Meizhi Optoelectronics failed to go public, and Midea Group’s A shares were defeated

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Source: Beijing Business Daily

As the head of Midea Group (000333), He Xiangjian is also promoting the independent IPO of Midea Group’s subsidiaries while continuing to merge. However, according to the official website of the Shenzhen Stock Exchange, on the evening of July 27, after more than a year of acceptance, the IPO of Meizhi Optoelectronics Technology Co., Ltd. (hereinafter referred to as “Meizhi Optoelectronics”) was finally withdrawn. This also means that He Xiangjian and his son, who already hold the actual control of 5 listed companies including Wandong Medical and Hekang New Energy, lost another A-share. It is worth noting that during the previous review process, Meizhi Optoelectronics was repeatedly questioned by regulators on issues related to spin-off and listing, horizontal competition and other issues.

Meizhi Optoelectronics GEM IPO terminated

On the evening of July 27, the official website of the Shenzhen Stock Exchange showed that the IPO of Meizhi Optoelectronics Growth Enterprise Market has been changed to a terminated status.

The Shenzhen Stock Exchange stated that since Meizhi Optoelectronics applied for the withdrawal of the application documents for issuance and listing, according to Article 67 of the Shenzhen Stock Exchange’s “GEM Share Issuance and Listing Review Rules”, the Shenzhen Stock Exchange decided to terminate the review of its initial public offering and listing on the Growth Enterprise Market.

The company’s GEM IPO was accepted on June 29, 2021, and entered the inquiry stage on July 24 of the same year. It took nearly 13 months from acceptance to withdrawal.

It is understood that the controlling shareholder of Meizhi Optoelectronics is Midea Group, and the actual controller of the company is He Xiangjian. The equity relationship shows that as of the date of signing the prospectus, Midea Group directly holds 50% of the shares of Midea Optoelectronics, indirectly holds 6.7% of the shares of Midea Optoelectronics through its wholly-owned subsidiary Midea Venture Capital, and directly and indirectly controls 56.7% of the shares of Midea Optoelectronics, which is The controlling shareholder of Meizhi Optoelectronics.

In this GEM IPO, Meizhi Optoelectronics originally planned to raise funds of 506 million yuan, which will be invested in 4 projects including the construction of a production base for intelligent front-loading products and the construction of a quality testing center. With the withdrawal of the company’s IPO order, the above-mentioned financing plan may encounter obstacles. In response to the reasons for the cancellation of the company’s GEM IPO order, a reporter from Beijing Business Daily called the office of the board of directors of Meizhi Optoelectronics for an interview, but the other party’s phone was not answered.

It should be pointed out that Midea Group is also the controlling shareholder of A-share listed companies Wandong Medical and Hekang New Energy. In addition, He Jianfeng, the son of He Xiangjian, the actual controller of Midea Group, is also the actual controller of two A-share listed companies, Infore Environment and Hualu Baina. Currently, He Xiangjian and his son actually control 5 A-share listed companies. In addition, Midea Group plans to become the owner of Kelu Electronics, which is still in progress.

Issues such as competition in the industry are questioned

As the main body of Midea Group’s spin-off and listing, Meizhi Optoelectronics was repeatedly inquired about issues such as spin-off listing and horizontal competition during the company’s GEM IPO review process.

It is understood that Midea Group is a global technology group covering five business sectors: smart home business group, electromechanical business group, HVAC and building business department, robotics and automation business department and digital innovation business; A high-tech enterprise engaged in the design, development, production and sales of intelligent front-loading products.

Meizhi Optoelectronics pointed out that after the spin-off and listing, Midea Group and other subsidiaries will continue to concentrate resources to develop businesses other than the main business of Meizhi Optoelectronics to further enhance their independence.

In this regard, the Shenzhen Stock Exchange required Meizhi Optoelectronics to explain the differences and connections between the company’s business and Midea Group’s smart home business group, HVAC and building business divisions.

In addition, during the reporting period, Midea Optoelectronics competed with Midea HVAC, a wholly-owned subsidiary of Midea Group, and Hicks, a subsidiary of Midea HVAC Holdings, in the online controller business. Completely stop the wire controller foundry business. Meizhi Optoelectronics and Midea Smart Home used to compete in the same industry in terms of smart speakers. As of now, the aforementioned situation has been eliminated.

In this regard, the Shenzhen Stock Exchange requires Meizhi Optoelectronics to explain the specific basis that the relevant horizontal competition does not have a significant adverse impact on the company, and to explain the reason for the wire controller business in 2021.

Economist Song Qinghui said that horizontal competition is very harmful, it will not only damage the interests of the company, but also may bring about the transfer of benefits, which will ultimately damage the core competitiveness of the company. Therefore, in the IPO review, the supervision of issues involving horizontal competition will focus on it.

Beijing Business Daily reporter Dong Liang Ding Ning

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