MIDEA GROUP confronts the "spinoff listing curse"

After landing on the Hong Kong stock market in September last year, MIDEA GROUP (000333.SZ) is promoting its subsidiary AnDe ZhiLian Supply Chain Technology Co., Ltd. (hereinafter referred to as "AnDe ZhiLian") for an IPO in Hong Kong.

AnDe ZhiLian was originally the logistics department of MIDEA GROUP and has gradually grown into a company providing comprehensive supply chain solutions, with projected revenues and net profits of 18.663 billion yuan and 380 million yuan respectively in 2024.

Currently, MIDEA GROUP holds 52.94% of AnDe ZhiLian's shares.

Behind the revenue scale exceeding 10 billion, the MIDEA system (including MIDEA GROUP and its affiliates) remains an important customer of AnDe ZhiLian, contributing nearly 40% of its revenue in 2024 alone.

The high level of related party transactions with the parent company may be the main reason for AnDe ZhiLian's previous halt in its A-share IPO.

If AnDe ZhiLian successfully lists on the Hong Kong stock market this time, it is expected to become the first subsidiary of MIDEA GROUP to go public through a spin-off.

Prior to this, MIDEA GROUP had attempted twice to operate its subsidiary MeiZhi Optoelectronics Technology Co., Ltd. (hereinafter referred to as "MeiZhi Optoelectronics") for listing on the ChiNext, but both attempts ended in failure.

Whether AnDe ZhiLian can successfully ride the wave of the Hong Kong stock market and go public is currently under scrutiny.

MIDEA Contributes Over 10 Billion in Revenue

Currently, AnDe ZhiLian's business covers the entire process from pre-production logistics optimization, centralized warehousing and distribution to last-mile delivery and installation, addressing the logistics transportation issues from production to end delivery for companies in the home appliance manufacturing industry.

AnDe ZhiLian's advantage lies in its backing by MIDEA GROUP, which possesses rich supply chain data and can manage various aspects of delivery intelligently through a digital platform, helping enterprises reduce costs and improve operational efficiency.

It is not uncommon for leading home appliance companies to build their own supply chains.

Haier Group's RRS Supply Chain Technology Co., Ltd. (hereinafter referred to as "RRS") can also provide full-process services from production to end delivery, with annual revenue exceeding 10 billion.

The business compositions of the two are quite similar.

AnDe ZhiLian's main revenue comes from centralized warehousing and distribution services, primarily involving the stages from factory production to distributors, targeting companies with multi-tier manufacturers and distributors.

AnDe ZhiLian manages the omni-channel inventory of such companies through a centralized sharing model, providing unified warehousing and distribution services, which not only saves warehouse space but also improves delivery efficiency.

From 2022 to 2024, the centralized warehousing and distribution business generated revenues of 9.589 billion yuan, 10.654 billion yuan, and 12.053 billion yuan for AnDe ZhiLian, accounting for over 60% of its total revenue.

RRS's main revenue also comes from this segment, generating 11.644 billion yuan in 2022, accounting for nearly 70%.

The B-side of relying on a big tree for shade is AnDe ZhiLian's strong dependence on its parent company.

From 2022 to 2024, AnDe ZhiLian earned revenues of 5.342 billion yuan, 5.938 billion yuan, and 7.675 billion yuan by providing supply chain services to the MIDEA system, accounting for nearly 40% of its total revenue Not only that, the transaction scale between Ande Zhilian and the Midea Group is likely to maintain a growth trend in the future.

According to the framework agreement signed by both parties, the upper limit of the transaction amount for Ande Zhilian to provide services to the Midea Group from 2025 to 2027 is 9.35 billion yuan, 11 billion yuan, and 12.5 billion yuan, respectively.

The continuously expanding related transactions may be the main reason why Ande Zhilian ultimately chose to stop at the A-share IPO guidance.

As early as December 2023, Ande Zhilian submitted IPO guidance materials to the Securities Regulatory Commission, but it ended without success.

Xinfeng noted that China International Capital Corporation (CICC), the IPO guidance institution for Ande Zhilian, pointed out in the three phases of guidance materials that the revenue Ande Zhilian obtained from the Midea Group had an excessively high proportion and absolute amount.

At that time, there were similar troubles when Rishun was sprinting for an A-share IPO.

As early as 2021, Rishun submitted an IPO application to the Shenzhen Stock Exchange for the Growth Enterprise Market, but after two years, it ultimately withdrew the application.

From 2020 to 2022, Rishun's revenue from the "Haier Group" was 4.65 billion yuan, 5.252 billion yuan, and 5.316 billion yuan, accounting for about 30%.

During the listing committee meeting, the regulatory authorities required Rishun to explain "whether there is a significant dependence on related customers and whether it has the ability to operate independently and sustainably in the market."

Although Rishun successfully passed the review, it ultimately chose to withdraw voluntarily.

Subsequently, Haier Group entrusted the voting rights of Rishun to Haier Smart Home (600690.SH), which thus controlled Rishun and achieved consolidation.

Whether Rishun will join Ande Zhilian in shifting to the Hong Kong stock market remains to be seen.

Customer Expansion in Progress

The Midea Group is not only a direct contributor to revenue but also an important support for expanding external customers.

In May of this year, Midea Group signed a strategic cooperation agreement with Hisense Group, agreeing that both parties would carry out comprehensive strategic cooperation in multiple fields such as AI applications and smart logistics.

The following month, Hisense Electronics, a subsidiary of Hisense Group, subscribed for 164 million shares issued by Ande Zhilian for 1.52 billion yuan.

After achieving equity binding, the transaction scale between the two parties is expected to significantly increase.

From 2025 to 2027, Hisense Group plans to procure logistics services from Ande Zhilian with an upper limit of 200 million yuan, 1.2 billion yuan, and 1.8 billion yuan, totaling 3.2 billion yuan, which is more than 30 times that of the past three years.

Ande Zhilian also acknowledged the strategic synergy with the Midea Group, stating that if the latter fails to grow as expected, it may adversely affect its business, financial condition, operating performance, and prospects.

With this independent move, whether Ande Zhilian's supply chain logistics capabilities can be validated in more external companies and different industries may be key to unlocking performance space in the future.

In fact, as early as three years ago, in 2022, Ande Zhilian's chairman Liang Pengfei set a goal: by 2025, the proportion of external business may reach 80%, with a total business scale of 30 billion yuan.

With more than half of 2025 already passed, Ande Zhilian's revenue in the first half of the year was 10.885 billion yuan, with external revenue accounting for less than 60% during the same period, indicating that there is still a considerable distance from Liang Pengfei's goal On the road to expanding its customer base externally, Ande Zhilian is attempting to improve its industry coverage by focusing on clients in the general consumer goods, new energy, and automotive and auto parts sectors.

On the other hand, Ande Zhilian plans to leverage the global business coverage advantages of the Midea Group to develop overseas markets, with a focus on Southeast Asia and is also exploring mergers and acquisitions to enhance its international supply chain capabilities.

Whether this can bring more performance space to Ande Zhilian is being anticipated.

The First Spin-off to Break the Ice?

As the parent company of Ande Zhilian, Midea Group has maintained a stable growth trend in its performance.

In the first half of 2025, Midea Group's revenue and net profit attributable to shareholders were CNY 252.331 billion and CNY 26.014 billion, respectively, representing year-on-year growth of 15.68% and 25.04%.

Benefiting from national subsidies, Midea Group's main business in smart home products has seen significant growth, generating CNY 167.2 billion in the first half of 2025, a year-on-year increase of 13.31%, accelerating by 2.31 percentage points compared to the same period in 2024.

This may have created a stable incremental space for Ande Zhilian.

If Ande Zhilian successfully lists on the Hong Kong stock market, it is expected to become the first subsidiary of Midea Group to successfully go public through a spin-off.

Currently, Midea Group has three listed companies under its umbrella: Hekang New Energy (300048.SZ), Wandong Medical (600055.SH), and Kelon Electronics (002121.SZ), all of which were obtained through acquisitions.

Compared to "buying," Midea Group's spin-off operations have not been smooth.

As early as five years ago, Midea Group attempted to spin off Meizhi Optoelectronics for a listing on the Growth Enterprise Market—between 2021 and 2023, Meizhi Optoelectronics submitted two IPO applications to the Shenzhen Stock Exchange but both ended in failure.

This planning for Ande Zhilian's listing in Hong Kong marks Midea Group's fourth attempt at a spin-off operation.

If Ande Zhilian successfully goes public, Midea Group is expected to shake off the shadows of its previous spin-off failures.

It is worth mentioning that as the head of Midea Group, the He Xiangjian family also controls Midea Real Estate (3990.HK), Yingfeng Environment (000967.SZ), Bainian Qiancheng (300291.SZ), and Kuka Home (603816.SH).

If this listing is successful, Ande Zhilian is expected to become the ninth listed company under the He Xiangjian family.