\u3000\u3000 Haier Smart Home Co.Ltd(600690) (600690)
Event: on January 11, 2022, the 26th meeting of the 10th board of directors of Haier deliberated and approved the proposal of Haier Smart Home Co.Ltd(600690) on placing new H shares according to general authorization. The company plans to issue additional H shares and apply for listing on the main board of Hong Kong stock exchange.
Number of shares issued: on September 15, 2021, the company announced that it planned to issue no more than 73 million H shares by means of non-public issuance of H shares. According to the placing agreement on January 11, 2022, the number of shares placed this time is 41.414 million shares, accounting for 0.4% / 1.5% of the total issued shares / H shares of the company; After the placement of shares is completed, the Placement Shares will account for 0.4% / 1.4% of the total issued shares / H shares of the company.
Assignees: the assignees are golden sunflower, segantii, PAG Pegasus Fund LP, janchor and valliance, who subscribe 34.856 million shares, 2.186 million shares, 2.176 million shares, 1.131 million shares and 884000 shares respectively, accounting for 84.2%, 5.3%, 5.3%, 3.2% and 2.1% of the shares placed this time. Golden sunflower is an employee stock ownership platform. A total of 404 people subscribed for the company’s shares through golden sunflower, of which Dong Jiangao, the company and its subsidiary, contributed HK $76.35 million in this strategic placement, accounting for 7.8% of golden sunflower’s contribution. Segantii, PAG Pegasus Fund LP, janchor and valliance are professional global investment institutions.
Placing price and lock up period: the placing price is HK $28.00/share, which is 14.4% lower than the closing price of H shares of 32.70 yuan on January 11, 2022. The placing shares that golden sunflower undertakes to subscribe for shall not be traded or transferred within 12 months from the date of signing the placing letter; The placing shares promised to be subscribed by other allottees shall not be traded or transferred within 6 months from the date of signing the placing letter.
Purpose of funds: the total funds raised in this placement are about HK $1.16 billion, and the net proceeds are about HK $1.15 billion. The net proceeds from the placement will be used for: 1) 70% of the capacity construction of overseas industrial parks; 2) Relevant investments in ESG mainly include but are not limited to environmental impact management in the whole product life cycle, research and development of energy-saving and low-carbon technologies at the product end, and carbon neutralization capacity-building by 15%; 3) 10% information upgrading of overseas industrial parks; 4) Overseas channel construction and promotion 5%. The raised funds are mainly used for the construction of overseas and local production capacity. We believe that it is conducive to the company to improve the overseas operation efficiency and boost the profit margin of overseas business.
The strategic placement further binds the interests of listed companies and executives: the company’s employees account for a relatively high proportion in this strategic placement, and the company’s directors contribute a high amount (Liang Haishan, Li Huagang and Xie Juzhi contribute HK $18.35 million, 18.35 million and 11.01 million respectively), reflecting the confidence of executives and employees in the future growth of the company. Although the placement price is 14% lower than the current share price, considering the lock up period, we believe that this strategic placement is conducive to stimulating the enthusiasm of employees.
Investment suggestion: Haier is the leader in the global development of Chinese household electrical appliance enterprises. It has a perfect brand, channel and supply chain layout overseas, and there is a large room for overseas profit margin improvement. In addition, the company deepened digital transformation and helped China’s home appliance business increase revenue and reduce expenditure through high-end, systematic and scene sales models. It is estimated that the company’s EPS from 2021 to 23 will be 1.41/1.63/1.90 yuan respectively.
Risk tip: the sharp rise in raw material prices and the sharp fluctuations in the real estate boom outside China have an impact on the demand for household appliances
