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Midea wins approval for sale of 10% stake

GUANGDONG Midea Electric Appliances Co has received regulatory approval to sell an additional 10-percent stake to consolidate its leading position in the white goods market, it said yesterday.

It plans to issue no more than 189 million new shares in the country's first private placement by a listed company since last month's resumption of initial public offerings. Based on yesterday's closing price of 17.30 yuan, the company can raise approximately 3.27 billion yuan (US$478.7 million).

The money will be used to replenish former investments in projects such as a refrigerator components plant in Hefei, Anhui Province, in partnership with Toshiba Carrier Corp, an air-conditioner manufacturing base in Vietnam, washing machine production lines in Hefei and air-conditioner production lines in Hubei and Guangdong provinces.

"Actually most projects are close to completion with its own capital and the raised money could replenish its working capital to facilitate the company's capability to carry out mergers and acquisitions as the company is on its way to integrate its white goods business," said Wang Nianchun, an analyst of Guosen Securities Co.

The company also plans to set up a research house to develop high-end models to rival white goods makers in developed countries after local market competition had been intensifying in recent years.

"The research house will help the company create new drive for profit growth as Chinese home appliance makers are increasingly reliant on overseas market with one-third exporting to international markets," the company said in a statement filed to the Shenzhen Stock Exchange.

"The share of high-end products has been increasing this year, which is expected to benefit the company's profitability. The performance for the first half is seen to be beyond expectation," Wang said.

Guangdong Midea dropped 3.62 percent in Shenzhen trading yesterday, compared to a rise of 1.85 percent in Shenzhen Composite Index.


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