On the evening of January 9, 2024, iFLYTEK announced that the company intends to spin off its holding subsidiary, iFLYTEK Medical, to be listed on the main board of the Hong Kong Stock Exchange. The issuance size of iFLYTEK Medical does not exceed 15% of the total share capital after the issuance, and the issuance method is a Hong Kong public offering and an international placement of new shares. After the spin-off is completed, iFLYTEK will still maintain control of iFLYTEK Medical.
*: iFLYTEK announcement.
According to the announcement, the spin-off and listing of iFLYTEK Medical will help strengthen the connection with international customers and partners, attract global talents, and carry out technical and product cooperation with international scientific research institutions, medical institutions, academic institutions, etc., to further promote the overseas business expansion of iFLYTEK and the internationalization process of iFLYTEK Medical.
Respond to business expansion funding needs
iFLYTEK announced that the initial issuance size of iFLYTEK Medical this issuance is not more than 15% of the enlarged total share capital immediately after the issuance (before the exercise of the over-allotment right), that is, no more than 2008990,000 shares and granted to the Global Coordinator The Bookrunner an over-allotment option not to exceed 15% of the initial issue size of the H Shares mentioned above, i.e., subject to the full exercise of the over-allotment optionThe number of H shares issued by iFLYTEK Medical this time is not more than 2310340,000 shares. The final issuance ratio and number of issuance shall be determined by the board of directors authorized by the general meeting of shareholders of iFLYTEK and the persons authorized by the board of directors in accordance with legal provisions, regulatory approvals or filings, and market conditions.
According to the announcement, the spin-off will provide an independent listing platform for iFLYTEK Medical, which can directly obtain equity or debt financing from the Hong Kong capital market to meet the capital needs of existing and future business expansion, and promote iFLYTEK Medical to accelerate the development and iteration of products and services. It is of great significance for listed companies and iFLYTEK Medical to highlight their main businesses, enhance their independence and long-term development by flexibly responding to market changes, seizing market opportunities to achieve rapid business growth, and further promoting their internationalization strategy, while helping listed companies make full use of the capital market, further enhance brand influence, consolidate industry leading position, and enhance comprehensive competitiveness.
iFLYTEK said that there are four considerations for the spin-off of iFLYTEK Medical for listing:The first is to optimize the business structure and focus on the development of the main businessAfter the spin-off, iFLYTEK Medical will establish a more suitable management method for the characteristics of the medical industry, which will help the listed company to straighten out the overall business structure and make each independent business clearer. The second is to promote the internationalization strategy and expand overseas marketsThis spin-off will further promote the overseas business expansion of iFLYTEK and the internationalization process of iFLYTEK Medical. The third is to broaden financing channels and embrace the strategic futureAfter the spin-off and listing of iFLYTEK Medical, it will be able to use the capital market to independently carry out equity and debt financing to meet the capital needs of continuous R&D investment and market expansion, reduce the company's financial burden, and also enable the company to allocate more resources to the research and development of general large models and other strategic emerging directions in the future. The fourth is to solve the problem of talent incentives and constraintsThe spin-off and listing of iFLYTEK Medical can provide a more flexible mechanism for the introduction of compound talents, international talents and team incentives, promote iFLYTEK to maintain its technology and market leadership, and achieve rapid business growth.
In 2022, the loss will exceed 200 million yuan
According to the announcement, after the spin-off and listingiFLYTEK will still maintain control of iFLYTEK Medical, which remains a subsidiary within the scope of the consolidated statements of the listed companyThe operating performance of iFLYTEK Medical will be reflected in the overall performance of the listed company.
According to the announcement, iFLYTEK is the controlling shareholder of iFLYTEK Medical, and Liu Qingfeng and HKUST Holdings are the actual controllers of iFLYTEK Medical. iFLYTEK directly holds 5247%。
According to the announcement, iFLYTEK Medical is a pioneer in using AI to empower China's medical industry, with the mission of creating "AI diagnosis and treatment assistant for every doctor and AI health assistant for everyone". Through leading core technologies such as speech recognition, image recognition, and natural language understanding, iFLYTEK is committed to deeply integrating artificial intelligence technology with the medical industry, promoting the development of the health care industry, and helping the implementation of national medical reform policies. In June 2022, iFLYTEK's "Intelligent Medical Assistant Construction and Application" was selected as one of the "Top Ten Digital Health Demonstration Cases" by the National Health Commission, and in September, at the press conference of the National Health Commission summarizing the "Progress and Effectiveness of Health Informatization Work since the 18th National Congress of the Communist Party of China", iFLYTEK's "Intelligent Medical Assistant" was affirmed by the National Health Commission as a typical case of effectively improving the quality of primary medical services.
In terms of performance, from 2020 to 2022, iFLYTEK Medical's operating income will be 32.1 billion yuan, 35.6 billion yuan, 49.4 billion yuan, and the net profit attributable to the parent company was 76.1 billion390,000 yuan, -7973230,000 yuan, -20.4 billion yuan.
Liu Qingfeng, chairman of iFLYTEK, previously talked about the considerations behind the spin-off of the medical business in an interview with a reporter from China ** Daily, "I hope to concentrate resources on scheduling to do big things and concentrate on fighting big battles, which is one of our main logics, and we don't want to be separated, but in some new businesses, we also need to use more mechanisms." For example, the equity option incentive mechanism of listed companies, spin-off and listing, we can use greater attraction to let outstanding talents from all over the world join, which is one side of consideration;The second consideration is that as a listed company, there is a certain limit to the space that can be borne when doing some exploratory business in the early stage, for example, there are some large capital investments and huge performance losses, if they are all included in a listed company, the financial pressure of the listed company is very large. ”
Reviewer: Ren Mingjie Editor: Yu Hongbo Producer: Yu Zhe Signed: Fei Yangsheng