By LI Biao
Following its unsuccessful attempt to go public in July 2021 due to independence concerns, home electronics maker Meizhi Guangdian has reapplied for listing, hopefully raising 500 million yuan (US$71 million).
Meizhi Guagdian, a producer of LED lights and smart home devices for the Midea Group, has stopped using the Midea IT system in an attempt to demonstrate its independence from the group, a requirement if the listing is to proceed. Meizhi has also reduced sales and purchases to and from Midea. However, Midea retains control of Meizhi with a large portion of equity.
The listing is part of the trend for home appliance makers to spin off subsidiaries to fend for themselves. By allowing these subsidiaries to list independently, listed companies seek to access stronger liquidity channels and increased valuation. Similar plans have been considered by Haier, Skyworth, and Gree, but so far only Haier's application has been successful.
Home appliances are closely linked to the real estate market. The real estate crisis has dragged the home appliance industry down with it. Meizhi's main clients are real estate companies, and revenue from real estate clients' has decreased dramatically.
Meizhi reported a gross profit margin of 23.3 percent in 2022, much lower than the average level of listed companies in the same industry.
