Midea Determines Total Listed Assets of RMB 90 Billion

On December 17, Midea Electric (000527, the previous closing price of 9.18 yuan) announced that it is expected that it will apply for resumption at the latest by the end of March 2013. This also means that the United States is expected to complete the final asset restructuring in about 3 months. This is the most detailed announcement of the progress of restructuring since the suspension of the US electrical appliance. According to the announcement, the related assets of the company’s major appliances, small household appliance businesses, electromechanical business and logistics business involving the Midea Group will be injected into the listed company. The total assets of the entire U.S. group are more than 90 billion yuan. This merger of assets involves about 200 subordinate domestic and foreign subsidiaries.

Yesterday, Jiang Peng, secretary general of the US electrical appliance, said in an interview with the reporter of the “Daily Economic News” that the quality of small household appliances and logistics assets that received much attention from the outside world were very good.

Focus on Home Appliances

It is understood that Midea Group originally comprised four secondary industry groups including Refrigeration Appliances Group, Household Appliances Group, Electrical and Mechanical Group and Real Estate Group.

The main components of the Refrigeration Appliances Group are the listed company Midea Electric and Little Swan A (000418, closing price of 7.82 yuan); the household appliance group is dominated by the small household appliances business; the Electromechanical Group business mainly includes the Hong Kong-listed electromechanical-based industry. Ling Holdings (00382, HK), plus Andhr Logistics Co., Ltd. This means that the U.S. asset integration involves the listed companies Midea, Little Swan, Welling, and unlisted small appliances and logistics businesses.

Hong Shibin, deputy director of the China Home Appliances Association’s Marketing Committee, told the “Daily Economic News” reporter that after this integration, the U.S. asset structure will be more clear and beneficial to corporate governance, and the industrial chain will be more complete from the upstream, midstream and downstream. Jiang Peng told reporters that the company's integration of home appliances and related industries is conducive to a more focused home appliance business.

Accumulated increase in the shareholding of Little Swan A1%
Jiang Peng said that he would rather call this integration as a merger of assets rather than an asset injection. “Unlisted small household appliances and logistics operations will be injected into the electrical appliances in the United States,” Jiang Peng told the Daily Economic News reporter. The current sales revenue of home appliance business is about 30 billion yuan. In general, the gross profit of small home appliances is higher than that of large home appliances. He is more confident in the above-mentioned assets to be injected. He believes that the business and scale of many small home appliances in the United States are For the first market, the profit level is still good. If it is an overall platform in the end, it is more favorable to the company. Public statistics show that in the small home appliances business of the United States, rice cookers, induction cookers, drinking fountains, electric pressure cookers, electric kettles, fans, heaters and other products have ranked first in the national market for sales, sales, and market share for many years. Soybean milk makers and microwave ovens are among the top two in the industry.

The integration of U.S. electrical assets also involves several listed companies. Because Little Swan A had previously been controlled by Midea Electric and this was not suspended, the analysis of the industry is not expected to change much at the capital level.

Little Swan announced yesterday that Midea’s electrical appliances had accumulated 1% of its shares since November last year. Another listed company is Welling Holdings, which is currently listed on the Hong Kong Stock Exchange with a market value of approximately 3 billion Hong Kong dollars. According to data from Welling Holdings' 2011 annual report, the company's operating income was HK$10.49 billion last year, and its annual profit was HK$605 million. As for how to integrate Welling Holdings, there is still no definite news and Welling Holdings has not suspended trading.

Before that, household appliance analyst Liang Zhenpeng said in an interview with reporters that Welling may be like Little Swan A. It is controlled by Midea Electric. Welling is originally a platform for listing, and it may maintain this position after consolidation. Jiang Peng said this: “This is the only way to wait until the final board of directors passes. Then I can say how to operate in the end, but in the final direction, they are a whole”.