, many well-known institutions such as china cosco shipping, national development fund, byd, tcl, ruiyuan fund, and idg capital have become cornerstone investors of midea group's listing.

in addition, according to the latest news, hillhouse capital and singapore's sovereign wealth fund gic are considering investing in it. the insider revealed that hillhouse capital is negotiating to subscribe for more than us$1 billion in shares, while gic is considering subscribing for about us$500 million in shares.

data shows that before the secondary listing on the hong kong stock market, midea's founder he xiangjian directly held 0.5% of the shares, held 31% through midea holdings, and midea's president fang hongbo held 1.7% of the shares.

2

midea's "prince" performance is embarrassing

8.9 billion yuan to acquire gujia home furnishing, with a floating loss of more than 3.4 billion yuan

midea group is still growing bigger and stronger, attempting to use the hong kong stock market listing as a springboard to accelerate global expansion.he xiangjian's only son, he jianfeng, suffered a major loss。

at the end of last year,he jianfeng spent 8.88 billion to acquire 29.42% of the shares of gu jiajia furniture, the "leading home furnishing company", becoming the largest shareholder and actual controller. and this is the price after "bargaining". the initial total transfer price was actually 10.299 billion yuan.

however, this acquisition of gu jiajia furniture did not make as much money as he jianfeng's previous acquisition of zhonglian environmental protection.

not long ago, gu jiajia furniture released its financial report for the first half of 2024, which showed thatgu jiajia furniture's revenue in the first half of 2024 was 8.9 billion yuan, a year-on-year increase of 0.34%; net profit was 896 million yuan, a year-on-year decrease of 2.97%。

it is worth noting that in the first half of the year, gu jiajia furniture also received 155 million yuan in government subsidies.

although the net profit declined, it is still profitable after all.for he jianfeng, the biggest loss is the market value。

as mentioned above, he jianfeng acquired 29.42% of gujia home furnishing's shares for 8.88 billion yuan, with an average transfer price of 36.7187 yuan per share. however, since the beginning of this year, gujia home furnishing's share price has continued to decline, especially since may, when the share price has fallen below 30 yuan. as of the close of september 12, gujia home furnishing's share price had fallen to 22.57 yuan.compared with the transfer price, it has fallen by 38.5%, with a floating loss of more than 3.4 billion。

as the only son of he xiangjian, he jianfeng could have been a "rich second generation". however, he chose to start his own business and became very successful in investment. in addition to gujia furniture, he also owns two listed companies, yingfeng environment and baina qiancheng, and has built an industrial investment empire with a market value of over 50 billion yuan.

but this year, he jianfeng has suffered setbacks repeatedly. not only did gujia furniture's stock price suffer a floating loss of more than 3.3 billion, but the film and television entertainment sector's two films this year, "nothing that can't be solved by a hot pot" and "a journey across the moon", also suffered box office and reputation failures. among them, "nothing that can't be solved by a hot pot" was withdrawn from the theaters after only five days of release, and was soon released on video platforms. the box office was only 53 million, while the cost exceeded 100 million, so it was definitely a loss.

according to financial report data, in the first quarter of 2024, baina qiancheng's net profit was approximately 3.52 million, which was just barely turned from loss to profit compared with the same period last year.but in the second quarter, baina qiancheng lost another 33.05 million。

in fact, since he jianfeng took over baina qiancheng, its performance has been poor. in 2018, he jianfeng's yingfeng group spent 1.8 billion yuan to become the actual controller of baina qiancheng. in that year alone, baina qiancheng lost 3.4 billion yuan. in 2023, baina qiancheng turned from profit to loss again, with a loss of 186 million yuan. in the first half of 2024, it lost another 29.53 million yuan.

3

conclusion

although he jianfeng has been rushing on the road of entrepreneurship in order to get rid of the label of "second-generation entrepreneur", midea has also been de-family-oriented.

but compared with he xiangjian's "midea empire" with a market value of 420 billion yuan, he jianfeng's own business is still a bit dwarfed.

therefore, there has been discussion and speculation about whether he jianfeng will take over in the future. especially now that he xiangjian is old and he jianfeng's investment career has repeatedly suffered setbacks.

however, with the replacement of midea group's board of directors in june 2024 and he jianfeng's resignation as non-executive director, the space left for he jianfeng to take over is getting smaller and smaller.