Revealing the capital territory of Midea: the investment history hidden in the acquisition of A-share "Asian Games Internet celebrity mattress".
Finance Associated Press, November 18 (edited by Lichen) Foshan, a low-key and rich southern city, has never lacked a variety of wonderful capital stories. Midea Group, a 100 billion home appliance giant and a subsidiary of He Xiangjian, may be the only enterprise with a whole industry chain and a full product line in the global home appliance industry, especially in the white goods industry. After taking a back seat, He Xiangjian, who is becoming more and more low-key, is not really idle. Instead, together with his son He Jianfeng, he used his capital advantage to frequently sweep goods, and a capital territory covering home appliances, real estate, new energy, medical care, robotics, environmental protection, finance and other fields was presented and is still expanding.
In fact, in addition to its international layout, Midea Group has also gradually expanded its capital territory in the A-share market in recent years. Since 2020, Midea Group has successively acquired two listed companies, Hekang New Energy and Wandong Medical, and will take control of Kelu Electronics in 2023. At present, Midea Group's two "A split A" are in progress, and if both can be realized, the number of listed companies under Midea Group will reach 5. In media reports, He Jianfeng is often called the "prince" of Midea and the young owner of Midea. His son He Jianfeng is currently the actual controller of Infore Environment and Baina Qiancheng, two A-share companies.
Compared with He Xiangjian's main investment in industry, He Jianfeng's Infore Holdings is more like an "octopus" across industry and finance, and the industry is more complex and has little to do with each other. In the financial field, Infore Group Co., Ltd., controlled by He Jianfeng, is also one of the major shareholders of E Fund Management Co., Ltd., holding 22.65% of the shares. Tianyancha shows that Infore Group, which has been established for more than 20 years, has invested in a total of 55 enterprises, mainly in the fields of new energy, advanced manufacturing, chip semiconductors, and new consumption.
Tens of billions of cash into Gujia Home, the supplier of "Asian Games Internet celebrity mattress", is the most daring capital operation of He Jianfeng, the son of He Xiangjian, the founder of Midea Group. Analysts say the "combination" of the two giants is both surprising and reasonable. Although Gujia Home Furnishing and Midea Group belong to the home furnishing and home appliance tracks respectively, many of Gujia's executives are from the "Midea Department", and the strategic cooperation of home appliance companies is not uncommon. Ho's identity makes the acquisition unique. The market believes that the acquisition he initiated is "the expansion of Midea's territory".
▌Midea's "superb financial skills": the investment history hidden in the acquisition of A-share "Asian Games Internet celebrity mattress".
At the age of 48, the Uzbek athlete "Qiu Ma", who participated in the Hangzhou Asian Games, is loved by the public for her perseverance and fighting spirit, and she is also the only gymnast in history who has participated in 8 consecutive Olympic Games. It is the preference of such an Internet celebrity athlete that makes Gujiajia home furnishing popular. At the end of the Hangzhou Asian Games, "Qiu Ma" "packed" the mattress used during the competition and returned to China, because this mattress made her feel "comfortable enough to lie in bed", and this experience came from Gujia Home, the official mattress supplier of the Asian Games, a leading brand in the domestic home furnishing industry.
A few days ago, He Jianfeng's Infore Ruihe Investment acquired the control of Gujia Home Furnishing with 10 billion yuan, which opened the prelude to the integration of household appliances and home furnishing industry resources, which caused an uproar in the industry. In the eyes of some investors, it is not surprising that Gujia Home Furnishing is seeking capital to take over, the company's share price has fallen for two years, and it is now close to "halving" at a high level, and about half of the shares held by the controlling shareholder and its concerted actors are in a pledge transition. For He Jianfeng, who is good at investment, although the merger and acquisition price is huge, the converted unit price is the lowest level in the past three years, which is a cost-effective transaction. Of course, as an investment institution, the acquisition benefit is the essence of Infore. Some market participants also believe that the takeover of Infore may be a piece of chess in the integration of the large home furnishing industry of the United States. The timing of Infore Group's move also happened to step on the node of rapid expansion between China and the United States.
Source: Choice data
According to the relevant bond issuance announcement of Infore Group, in the past five years, the annual revenue of Infore Group has fluctuated between 14 billion and 16 billion yuan, and the net profit attributable to the parent company is less than 500 million yuan per year. In 2022, it will drop to 111 million yuan, and in the first half of 2023, it will only be 11 million yuan. Since 2018, Infore Group's total net profit attributable to the parent company is only 788 million yuan. In addition, Infore Group announced that the current total assets are as high as 57.6 billion yuan, net assets are close to 20 billion yuan, and foreign investment is as many as 54 companies.
However, analysts said that He Jianfeng, who was born in 1967, may have wanted to work side by side with his father at first. But after a few years of training, he chose to start anew. But whether it is the first pot of gold or many important transactions after that, it has a lot to do with his father He Xiangjian and beauty. On the surface, He Jianfeng's career has been developing in the "outside the body" of the United States, but the blood relationship between the two is comparable to that of father and son. He Jianfeng's early modern industry was to make OEM products for Midea, and achieved an income of 350 million yuan in 2001. Three years later, Infore Group sold its two companies to Midea and cashed out nearly 70 million yuan.
Infore is the first listed company Infore Environment, formerly known as Shangfeng Hi-Tech, which was controlled by Midea at first. Later, in 2006, Midea transferred the controlling stake of the company to Infore Group at the original price, and also sent a large number of talents to it. Since becoming the actual controller, Infore environment has started a large-scale merger and acquisition mode, with a total of 18 billion yuan, which can be called the king of A-share environmental protection mergers and acquisitions. Among them, more than 15 billion yuan was used to acquire Zoomlion Environment, creating the largest amount of mergers and acquisitions in the environmental protection industry.
In 2018, the company achieved operating income of 13.045 billion yuan, a year-on-year increase of 46.81%, and a net profit attributable to the parent company of 929 million yuan, a year-on-year increase of 64.05%. However, then the related business fell off a cliff, and the net profit attributable to the parent company in 2021 and 2022 decreased by 45.7% and 44.37% respectively. During the period, accounts receivable soared, which had an impact on the company's cash flow, and multiple pressures caused the stock price to plummet.
Source: Choice data
In 2007, Infore acquired 25% equity of E Fund from Midea for 165 million yuan, becoming the largest shareholder of E Fund. As He Jianfeng's second listed company, He Xiangjian also has a figure behind him. In 2018, Infore Group acquired Baina Qiancheng (Hualu Baina), which is also inseparable from the help of his father. In March of that year, Infore Group and Ningbo Profei Investment Management Co., Ltd., controlled by He Xiangjian, spent 1.8 billion yuan to take over 17.55% of the shares of Baina Qiancheng. From 2019 to 2022, its net profit attributable to the parent company will decline unilaterally, with 114 million, 112 million, 66.33 million, and 20.8 million respectively. According to the third quarter report of 2023, Baina Qiancheng achieved revenue of 184 million yuan, a year-on-year decrease of 13.37%, and achieved a net profit attributable to the parent company of -32 million yuan.
Recently, a popular game "I'm Surrounded by Beautiful Women!" made Baina Qiancheng eat a big wave of dividends from this game. At the beginning of next month, Zhong Chenyao, one of the leading actors of this game, will have a movie called "Hot Search" released, and Bai Na Qiancheng is one of the co-producers behind it. On the news, the stock price has risen as much as 88% since the low on October 23. In addition, it is said that Baina Qiancheng also has a project of the same type as "It's Over! I'm Surrounded by Beautiful Women!" in the internal testing and approval stage.
Source: Choice data
▌The giant ship of Midea with a market value of 370 billion: how big is the "capital empire" of Midea and the He family
As a leading household appliance company, Midea wants to do industrial extension, and it is still achieved through foreign investment. The history of Midea Group's capital expansion is actually an "evolutionary history" of an old home appliance enterprise seeking a diversified development path. The He family, with He Xiangjian as the core, has made a lot of gains in the capital circle. He Xiangjian, the founder and actual controller of Midea Group, has rarely appeared in the public eye since he stepped back in 2012, and is now 80 years old with assets of 100 billion yuan. Left-handed industry, right-hand finance, happy. In the "2023 Hurun Report" released this year, the wealth of He Xiangjian's family reached 200 billion yuan, ranking 8th.
The inheritance of Midea Group's management rights of "passing on the virtuous but not the children" has also become a classic case in China's EMBA classroom. With a market value of 370 billion U.S. giant ships, He Xiangjian finally gave the right to pilot to the "outsider" Fang Hongbo. As early as 2015, his successor Fang Hongbo made it clear that Midea had more than 40 billion cash in hand, and it was impossible not to invest. But in the next three years, Midea will not buy an acre of land, nor will it build a new factory.
From 2020 to 2023, Midea has successively acquired Hekang New Energy, Wandong Medical and Kelu Electronics and become its actual controllers. From the perspective of performance, since the inclusion of Midea Group, the earnings of the three listed companies are still fluctuating. The strongest profitability is Wandong Medical, and its main products are large-scale medical imaging equipment. In 2021 and 2022, the net profit will be 183 million yuan and 175 million yuan respectively, a year-on-year decrease of about 17% and 4% respectively. Wandong Medical announced on October 27 that the net profit attributable to the owners of the parent company in the first three quarters was 120 million yuan, a year-on-year increase of 16.54%. Hekang New Energy, which is engaged in industrial automation control, suffered a net profit loss of 515 million yuan in 2020 when it was acquired, and then turned around to a profit of 50.26 million yuan in 2021. In 2021, the profit was 50.259 million yuan, and as of the announcement on October 23 this year, the net profit in the first three quarters of 2023 was about -35.3 million yuan.
On Friday, the charging pile concept stock Kelu Electronics is still in the red, the company is mainly engaged in smart grid, new energy and integrated energy services. Before Midea Group became the owner, there were losses for two consecutive years in 2018 and 2019, and the net profit turned around in 2020. However, in 2021, the company's loss expanded again to 665 million yuan, and it will continue to lose 101 million yuan in 2022. Kelu Electronics announced its third quarterly report on October 26, with a net profit loss of 77.68 million yuan in the first three quarters. Now, Midea Group's two "A to split A" are also in progress. In April this year, the listing of Midea Group's spin-off subsidiary "Meizhi Optoelectronics" was accepted and has now entered the inquiry stage. Meizhi Optoelectronics is mainly engaged in the research, production and sales of LED lighting and home intelligent front-loading products, and is directly and indirectly held by Midea Group with a total of 56.7% of the shares. In late July, Midea Group launched the preparatory work for the listing of its spin-off subsidiary "Ande Zhilian" on the main board of the Shenzhen Stock Exchange. Ander Zhilian is a logistics technology company, which is 73.85% owned by Midea Group.
Not only that, He Jianfeng's wife Lu Deyan has also been in the capital circle for many years, and she was a member of the New Third Board listed company Bomei Property (839955. NQ, now terminated from listing). He is now co-in charge of Midea Real Estate, a Hong Kong-listed real estate company, with He Jianfeng and He Xiangjian, and holds 5.45% of the shares of Midea Holdings, the controlling shareholder of Midea Group. He Xiangjian's eldest daughter He Qianchang is also "not to be outdone" and has broken out of a world in the capital circle. Huitong Co., Ltd., which was built by He Qianchang, currently has a total market value of 5.1 billion yuan after successfully landing on the Science and Technology Innovation Board in 2020. He Qianchang directly holds 30.61% of its shares and is the actual controller of the company. In addition, Tianyan check shows that He Qianchang actually controls 14 companies, most of which are new material companies. He Xiangjian's second daughter He Qianxing is currently working as an executive in 9 companies including Midea Holdings, and Foshan Shunde Chengmei Enterprise Management Co., Ltd., which is actually controlled by him, was established in 2021 and is an enterprise mainly engaged in business services.
Liang Zhenpeng, an analyst in the home appliance industry, said that Midea's diversification has taken too big a step, and it is all unrelated diversification, and even some small companies have been acquired. Third-tier brands like Lingwang Elevator, which still have a certain synergy with Midea's real estate business, but a large number of non-related businesses have been acquired, no professionals take care of them, and they also occupy the development resources of the main business, which is very dangerous. Historically, companies such as Little Swan, Aucma, Chunlan and other enterprises have dragged down their main businesses due to diversified expansion. From the perspective of Midea Group's own stock price performance, compared with the high point in 2021, the stock price has fallen by 60.9% so far.
(Finance Associated Press, Lichen)