Author | Huang Yu Editor | Liu Baodan Last year, thanks to the success of the "Speeding" on iQiyi, the company has had a difficult time recently. On the one hand, the explosively popular TV series is on hiatus, and on the other hand, the derivative concert of the variety show "Plant Some Goodness" has been criticized for "free offline but paid online." According to Wall Street News, the second Wheat Field Music Festival, produced by iQiyi's reality show "Plant Some Goodness," was held on June 6th. Some viewers had previously received free offline tickets through official activities, while online viewers, even iQiyi members, had to pay RMB 12 for viewing, and the viewing period was valid until June 14th. This differentiated pricing model has caused dissatisfaction among many viewers, who question that iQiyi's move is "cutting corners." In response, iQiyi's customer service said, "You can buy tickets to watch the concert live according to your own needs, and the edited content of the concert will be launched on the main platform in the future." In fact, this is not the first time that long video platforms represented by iQiyi have been accused of "cutting corners." In recent years, membership grading systems, early access, and inventory restrictions have often caused user backlash, in addition to paying extra for derivative programs. The differential pricing model reflects the growth anxiety faced by long-form video platforms such as "i优腾."

The weather is good today Today's weather is good.

After nearly a year, Midea Group, the leader in the white goods industry, has finally successfully listed in Hong Kong IPO, becoming the second "A+H" listed white goods giant after Haier, and also setting a new record for the largest IPO in the Hong Kong stock market in nearly three years.

On September 13th, according to the Hong Kong Stock Exchange, Midea Group's Hong Kong IPO price has been set at HKD 54.8, calculated based on Midea's A-share price of approximately RMB 63.3 per share in the past five days, with a discount rate of approximately 21%; the total capital raised is USD 4.6 billion, approximately HKD 35.88 billion.

This means that Midea's final issuance price not only reached the upper limit of the price range (HKD 52 per share - HKD 54.8 per share), but the over-allotment option was also fully exercised, with a cumulative issuance of approximately 0.65 billion shares, accounting for approximately 8.5% of the company's total post-issuance share capital.

According to Midea's prospectus, from September 9th to 12th, it was planned to globally offer approximately 0.492 billion shares of Hong Kong stocks, accounting for approximately 7% of the total pre-issuance share capital. Among them, approximately 24.61 million shares were publicly offered in Hong Kong, accounting for approximately 5% of the total offering, and approximately 0.468 billion shares were internationally offered, accounting for approximately 95% of the total offering. There is also an option for approximately 15% of over-allotment shares.

In terms of scale, Midea's fundraising this time is undoubtedly remarkable. It should be noted that in the first half of this year, Chabudao (02555.HK) was the company with the largest IPO fundraising scale in the Hong Kong stock market, but the initial raised capital was only HKD 2.586 billion.

However, looking at the actual subscription situation of Midea, the sentiment of retail investors is relatively weak. Tradego data shows that the oversubscription multiple of the portion of Midea's Hong Kong stock initial public offering (IPO) is only 3.25 times. Among the 44 companies listed in Hong Kong's stock exchange this year, only 8 of them had an effective subscription multiple of less than 3.5 times, while the oversubscription multiple of Lao Pu's Gold reached over 432 times.

Margin lending, or M&A (Margin in English), is a way of subscribing for new shares in Hong Kong's stock market. The higher the oversubscription multiple, the higher the enthusiasm of retail investors financing through brokerage firms.

Compared with retail investors, institutions are enthusiastic about subscribing for Midea Group shares, which is mainly reflected in the international allocation of Midea, which is very hot. The full subscription was achieved on the first day of issuance, and the subscription ended on September 11, one day in advance.

According to the prospectus, in this IPO, Midea also introduced 18 'luxury' cornerstone investors, including COSCO Shipping Holdings, Boyu Capital, UBS Group Asset Management, BYD, TCL Industries, and Dajia Life. Assuming the determined issue price is HKD 54.80, the total subscription amount will be approximately 1.79 billion shares, accounting for 27.56% of the issued shares and 2.35% of the company's total share capital.

Because Midea's Hong Kong IPO pricing discount rate is larger than some of its peers, it has raised concerns among A-share investors. It is reported that when Haier Smarthome went public in Hong Kong, the issue price had almost no discount compared to its A-share price at that time and only had a discount of about 14% compared to its recent price.

Regarding this, Midea Group stated during an investor communication on September 12 that the pricing of the Hong Kong IPO is a relatively complex process involving various factors, including but not limited to the company's operations, market conditions, investor needs and expectations.

In addition, Midea Group also mentioned that the participation of cornerstone investors can provide some degree of price support for the IPO. Their subscription intentions and price range can serve as a reference for the final pricing.

However, for Midea Group, fundraising does not seem to be the primary goal of the Hong Kong IPO. The explanation given by Midea Group is: based on the need to deepen its global strategic layout.

In the annual general meeting of shareholders in April 2023, executives of Midea Group also responded to the investors, stating that the listing in Hong Kong was not for raising funds, but the fundamental reason was the breakthrough, convenience, and speed of the Hong Kong stock market.

Analysts at Guolian Securities also believe that for Midea, the significance of the H listing goes beyond fundraising. It is an extension of the "global breakthrough" strategy that has been the main focus since 2020, providing an operating platform for overseas stock-based incentives and mergers and acquisitions, while improving overseas investment channels and capital structure.

According to the latest prospectus, Midea's Hong Kong IPO will use the raised funds for global technology research and development, continuous construction of the intelligent manufacturing system, upgrading of supply chain management, improvement of global sales channels and networks, and enhancement of overseas sales of its own brand.

In summary, the ultimate goal of the Hong Kong IPO is to promote Midea's global strategy. It is important to note that in the context of domestic growth slowdown, going global has become a consensus among Chinese enterprises.

Midea started its overseas layout as early as 1986 and increased its efforts in going global in 2016. In recent years, this process has accelerated significantly.

In terms of revenue contribution, overseas revenue has overtaken domestic revenue and become a stronger growth driver for Midea. In the first half of this year, revenue from overseas grew by 13.1% YoY to 91.08 billion yuan, while domestic revenue grew by 8.37% YoY to 126.2 billion yuan.

Midea has set a goal to achieve overseas sales revenue between 35 billion US dollars and 40 billion US dollars by 2027. From this year's trend, Midea is steadily approaching its goal.

However, among the leading Chinese companies, Midea's performance in globalization is not considered outstanding.

In terms of revenue proportion, Midea's current overseas revenue accounts for about 40%. In 2023, Haier Smart Home's overseas revenue proportion has exceeded half, while TCL's overseas revenue proportion is 46%.

In addition, Midea also needs to further enhance its global brand value. According to Wall Street News, Midea's overseas income comes more from OEM (original equipment manufacturer), and it needs to increase the proportion of income from OBM (own brand manufacturer) with higher profit margins.

Financial report data shows that Midea's overseas OBM business is growing rapidly, and by 2023, the revenue from OBM business has exceeded 40% of overseas smart home business income, mainly dominated by the Toshiba, Midea, and Comfee brands.

In the view of Midea Group, the essence of internationalization is localization, with internationalized headquarters transforming foreign lands into hometowns, and continuing to increase the overseas infrastructure construction of after-sales service, logistics, and brand, etc.

Recently, Liu Xiangyang, the CISO of Midea Group and the dean of the Software Engineering Institute, also revealed at a public forum that Midea's overseas strategy can be summarized in four aspects: first is the globalization of research and development, second is the globalization of manufacturing; third is the globalization of sales and after-sales; and fourth is the globalization of talent.

Now, the door of the Hong Kong Stock Exchange has opened to Midea, and investors are looking forward to its further advancement in globalization.