After the failure of the independent listing from the United States, the main production of LED lights and smart home equipment of the United States intellectual photoelectric re-war GEM.

According to the official website of Shenzhen Stock Exchange recently, Meizhi Optoelectronics GEM's IPO application has been accepted again and plans to raise 0.506 billion yuan, with CITIC Securities acting as underwriter. Previously, Meizhi Optoelectronics had applied for listing for the first time after the spin-off from the United States in July 2021, and the company voluntarily withdrew its listing application after three rounds of SEC inquiries.

According to Meizhi Optoelectronics's latest response to the CSRC's inquiry letter, the company's previous withdrawal of the listing application was rooted in independence issues, mainly for three reasons:

Prior to the start of the spin-off and listing of the 1., the company was under the management of the former central air-conditioning division of Midea Group, which had a short period of independent operation in the previous reporting period;

At the time of the 2. company's previous filing, there were still unresolved peer competition situations after the filing date;

3. companies share IT systems with Midea Group.

Since the implementation of the domestic spin-off listing rules of listed companies, "A-split A" has become the choice of many A- share listed giants to reshape their valuation. From 2019 to March 2023, 21 companies have completed the spin-off and more than 100 are in progress. CICC Research Report pointed out that the independent listing of listed companies by splitting subsidiaries will not only enable subsidiaries to obtain independent valuation and more liquid financing channels after entering the secondary market, but also hope to increase the valuation of the parent company.

In this wave of "A split A" trend, home appliance giants have become fans. Not only the United States, Haier's two companies, House Intelligence and Daily Shun, Skyworth's Skyworth Electric have embarked on the road of spin-off and listing. Dong Mingzhu also confirmed at Gree's board meeting at the beginning of this year that the company is planning to spin off its large business section. At present, among the above-mentioned spin-off companies, only Haier's day sun passed the meeting smoothly in May this year.

Midea Group has five major business sectors, namely, Smart Home Business Group, Industrial Technology Business Group, Building Technology Division, Robotics and Automation Division, and Digital Innovation Business. Compared with the average more than 300 billion annual revenue and more than 20 billion net profit of Midea Group, the revenue of Midea Optoelectronics from 2020 to 2022 is 0.79 billion yuan, 0.93 billion yuan and 0.91 billion yuan, respectively, and the net profit is 69.35 million yuan, 76.9 million yuan and 83.27 million yuan. The overall scale of Meizhi Optoelectronics is small, and the divestiture will not affect the revenue and profit of the United States.

For the multi-business line layout, large-scale industry leading listed companies spin-off cases, the independence of subsidiaries is the focus of the object, the company control involved, related transactions and peer competition is usually the focus of the regulatory review issues.

In the equity structure, the United States absolutely controls Meizhi Optoelectronics. Midea Group directly holds 50 per cent of the shares and indirectly holds 6.7 per cent of the shares through its wholly-owned subsidiary, Midea Venture Capital, which controls a total of 56.7 per cent of the company's shares and is the controlling shareholder. He Xiangjian, founder of the United States, is the actual controller. In addition, the remaining shareholders are all equity investment institutions initiated by Midea employees, and the executive partners of the institutions are all Midea executives. The company also suggests in the prospectus the risk of controlling shareholders and actual controllers miscontrol.

Independence is the top priority of the spin-off listing.

The main business of Meizhi Optoelectronics is divided into lighting and intelligent front installation. The former covers household lighting and commercial lighting, contributing more than 70% of the income. The latter covers intelligent panels, intelligent door locks and intelligent gateways, contributing nearly 30% of the income.

The development of the home appliance industry is closely related to the real estate market cycle. Ma Wangjie, chief analyst of home appliances at CITIC Construction Investment Securities, pointed out that the sales of air conditioners driven by real estate once exceeded 60%, but now it has dropped to about 30%.

The debt crisis of real estate companies, which began in 2022, has led to a downward cycle of market demand, making the business of home appliance companies also suffer a certain impact.

The main downstream customers of Meizhi Optoelectronics products are real estate companies, which are concentrated in the two major customers of Country Garden and Midea's real estate development company Midea Real Estate. In 2022, the sales revenue from Midea Real Estate was 0.129 billion yuan, accounting for 14.21 of the current year's revenue. In the first two years, it was 14.3 and 16.8 respectively. The sales revenue of Country Garden, another major customer, accounted for 20.3, 17.3 and 10.3 for three consecutive years. The company's offline engineering distribution revenue from real estate customers decreased from 0.3 billion yuan to 0.25 billion yuan, and the annual revenue also declined.

The competition in the home appliance industry itself has also become white-hot. The gross margin of Meizhi Optoelectronics in 2022 is 23.3, which is lower than the average of comparable listed companies in the same industry. Competitors in the industry, such as Bull Group (603195.SH) and Opal Lighting (603515.SH), had gross profit margins of 38% and 35.3 respectively in the same year. The annual revenue of the two companies last year was 14.1 billion yuan and 7.3 billion yuan respectively.

On the issue of competition with Midea, Midea Optoelectronics has carried out targeted solutions one by one.

Previously, Midea HVAC, a wholly-owned subsidiary of Midea Group, also produced wire controllers, which were mainly sold as supporting parts for air-conditioning products and air-conditioning hosts. In order to avoid competition in the same industry, Meizhi Optoelectronics abandoned the coincident business from the end of October 2021. As a result, revenue from the company's smart front-loading business fell 24% to $0.2 billion from $0.27 billion in 2021.

At the same time, Meizhi Optoelectronics has completed the self-construction of IT system in 2022, and stopped using Midea Group IT system and paying Midea Group IT system usage fees from January 2023.

According to the prospectus, the share of revenue from related sales of Meizhi Optoelectronics has fallen from 24% to 13%, and related purchases have remained at a relatively low level overall.

Meizhi Optoelectronics and the United States group customer overlap rate is very high, the company in recent years also synchronized to reduce this ratio. Revenue from overlapping customers will be $0.53 billion, $0.51 billion and $0.43 billion in 2020, 2021 and 2022, respectively, accounting for 67 percent, 55 percent and 47.3 percent.

On this basis, Meizhi Optoelectronics is through the sales, procurement, customers, technical services and other links with the United States, has completed the independence test of the spin-off listing.