Nan Fang Du Shi Bao·2025-08-26 14:57Summary of Key Points Core Viewpoint - Aux Electric is planning a global offering of approximately 207 million shares, with an expected net amount of around HKD 3.287 billion from the offering, assuming a share price of HKD 16.71 [1][3]. Group 1: Offering Details - The global offering includes about 20.716 million shares, with 10.358 million shares available for Hong Kong and approximately 196.803 million shares for international distribution [3]. - The maximum offering price is set at HKD 17.42 per share, with additional fees including a 1.0% brokerage commission and various transaction fees [3]. - The proceeds from the offering will be allocated as follows: 50% for upgrading smart manufacturing and supply chain management, 20% for global R&D, 20% for enhancing sales and distribution channels, and 10% for general working capital [3][5]. Group 2: Company Performance - Aux Electric's main business is the design, production, and sales of household and central air conditioning systems, with its major brand being AUX [5]. - The company is the fifth largest air conditioning provider globally, with a market share of 7.1% as of 2024 [5]. - Revenue figures for Aux Electric from 2022 to 2024 are as follows: CNY 19.528 billion, CNY 24.832 billion, and CNY 29.759 billion, with adjusted net profits of CNY 1.449 billion, CNY 2.511 billion, and CNY 2.935 billion respectively [5]. Group 3: Competitive Landscape - Despite revenue growth, Aux Electric's profit margins are under pressure due to a low-price strategy, with gross margins of 21.3%, 21.8%, and 21.5% from 2022 to 2024, significantly lower than competitors like Gree Electric and Midea [6]. - The company has seen a decline in net profit growth, with a projected drop to 17.0% in 2024, compared to previous years [6]. - Aux Electric's market position has weakened, with its online market share dropping from 28.57% in 2018 to 5.02% by 2025 [6]. Group 4: Financial Health - Aux Electric has a high debt level, with asset-liability ratios of 88.3%, 78.8%, 84.1%, and 82.5% from 2022 to Q1 2025, indicating significant short-term repayment pressure [7]. - The company's current liabilities amount to CNY 17.284 billion, while cash reserves are only CNY 2.896 billion, leading to a concerning net current liability situation [7]. Group 5: Legal Issues - Aux Electric has a history of legal disputes with Gree Electric, including multiple lawsuits over patent infringements, resulting in significant financial penalties [8].