Financial reporter Zhang Tingwang
Recently, Midea Group submitted a prospectus to the Hong Kong Stock Exchange, continuing to sprint for the dual listing of "A+H shares".
In fact, this is the company's second submission to the Hong Kong Stock Exchange, on October 24 last year, Midea Group submitted an application for issuance to the Hong Kong Stock Exchange for the first time, and now the relevant materials have just passed the "validity period" of half a year. This time, the company has updated its financial data to the full year of 2023.
In terms of sales volume and revenue in 2023, Midea Group is the world's largest home appliance company, with a market share of 7.9%; at present, the market value of Midea Group's A-share market is 486.7 billion yuan, and according to market news when it sprinted to the Hong Kong stock market last year, it plans to raise about $1 billion in funds.
As of the end of 2023, the balance of monetary funds held by the company is about 81.674 billion yuan, accounting for 16.80% of total assets. In comparison, the balance of the company's short-term borrowings was about 8.819 billion yuan, and the balance of non-current liabilities due within one year was 14.458 billion yuan.
What is the meaning of the drunkard?
The annual net profit exceeded 30 billion yuan
There is plenty of money on the books
According to the prospectus, from 2021 to 2023, Midea Group's revenue will be 343.361 billion yuan, 345.709 billion yuan, and 373.710 billion yuan respectively. The gross profit of the company was 76.910 billion yuan, 83.387 billion yuan and 98.390 billion yuan respectively, with a compound annual growth rate of 13.1%, and the corresponding gross profit margin was 22.4%, 24.1% and 26.3% respectively.
During the same period, the company's net profit was 29.031 billion yuan, 29.812 billion yuan and 33.747 billion yuan respectively, and the net profit margin was 8.5%, 8.6% and 9.0% respectively.
For such a large Midea Group, such a gross profit margin and net profit growth rate is very rare.
Midea Group is also not stingy in R&D, with R&D expenditures of 12 billion yuan, 12.7 billion yuan and 14.6 billion yuan respectively in the past three years, and a cumulative R&D investment of more than 39 billion yuan in the past three years, accounting for 3.5%, 3.7% and 3.9% of the revenue in the same period, respectively.
In terms of business, Midea Group is not just a well-known home appliance giant. According to the prospectus, it is a technology group covering smart home, new energy and industrial technology, intelligent building technology, robotics and automation, etc., with a business matrix covering both ToC and ToB.
Smart home is the company's main business, and in 2023, the company's smart home business will account for 65.9% of revenue, a decrease of 2.5 percentage points from 2021. According to Frost & Sullivan data, in terms of sales volume and revenue in 2023, Midea Group is the world's largest home appliance company, accounting for about 7.9% of the world's sales. The sales volume of the company's household air conditioners, washing machines and refrigerators all rank among the top three in the world.
On the other hand, the proportion of revenue from the company's commercial and industrial solutions business has gradually increased, with 21.4%, 24.2% and 26.2% from 2021 to 2023, respectively.
In terms of output in 2023, Midea's home appliance compressor business ranks first in the global market, and the output of household air conditioning compressors also ranks first in the world, with a market share of up to 40%.
On paper, Midea Group is not short of money. As of the end of 2023, the balance of monetary funds held by the company is about 81.674 billion yuan, accounting for 16.80% of total assets. At the same time, Midea Group has maintained relatively abundant cash reserves, and the company's cash and its equivalents are 59.8 billion yuan.
In comparison, the balance of the company's short-term borrowings was about 8.819 billion yuan, and the balance of non-current liabilities due within one year was 14.458 billion yuan.
In this context, Midea Group's listing in Hong Kong is obviously not just aimed at financing.
The prospectus also verifies this point, Midea Group's Hong Kong stock IPO, the funds raised are intended to be used for global technology research and development, the continuous construction of intelligent manufacturing system and the upgrading of supply chain management, the improvement of global sales channels and networks, and the increase of overseas sales of its own brand, replenishment of working capital and general corporate purposes.
In addition, Hong Kong stocks are more international and open than A-shares, and the listing of Hong Kong stocks will help Midea enhance its brand popularity in the international market and be concerned by more investors.
Revenue growth slowed
Direct financing totaled 84 billion yuan
Like other home appliance companies, Midea Group has to face the problem of the home appliance market peaking.
According to Frost & Sullivan data, the sales volume of the global home appliance market has increased from 2.886 billion units in 2017 to 3.067 billion units in 2023, with a compound annual growth rate of only 1.0%, and the growth has shown a declining trend.
The company's revenue growth rate has become "worrying". From 2021 to 2023, Midea Group's revenue will be 343.361 billion yuan, 345.709 billion yuan, and 373.710 billion yuan respectively, with a compound annual growth rate of 1.4%. It is basically in line with the growth rate of the entire market.
In this context, Midea Group chose to go public in Hong Kong, or intends to increase its overseas to seek new business opportunities, which is also part of its globalization strategy.
Midea Group has established a complete online and offline sales network in many overseas markets, with more than 5,000 after-sales service networks. At the same time, the company continues to deepen the penetration of the digital sales platform "Meiyunpin" in overseas markets. According to the prospectus, Midea's overseas sales account for more than 40% of the company's total sales, and its products have been sold to more than 200 countries and regions around the world.
At the same time, Midea has 16 overseas R&D centers and 21 major production bases, covering 17 countries, with more than 30,000 overseas employees. In the process of globalization, product localization is one of the key tests, and Midea is committed to providing products that meet the needs and preferences of the local market with the support of overseas R&D and production bases, as well as a large team of overseas talents.
It is worth noting that Midea's business expansion and globalization process is accompanied by a series of large-scale "buying, buying, buying", which is also its main way to deploy overseas markets and non-home appliance business.
From 2016 to 2017, Midea acquired Toshiba's home appliance business (i.e., Toshiba Life), Clivet, an Italian central air-conditioning company, and Kuka, a German robotics company, to obtain the brand, technology and market of the acquired companies in the direction of home appliances, commercial air conditioners, and industrial robots, and acquired Lingwang, an electronics manufacturing company, in 2020, Kelu Electronics, which was acquired in 2023, and increased its holdings in Hekang New Energy.
However, after all, the acquisition is a heavy capital operation, and the judgment of the market and the run-in test between enterprises after the acquisition are on the one hand, and more importantly, it requires a large investment of real money. Midea Group continues to ask for money from the capital market, and Flush iFinD data shows that from 2013 to 2022, including IPO fundraising, the company has accumulated a total of 84 billion yuan in direct financing (equity financing and debt financing).
In addition, as the business and scale became larger and larger, Midea Group began to plan to spin off its subsidiaries and go public independently.
On July 29, 2023, Midea Group announced that it would spin off Ander Zhilian Supply Chain Technology Co., Ltd. to be listed on the main board of the Shenzhen Stock Exchange, which was founded in 2011 and is a smart logistics company with revenue of 10 billion.
In April 2023, Midea Optoelectronics, a subsidiary of Midea Group, once again launched the GEM IPO sprint, as an enterprise mainly engaged in lighting business, Midea Optoelectronics mainly uses Midea's trademark for product sales. Similar to the shareholding structure of Ander Zhilian, Midea Group directly and indirectly controls 56.7% of the company's shares. However, on December 23 of the same year, Meizhi Optoelectronics terminated the GEM IPO.
Image sources in the article: prospectus, straight flush, Shenzhen Stock Exchange