The A+H market boom is back! "Internationalization strategy" is the core of going to Hong Kong.

Hong Kong's Wind Information Co. reported that in recent days, industry giants such as Foshan Haitian Flavouring and Food, Jiangsu Hengrui Pharmaceuticals, and others are planning to list in Hong Kong. Since the beginning of this year, the trend of "A+H" listing has been heating up, and as of now, more than 10 listed companies have planned to split or spin off subsidiaries to list in Hong Kong. From the announcements or statements of listed companies, it is not difficult to see that "internationalization strategy" is one of the core purposes for A-share companies to list in Hong Kong. The "A+H" listing trend is rising again On December 11, Foshan Haitian Flavouring and Food announced that in order to further promote its globalization strategy and enhance its international brand image and overall competitiveness, the company plans to issue H shares and apply to list on the main board of the Hong Kong Stock Exchange. If Foshan Haitian Flavouring and Food successfully lands on the HKEx, it may become the first domestic seasoning company to have dual A+H share listings. Prior to this, on December 9, Jiangsu Hengrui Pharmaceuticals also announced that in order to further promote technological innovation and the dual drive strategy of internationalization, and further support the development of the company's international business, the company plans to issue shares abroad (H shares) and list on the main board of the Hong Kong Stock Exchange. Since the beginning of this year, the heat of "A+H" listings has been increasing. According to incomplete statistics from public news, companies such as Foshan Haitian Flavouring and Food, Jiangsu Hengrui Pharmaceuticals, Ningbo Joyson Electronic Corp., Anjoy Foods Group, Aliter Continens, Xiamen Jihong Package Technology, Chifeng Jilong Gold Mining, Hainan Drinda New Energy Technology, and Chengxin Lithium Group have planned Hong Kong listings. In addition, A-share listed companies such as Iflytek Co., Ltd., Goertek Inc., Shandong Nanshan Aluminium, and Beijing Tongrentang are also planning to split or spin off subsidiaries to list in Hong Kong. BHGB submitted an application on January 29 to issue foreign shares (H shares) and list on the main board of the Hong Kong Stock Exchange, becoming the first company on the NEEQ to plan a listing in Hong Kong. So far this year, Midea Group Co., Ltd, Jiangsu Lopal Tech., and S.F. Holding have successfully listed on the HKEx. According to Wind data, there are a total of 151 companies listed in both mainland China and Hong Kong. On September 17, Midea Group Co., Ltd successfully landed on the main board of the HKEx. The total amount raised in the Midea Group Co., Ltd initial public offering was HK$31.014 billion. If the 15% over-allotment option is completely exercised after listing, the total amount raised will reach HK$35.666 billion, ranking it first in the Hong Kong IPO fundraising ranking this year. At the listing ceremony, Midea Group Co., Ltd Chairman Fang Hongbo stated that the successful listing is not only an important strategic layout for Midea in the capital market but also a new starting point for the company's deepening global development. On November 27, S.F. Holding officially listed on the HKEx, becoming the first "A+H" listed company in the express industry. Assuming the over-allotment option is not exercised, S.F. Holding's net IPO proceeds reached HK$5.662 billion, ranking it second. S.F. Holding Chairman Wang Wei stated that the listing in Hong Kong is of significant importance for S.F. Holding, as the company can leverage the Hong Kong platform to better develop international markets. It is clear that "internationalization strategy" is one of the core purposes for A-share companies to list in Hong Kong. Zhang Shujian, head of the investment capital market department at Futeng Capital, believes that the "A+H" model, by creating dual listing platforms in two locations, increases the flexibility of fundraising in the listing process, and introducing international long-term investors is conducive to optimizing the shareholder structure. Taking Foshan Haitian Flavouring and Food as an example, as a leading enterprise in the domestic seasoning industry, its production and sales volume ranks first in the industry, and the company's revenue scale has once exceeded 25 billion yuan. Influenced by the public opinion crisis in 2022, Foshan Haitian Flavouring and Food's revenue growth rate in 2022 is expected to be 2.42% year-on-year, with a net profit of 6.198 billion yuan, a decrease of 7.09% year-on-year, the first decline since its listing in 2014. In 2023, the revenue scale is expected to decline by 4.1%, marking the first revenue decline in nearly 10 years, with a net profit of 5.626 billion yuan, continuing to decline year-on-year. However, by 2024, Foshan Haitian Flavouring and Food's overall performance is expected to rebound, with revenue of 20.399 billion yuan in the first three quarters, an increase of 9.38% year-on-year. The net profit is 4.815 billion yuan, up 11.23% year-on-year. In fact, in addition to the impact of the public opinion crisis, the entire Chinese seasoning market has entered a new stage of stock competition after experiencing rapid growth in the past. Guotai Junan's report on the review and outlook of the seasoning industry shows that from 2020 to 2023, the CAGR (Compound Annual Growth Rate) of the seasoning industry's sales revenue is declining.Translating into The growth rate is 1.3%, with a sales CAGR of -1.25%.Facing increasingly intense industry competition, the overseas market may become the next important direction for Foshan Haitian Flavouring and Food. Foshan Haitian Flavouring and Food previously stated during research that the overseas seasoning market is a huge market, and the company will further strengthen the development of the overseas market in the future to contribute incremental growth. In August of this year, Foshan Haitian Flavouring and Food stated in an investor Q&A that while stabilizing the domestic market, Haitian continues to expand its presence in the overseas market, with its products currently being sold in over 90 countries and regions worldwide. In terms of overseas business, in recent years, the proportion of overseas revenue in Foshan Haitian Flavouring and Food's overall revenue has been on the rise, increasing from 5.23% in 2019 to 7.10% in 2023, and the business scale has also increased from 10.35 billion yuan in 2019 to 17.44 billion yuan in 2023. Policy support for mainland companies listing in Hong Kong Since the beginning of this year, the China Securities Regulatory Commission and stock exchanges have successively issued policies supporting A-share companies listing in Hong Kong, which has been a major driver of the current "A+H" wave. On October 18th, the CSRC and the Hong Kong Stock Exchange jointly announced that they will optimize the new listing application approval process timeline to enhance the attraction of Hong Kong as a leading international IPO capital market within the region. The CSRC stated in October that it is working to accelerate the approval process for some overseas listings, with over 10 banks and law firms participating in meetings. HKEX Chief Executive Charles Li said that A-share listed companies that meet certain criteria can be granted rapid approval to list in Hong Kong. Currently, nearly 77% of foreign capital holds mainland stocks through the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs. They are closely cooperating with the Shanghai and Shenzhen Stock Exchanges to introduce optimization measures such as incorporating REITs into the Stock Connect programs, introducing block trading mechanisms, and allowing RMB counter trading of Hong Kong stocks, with the hope of implementing them soon. Yuan Shuai, Deputy Secretary-General of the Beijing Centergate Technologies IoT Industry Alliance, stated that on one hand, as China's capital markets continue to open up, the Hong Kong stock market, as an international, open financial platform, will continue to attract these companies to list. On the other hand, policy adjustments and changes in the A-share market environment may also affect companies' listing choices and strategic adjustments.