Asia Tea Time - Cup 70 ☕

This week I talk a large Hong Kong listing from a Chinese home appliances firm and why you’re eligible for compensation if your flight from Europe gets cancelled. 

Macro in Asia

Chinese appliances giant Midea raises U$4 billion in Hong Kong listing

Chinese white goods appliances maker Midea, which already has its shared listed on the Shenzhen stock exchange, is raising over US$4 billion in a listing on the Hong Kong stock exchange.

Midea priced its offering at the top of its indicated price range of HK$52 to HK$54.80, according to a statement from the company on Friday to the Hong Kong stock exchange. 

Why it’s happening

• Midea is looking to use the proceeds of its Hong Kong listing to do a number of things: support research and development, develop manufacturing systems, and expand its global sales network. 

• Management also cited the expected benefits from the tailwinds of tourism and generally healthy Singapore economy. 

Why it matters

• Midea’s Hong Kong listing is set to be the largest on the Hong Kong exchange since Kuaishou Technology (HKEX: 1024) raised US$6.2 billion in an IPO in early 2021.

• Midea produces a wide array of home appliances, from homeware (like washing machines and fridges) all the way though to heating and ventilation devices, so the fact they felt confident to raise money in Hong Kong suggests it’s not all “doom and gloom” for China’s economy. 

What’s next?

• This would be a big coup for the Hong Kong exchange but there’ll need to be more Mieda-like listings to really rejuvenate the market. Watch closely how the rest of year pans out for the exchange. 

Tim’s Take 

Midea might not be that well known outside of China but it, along with Haier, dominate the domestic market for kitchen and household appliances. 

It also has a sizeable presence in emerging markets, which find its well-made, cheap appliances a boon as increased urbanisation takes hold. 

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Midea employs over 166,000 people and has a presence in nearly 200 countries. Meanwhile, it has a diversified production capacity, with 30 different global production centres.

The company already has its shares listed in Shenzhen (it carried out its IPO there in 2013) and Midea’s Hong Kong shares (H-shares) are being issued at a 20% discount to its Shenzhen A-shares – a fact that has made its Hong Kong listing extremely popular and oversubscribed. 

While a discount is common occurrence for dual-listed mainland firms, with their H-shares tending to trade at a discount to their A-share equivalent, Midea’s discount is particularly attractive. 

The discount exists mainly due to Hong Kong’s open capital markets and more institutional-leaning investor base.

With Midea’s Shenzhen-listed shares up over 16% so far in 2024, and with the company offering a dividend yield of over 4%, it’s no surprise that there’s investor interest in the listing. 

While the company is doing well and outperforming the broader Hang Seng Index (which is only up 3.5% so far this year), investors should see how its shares perform post-listing – and potentially up to the end of this year – to see whether its business fundamentals can continue to back up the current enthusiasm. 

Tim’s money tip of the week

Travelling to Europe is super popular but now that the summer is coming to an end, it’s worth taking stock of just how inefficient European airports can be.

Cancelled flights in Europe are more common than we think but there is also a way for us to claim money from the airlines for any flights that depart from Europe.

According to a European Union (EU) regulation, passengers on cancelled flights departing from the EU to another non-EU country can be eligible for up to 600 Euros in compensation, with a minimum of at least 250 Euros.

The regulation – called EC261 – gives eligible passengers the right to claim this compensation from their airline for delayed or cancelled flights departing from the EU.

So, the next time your flight out of Europe is either severely delayed or cancelled altogether, it’s worth getting in touch with your airline and trying to claim this compensation.