On April 29, 2024, Midea Group Co., Ltd. (hereinafter referred to as “Midea Group”), headquartered in Foshan, Guangdong, submitted a prospectus to the Hong Kong Stock Exchange to be listed on the Hong Kong Main Board. This is another application after its submission expired on October 24, 2023.
Midea Group (000333.SZ) completed its listing on the Shenzhen Stock Exchange through the merger of Midea Electric on September 18, 2013. As of April 29, 2024, the market closed at noon, with a market value of about RMB 490.2 billion.
Link to Midea Electric's prospectus:
https://www1.hkexnews.hk/app/sehk/2023/105823/documents/sehk23102400698_c.pdf
Main business
As a world-leading, technology-driven smart home and commercial and industrial solutions provider, Midea Group provides consumers with all kinds of household appliances through the smart home business; through commercial and industrial solutions, it provides various solutions to enterprise customers, such as home appliance compressors and motors, commercial air conditioners, industrial robots and supply chain services. The Midea Group operates in more than 200 countries and regions, with 33 R&D centers, 43 major production groups, and more than 190,000 employees worldwide. Midea Group has been included in the Fortune 500 list for eight consecutive years.
According to the Frost & Sullivan report,
In terms of revenue and sales in 2023, Midea Group is the world's largest home appliance company, with a market share of 7.9% in terms of sales volume;
In terms of production in 2023, Midea's home appliance compressor business ranked first in the world, with a market share of 30.3%. The household air conditioning compressor business also ranked first in the global market during the same period, with a global market share of 45.1%.
In terms of revenue in 2023, Midea Group was the largest commercial air conditioning supplier in mainland China and the top five in the world, with market shares of 14.3% and 6.6% respectively;
KUKA Group, a subsidiary of Midea Group, is one of the four largest industrial robot companies in the world. It ranked second in sales volume and revenue for heavy-duty robots in 2023, with market shares of 18.6% and 17.9% respectively;
As of December 31, 2023, the total number of Midea Group patent families ranked among the top ten global enterprises, with more than 29,000 invention patents.
Midea Group's business is mainly divided into two major segments: smart home business and commercial-grade industrial solutions.
I. Smart home business
Midea Group provides a wide range of high-quality home appliances, including air conditioners, refrigerators, washing machines, kitchen appliances and other household appliances. It uses IoT and AI technologies to provide connected and integrated smart home services to ensure a smooth and unique user experience. The company's IoT devices are equipped with wireless communication modules such as Wi-Fi and Bluetooth, which allow them to connect to the Internet, communicate with other devices, and be managed centrally through the digital platform provided by the company to customers. Midea Group's complete brand matrix covers high-end markets, mass markets, and youth markets. The company's global distribution network covers online and offline channels. In 2023, Midea Group's online sales account for more than 50% of total online sales.
II. Commercial-grade industrial solutions
Midea Group provides a full range of products and services: new energy and industrial technology, intelligent building technology, robotics and automation, and innovative business. Between 2021 and 2023, Midea Group's commercial and industrial solutions revenue grew at a compound annual rate of 15.4%, and its share of total revenue increased from 21.4% in 2021 to 26.2% in 2023.
New energy and industrial technology, providing advanced, reliable and environmentally friendly core industrial components, including compressors, motors and industrial control systems. It also provides green new energy solutions throughout the new energy value chain, including large-scale energy storage, industrial and commercial energy storage, household energy storage, smart grids, distributed photovoltaic solutions, and new energy vehicle components (including thermal management systems).
Intelligent building technology provides intelligent integrated solutions for infrastructure, public places, industrial parks, agricultural facilities and other places, empowering customers to transform buildings into efficient and green spaces, optimize energy consumption, and improve comfort. Midea Group has acquired Ling Wang, a leading manufacturer of freight elevators in the mainland.
Robotics and automation, Midea Group acquired KUKA Group in 2017. The business is operated by KUKA Group. The KUKA Group is headquartered in Germany and is one of the top four industrial robot manufacturers in the world, with a history of more than 120 years. KUKA Group provides one-stop automation solutions covering industrial robots, work units and fully automated systems, as well as automated logistics systems through its subsidiary Swisslog, which can serve end markets such as automobiles, electronics, metals and plastics, consumer goods, retail, e-commerce, and medical.
Other businesses mainly include Ande Zhilian, Meiyun Zhishu, Meizhi Optoelectronics, and Wandong Healthcare. Andelink serves more than 3,000 corporate customers in the home appliance, FMCG, household and other industries. In the field of digitalization of operations, Meiyun Smart Data provides industrial software and digital consulting services for intelligent manufacturing and industrial connectivity to promote the digital transformation of customers. Meizhi Optoelectronics is mainly engaged in R&D, manufacturing and sales of lighting and front-mounted appliances, and is committed to providing customers with intelligent integrated solutions. Midea Group acquired Wandong Medical, a leading provider of medical imaging products and services in mainland China, in 2021 to enter the medical imaging market.
Revenue model
Midea Group's revenue mainly comes from providing smart home businesses to consumers and providing commercial and industrial solutions to corporate customers.
In terms of product sales, Midea Group mainly designs, manufactures and sells household air conditioners, commercial air conditioners, HVAC systems, elevators, kitchen appliances, refrigerators, washing machines, various small household appliances, high and low voltage inverters, robots and automation systems, and other products and materials.
In terms of service provision, Midea Group provides robot and automation system construction services, intelligent logistics integrated solutions, warehousing services, distribution services, installation services and transportation services.
Midea Group's revenue can also be divided into: (i) heating, ventilation and air conditioning (HVAC); (ii) consumer electronics; (iii) robotics and automation systems; and (iv) others.
Shareholder structure
According to the prospectus, as of April 19, 2024, the shareholder structure of Midea Group
Mr. Ho Heng Kin directly holds 0.5% of the shares and holds 31.1% of the shares through Midea Holdings, which owns 94.5%;
* Mr. He Jianfeng's spouse, Ms. Lu Deyan, holds 5.5% of the shares in Midea Holdings.
Mr. Fang Hongbo holds 1.7% of the shares;
Other A-share shareholders hold 66.7% of the shares.
Directors and Executives
Midea Group's board of directors consists of 10 directors, including:
4 Executive Directors: Mr. Fang Hongbo (Chairman and President), Dr. Gu Yanmin (Vice President), Mr. Wang Jianguo (Vice President), Mr. Fu Yongjun (Vice President);
2 non-executive directors: Mr. He Jianfeng, Dr. Yu Gang;
4 independent non-executive directors: Dr. Xue Yunkui, Dr. Guan Qingyou, Dr. Han Jian, Dr. Xiao Geng;
Three members of the Supervisory Board: Mr. Dong Wentao, Mr. Zhao Jun, and Ms. Liang Huiming.
In addition to executive directors, executives include Vice President Guan Jinwei; Vice President Mr. Berlin; Vice President Mr. Zhao Lei; Vice President; Mr. Zhong Zheng; Vice President and Chief Digital Officer Mr. Zhang Xiaoyi; Vice President and ESG Chairman Mr. Li Guolin; Vice President Dr. Hu Ziqiang; Vice President Mr. Wang Jinliang; Vice President and Chief Technology Officer Dr. Wei Chang; Chief Talent Officer; and Mr. Jiang Peng, Secretary of the Board of Directors.
Company performance
According to financial data, in the past 2021, 2022 and 2023, Midea Group's revenue was RMB 343.361 billion, RMB 345.709 billion, and RMB 373.71 billion, respectively, and the corresponding net profit was RMB 29.031 billion, RMB 29.812 billion, and RMB 33.747 billion, respectively.
Intermediary team
Midea Group's intermediary team for this IPO mainly includes: CICC and Merrill Lynch as co-sponsors; PricewaterhouseCoopers as its auditors; Jiayuan and Shida are the company's Chinese lawyers and the company's Hong Kong and US lawyers respectively; Kindu and Fuller are its Chinese lawyers and Hong Kong and US lawyers; and Frost Sullivan is its industry advisor.