Source: Direct IPO Author: Shao Yangang
Haier Group indirectly controls about 60.44% of the equity of Zhongmiao Innovation and Technology.
After the second submission, a company backed by Haier finally passed the hearing. If it successfully lands in the Hong Kong stock market, Haier's subsidiaries will gain a seventh listed company in addition to Haier Smart Home, Haier Electric, Haier Biotechnology and other companies.
On July 22, according to the information of the Hong Kong Stock Exchange, Zhongmiao Innovation and Technology (Qingdao) Co., Ltd. (hereinafter referred to as "Zhongmiao Innovation and Technology"), an insurance agency service provider, passed the listing hearing and was only one step away from the main board IPO. Previously, Zhong Miao Innovation and Technology had submitted two forms to the Hong Kong Stock Exchange in May 2023 and April 2023 respectively.
It is reported that Zhongmiao Innovation and Technology was established in March 2017, formerly known as Qingdao Quanzhang Technology Co., Ltd., which is a subsidiary of Haier Group. Since its establishment, Zhongmiao has been mainly engaged in providing IT services, and after the acquisition of Haier Insurance Agency in December 2017, the company's business has expanded to insurance agency business, and in the process of development, it has expanded to consulting services.
Before the IPO application, Zhongmiao Innovation and Technology completed Series A and Series B financing, raising a total of about 142 million yuan. In the equity changes during the establishment process, Haier Group has always been in a controlling position. According to the prospectus, Haier Group indirectly holds a total of about 60.44% of the shares of Zhongmiao Innovation and Technology through Qingdao Haiyinghui and Qingdao Haichuanghui.
Source: Zhongmiao Innovation and Technology Prospectus
As a result, Zhongmiao Innovation and Technology has a deep binding relationship with Haier.
According to the prospectus, Zhongmiao's revenue mainly comes from insurance agency business, IT and consulting services, and it mainly earns insurance agency business income by distributing insurance company partners' insurance products to insurance users and charging them commissions.
In 2021, 2022, 2023 and the first four months of 2024, Zhongmiao Innovation and Technology achieved revenue of 120 million yuan, 148 million yuan, 174 million yuan and 58.644 million yuan respectively, gross profit of 48.049 million yuan, 67.259 million yuan, 74.513 million yuan and 24.839 million yuan respectively, and net profit of 26.992 million yuan, 36.349 million yuan, 38.993 million yuan and 14.829 million yuan respectively.
Source: Zhongmiao Innovation and Technology Prospectus
Among them, the insurance agency business, which mainly distributes four types of insurance products, namely property insurance products, life and health insurance products, accident insurance products and motor insurance products, contributed the majority of revenue. According to the prospectus, in 2021, 2022, 2023 and the first four months of 2024, Zhongmiao Chuangke's business revenue will be 116 million yuan, 131 million yuan, 156 million yuan and 54.802 million yuan respectively, accounting for 96.7%, 88.1%, 89.5% and 93.4% of the total revenue respectively.
The cost of sales of insurance agency business mainly consists of referral fees and commissions. As of the first four months of 2021, 2022, 2023 and 2024, the referral fees and insurance agent commissions of strategic channel partners were $58.2 million, $64.4 million, $82.6 million and $29.4 million, respectively, accounting for 48.5%, 43.4%, 47.5% and 50.2% of our total revenue for the same year and the same period, respectively.
In terms of its relationship with Haier Group, Zhong Miao has purchased a number of services from Haier Group to meet its business and operational needs. In 2021, 2022, 2023 and the first four months of 2024, the past transaction amounts of fees paid by Zhong Miao Innovation and Technology to Haier Group and its affiliates for the integrated services provided by Haier Group and its affiliates were $540 million, $5.7 million, $3.7 million and $0.6 million, respectively.
Haier Group also contributed revenue to Zhongmiao Innovation and Technology. According to the prospectus, in 2021, 2022, 2023 and the first four months of 2024, the commission income attributable to Haier Group's corporate insurance users will be 18.288 million yuan, 23.809 million yuan, 24.1 million yuan and 9.107 million yuan respectively, accounting for about 15.8%, 18.2%, 15.5% and 16.6% of the total commission income.
In addition, in 2021, 2022, 2023 and the first four months of 2024, Zhongmiao Innovation & Technology's IT service revenue from Haier Group and its affiliates was 577,000 yuan, 6.042 million yuan, 8.732 million yuan and 1.665 million yuan, respectively, and the consulting service revenue from Haier Group and its affiliates was 790,000 yuan, 2.346 million yuan, 1.46 million yuan and 285,000 yuan, respectively.
Despite the relatively large proportion of related revenue with Haier Group, Zhong Miao said in the prospectus that the company has expanded our insurance user base to cover more than 336,000 family insurance users and more than 17,000 non-Haier Group corporate insurance users during the track record period, despite the stable commission income attributable to Haier Group's insurance users from insurance company partners. In addition, Haier Group's commission income attributable to insurance users decreased from 18.2% in 2022 to 15.5% in 2023.
In addition, Haier Group is not the largest customer of Zhongmiao Innovation and Technology, and the prospectus shows that from 2021 to 2023, the revenue from the largest customer Ping An of China will account for about 35.0%, 38.1%, 36.1%, 34.1% and 31.7% of the total revenue.
As of the first four months of 2024, Zhongmiao Innovation and Technology has cash and cash equivalents of 63.677 million yuan, and according to the fundraising plan, Zhongmiao Innovation and Technology will be used to develop insurance agency business, develop and provide IT service products in the next five years, and seek prudent investment and acquisitions in the insurance intermediary and fintech industries.
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