CICC China International Capital Lim : Assists Haier to Issue RMB 3.007 bn Convertible Bonds

On Dec. 18, 2018, Qingdao Haier Co., Ltd. ('Haier', the 'Company' or the 'Issuer') successfully completed the issuance of RMB3.007 Bn A-share convertible corporate bonds. CICC acted as Sponsor and Lead Underwriter in the transaction. The deal marks the first convertible bond ('CB') offering in home appliances product sector and the second largest CB offering by a corporate issuer from consumer sector up to now.

As one of the largest listed companies in home appliances in China's A-share market, Haier has always been the forerunner of capital operation within the sector. The offering, as the first A-share CB offering in domestic home appliances product sector, has attracted attention from all types of investors and CB research teams in the whole market since its early road show. The successful issuance facilitated Haier to complete another low-cost and high-quality financing, and the proceeds will be used for the upgrading of smart manufacturing in production line such as refrigerators and air-conditioners to lead consumption upgrade; complete set of smart kitchen appliances' capacity layout projects for the implementation of the big kitchen appliance strategy; overseas emerging markets' manufacturing base construction to respond to the 'Belt and Road' initiative; advanced R&D lab, COSMOPlat industrial internet platform and U+ smart life platform projects to enhance innovation capabilities. The transaction will help Haier accelerate its product upgrading, expand its presence in kitchen appliances, and improve its sustainable innovation capability for future development.

CICC, as the long-term advisor for Haier, has engaged in material transactions of Haier since 2010, such as KKR's shares subscription in Haier, Haier's acquisition of GEA, Haier's acquisition of FPA, and the D-share IPO. The CB offering represents another milestone capital operation of Haier facilitated by CICC.

In the process of issuing, CICC, relying on its strong marketing and professional pricing capabilities, deeply explored investment institutions with interest in CB deals to assist the issuer to complete the road show smoothly. This offering received valid orders totaling RMB2.93tn in value from institutional investors offline, topping all public CB offerings in 2018, 0.0393% of online and offline orders were allocated in this deal, which was the lowest ratio among CB offerings with a size of over RMB1 Bn in 2018. The valid online and offline orders totaled over RMB3tn in value.

Haier was established in 1984 and listed on the Shanghai Stock Exchange in 1993. It is mainly engaged in R&D, manufacturing and sales of white goods. The main products include refrigerators, air-conditioners, washing machines, water heaters, kitchenware, and bathroom appliances. Through its persistent efforts and acquisitions, the Company operates a great number of global leading brands, including the white goods business of Sanyo of Japan, the home appliances business of GE, Fisher & Paykel in New Zealand, Candy in Italy, and MABE in Mexico, and it has developed Casarte as a domestic high-end home appliance brand. The Company has established its competitive edge with integrated capabilities in R&D, manufacturing and marketing both in the domestic and overseas market, realizing a layout deployment and global operation of a world-class brand. In 2017, its revenue from overseas operation represented 42% of the total revenue while near 100% of the revenue was generated from self-owned brand. According to retail sales statistics on the large home appliances published by Euromonitor, a world leading independent provider of strategic market research, in 2018, sales of Haier's large home appliances ranked No. 1 in the world for the 10th consecutive year; meanwhile, global sales of Haier's refrigerators, washing machines, wine cellars and freezers continued to rank No. 1 in the world. The Company's smart air-conditioners accounted for 30.5% in global sales, ranking No. 1 in the segment of interconnected air-conditioners (including smart air-conditioners) for the 2nd consecutive year.

The successful CB offering is another major deal facilitated by CICC in CB offering following YTO Express's successful CB offering recently. As a leading investment bank in China, CICC will continue to provide top financial services to clients and assist them to achieve their strategic goals by virtue of our extensive coverage of investors and in-depth understanding of both the market and the clients.