Midea’s Hong Kong IPO drives the market to a two-week high in its first-day trading

Midea Group pushes the Hang Seng Index to reach its highest in the past fortnight as the city’s biggest initial public offering in over three years amid the sluggish local market.

Under code 0300, the shares of the global electronic appliance giant opened at HK$ 59.2, an 8% increase from its listing price of HK$ 54.8, and closed at HK$59.1.  The Hang Seng Index reached a two-week high and closed at 17660.02 accordingly.

The Company’s Shenzhen-listed shares climbed by 1.83% last Friday, while the CSI300 index, which indicates the performance of the Top 300 Chinese companies, dropped by 0.42% compared with the previous close. The Shanghai and Shenzhen stock markets are closed today due to the Mid-Autumn Festival. 

Midea Group's IPO this time received 5.31 times oversubscription for the public offering and 8.06 times oversubscription for the international offering. It sold 566 million shares after exercising the option to expand its offering by 15% due to the excess demand, according to the company’s filing to the Hong Kong Stock Exchange.

The Foshan-based Midea priced its share at the top of the marketed range of HK$54.8 to raise $4 billion (around HK$31.2 billion), which made it the city’s biggest debut after Kuaishou Technology since early 2021. 

The Chinese manufacturer introduced 18 cornerstone investors who subscribed to 179.0327 million shares, approximately $1.258 billion (around HK$9.811 billion) of the offered shares. The list includes COSCO Shipping Hong Kong, UBS AM Singapore, and BYD’s subsidiary Golden Link, according to its IPO documents.

Despite its strong performance today, Renee Wu, 28, an insurance agent at AIA Group and individual stock trader, remains sceptical about purchasing Midea’s shares. 

“I won't touch Chinese concept stocks anymore. I feel they lack investment value,” Wu said. “The risks they bring outweigh what they can provide. Chinese concept stocks are heavily influenced by policies, which makes uncertainty too high."

Bonnie Chan, the CEO of the Hong Kong Exchanges and Clearing Limited (HKEX), who attended the listing ceremony, said the IPO of Midea Group reflects the attractiveness and depth of Hong Kong as a capital market. 

The statement also echoed KPMG’s estimation that Hong Kong would reclaim one of the top five IPO markets this year.

Midea is a leading Chinese multinational conglomerate primarily engaged in the manufacturing and selling home appliances and Heating, Ventilation, and Air Conditioning systems. 

Midea’s net profit recorded a year-on-year increase of 14.11% to 20.8 billion yuan (HK$22.88 billion) in the first half of the year, according to its IPO filing.