Midea prepares A-share listing

Shenzhen-listed GD Midea Holdings Co, a listed unit of Guangdong-based home appliance maker Midea Group, announced Monday that the group plans to make an overall listing on the A-share market through a share exchange, making it the largest listed home appliance firm in China.

The businesses to be floated will include Midea Group's major appliance, small appliance, electrical machine and logistics sectors, but its real estate business will not be involved in the plan, the company said Monday in a statement filed to the Shenzhen Stock Exchange.

Under the exchange, investors will get 0.3582 shares of Midea Group for each share they currently hold in GD Midea Holdings, Midea said.

The plan is still subject to approval from Midea's shareholders as well as from China's commerce and securities authorities, the company said.

The shares of GD Midea Holdings Co rose by the 10 percent daily limit to 10.1 yuan ($1.62) Monday on the news.

Analysts believe that the move will help improve corporate governance at Midea and enhance its competitiveness.

The listed group will have a complete industrial chain with a large number of businesses, giving it greater risk resistance capacity, Liang Zhenpeng, an independent analyst in Beijing, told the Global Times Monday.

After the overall floatation, the small appliance, electrical machine and logistics businesses will be managed in accordance with regulatory standards just like the current listed unit has been, said Liu Buchen, an analyst at consultancy Jiachunqiu Media Institution in Zhengzhou, noting that the company's revenue and profitability are expected to grow.

Midea Group's revenue reached 102.7 billion yuan in 2012, down 26.6 percent compared with 2011, while its major rivals Haier and Gree reported growth in their revenues and profits over the same period.

"The revenue decline was the price it needed to pay for a big 'surgery,' but after the operation its profitability and net profit margin will be enhanced," said Liu.

The net profit margin of Midea's listed unit was 5.1 percent in 2012, higher than Qing­dao Haier Co's 4.1 percent but lower than Gree Electric Appliances Inc's 7.3 percent, and the higher margin indicates better cost management and higher competitiveness, Liu said.

The assets injected into the listed arm are good assets, he said, so the stock will be more attractive to investors and it will be easier for the group to raise capital after the overall listing.

GD Midea Holdings specializes in major appliances, including refrigerators and air conditioners, earning 68 billion yuan in revenue in 2012, while the newly added assets earned about 32 billion yuan in 2012.

Midea laid off 30 percent of its workers at the end of 2011, and professional executive Fang Hongbo replaced founder He Xiangjian as the group's chairman in August 2012.