Gree | 'No Red' | Anxiety behind: To get involved in the chip industry

Holding a profit of RMB 28.7 billion, Gree unexpectedly made its first decision in a year without dividends.

On the evening of April 25, Gree Electric released its 2017 financial report. Its revenue for 2017 was 148.286 billion yuan, an increase of nearly 37% year-on-year. The net profit attributable to shareholders of listed companies was 22.4 billion yuan, an increase of nearly 45% year-on-year. The company announced that it will not distribute profits in 2017, and will not transfer shares and capital reserves to increase share capital.

The long-term stable high dividend has made Gree Electric Co., Ltd. the gold medal for A-shares. The sudden and undiscriminatory decision revealed that it was unusual for Gree Electric in 2018. In addition to Gree Electric, Chairman Dong Mingzhu’s tenure will expire at the end of May, and the Board of Directors The re-election has not yet been settled, Gree also faced a super task of 200 billion revenue this year.

Get involved in the chip industry

Gree left the money for expansion and diversification of air conditioning capacity.

On the evening of April 26, Gree Electric Co., Ltd. replied in the announcement of the Shenzhen Stock Exchange that the non-distribution was due to the company's plan to gradually expand the air-conditioning capacity. In addition, the company also plans to focus on the layout of smart equipment, smart appliances, integrated circuits and other industrial fields.

The announcement disclosed that Gree Electric is planning and implementing numerous investment projects.

Among them, in the newly-built air-conditioning base project, Luoyang and Nanjing Base are under planning, and the Hangzhou base is under construction. The smart factory upgrade project includes the overall re-planning and construction of the Zhuhai headquarters, the relocation of the Chongqing base and the planning and construction of the Zhuhai headquarters global R&D center. In addition, Gree It also announced smart equipment investment projects in Zhuhai, Wuhan and Luoyang, and smart home appliances projects in Chengdu, Luoyang and Hefei. It is worth noting that Gree also announced integrated circuit design investment projects and confirmed participation. Luoyang LYC Bearing Co., Ltd. mixed investment projects.

After China-US trade frictions, ICs with lower self-sufficiency ratios became the focus. Liu Buchen, a veteran home appliances observer, believes that Gree needs to enter the IC industry, mainly for smart distribution, and to make air-conditioning chips. He told the China Times. According to the analysis of the reporter, now every time Gree produces an air conditioner, the chips need to be imported, and the technology is in the hands of Japanese companies. But he also stressed that the air conditioner manufacturers are not sensitive to the price of the chips. The price of a chip is a few pieces. money.

On April 26th, the director of Gree Electric, Mr. Wang Jingdong, told the Huaxia Times reporter that Gree only had no dividend for the time being, but Gree’s dividends tradition will not change. For Gree’s planning in the integrated circuit industry, he expressed the follow-up meeting. A specific announcement was issued. He also told the Huaxia Times reporter that Gree had worked on air-conditioning chip designs for many years before.

In the conference call of investment institutions after the release of the 2017 financial report, Wang Jingdong also stated that the ZTE event gave Gree a lot of enthusiasm, and Gree needed to make its own air-conditioning chips.

Investors don't buy it

For Gree Electric Appliances, the attitude of the capital market was not positive. On April 26th, Gree Electric Appliances' closing price was 45.58 yuan, which was 8.97% lower than the previous day, and it was almost at the limit.

After-hours data shows that most of the fleeing funds are institutional investors.

On the same day, the net outflow of Gree Electric Appliances was 1.793 billion yuan, which was more than four times that of the second China Ping An. Its net large outflow was 1.576 billion yuan, which was nearly 4 times that of the second China Ping An. The net outflow was 217 million yuan, still ranking first. In contrast, Gree Electric's single-day net inflow totaled nearly 1.8 billion yuan. On the same day, Gree Electric Appliances was also issued a letter of concern by the Shenzhen Stock Exchange, stating that no cash dividends would be made in 2017. The specific reason and rationality.

Some people think that the loss of institutional investors due to dividends is not expected to come true. The previous stable high dividends have attracted many investment institutions for a long time.

According to the announcement, since its listing in 1996 to 2016, Gree Electric Appliances has accumulated 19 cash dividends totaling RMB 41.792 billion, which exceeds 40% of its net profit. Among them, from 2015 to 2017, Gree Electric Appliances distributed profits of RMB 19.85 billion. , accounting for 109.30% of the profit allotted for three years.

In fact, the quarterly report published on the evening of April 26 showed that institutional investors are optimistic about Gree.

Of the top ten shareholders of Gree Electric in the current period, with the exception of the top three shareholders, the remaining seven shareholders are institutional investors, holding a total of 11.2% of the shares, including many national players. In the first quarter of this year, the national team was Gree Electric Appliances continued to increase its holdings. Among them, the securities company increased its holdings of approximately 0.7% of the shares, and its shareholding ratio rose to 3.48%. The social security fund's 101 portfolio ranks as the tenth largest shareholder with a shareholding ratio of 0.79%. In the 2017 financial report, Dong Mingzhu also ranked the 10th largest shareholder with a shareholding of 0.74%.

It needs to be mentioned that on May 31 this year, 63-year-old Dong Mingzhu’s term of office on Gree’s board of directors will expire. Prior to this, the issue of his tenure has drawn attention from the outside world. However, there are opinions that the lack of dividends may result in the loss of Dong Mingzhu. With the support of institutional investors, Liu Buying analyzed with the China Times reporter that the drop in Gree's stock price reflects investors' irrationality and immaturity. No dividends will have a substantial impact on Dong Mingzhu's tenure. He thinks that Dong Mingzhu’s reappointment is not suspenseful. .

For investors, the good news is that on the evening of April 26, Gree Electric announced that the company will clear its capital requirements and cash flow estimates as soon as possible, and make a mid-2018 annual dividend.

Where is the growth of 200 billion yuan?

For Gree in 2018, one of the more serious issues was how to complete the 2000 billion yuan of revenue that Dong Mingzhu set.

Based on a rough calculation of the revenue of RMB 148.2 billion obtained in 2017, Gree Electric Appliances needs to achieve a revenue growth of 35% year-on-year to achieve RMB 200 billion. The just-released 2018 quarterly report shows that its current revenue is RMB 39.561 billion. An increase of 33.29% over the same period last year. The net profit attributable to shareholders of listed companies for 5,581 million yuan was increased by 39.04% year-on-year.

Gree’s high growth in 2017 originated from air-conditioning. The 2017 annual report shows that the current air-conditioning revenue was RMB 123.4 billion, accounting for 83.22% of Gree’s current revenue, which was an increase of 40% year-on-year. However, with the air-conditioning business alone, Gree could not be made. The quality of the revenue has broken through.

On the one hand, many air-conditioning industry experts told the China Times reporter that the air-conditioning industry would not be able to maintain its grand event last year in 2018. The data from Ove Cloud also shows that in January and February 2018, air-conditioning retail sales totaled 12.6 billion yuan. , year-on-year decrease of 4.0%. Air-conditioning retail volume of 3.2 million units, a year-on-year decrease of 11.7%.

On the other hand, as early as October 2016, at the Gree shareholders meeting, Dong Mingzhu said when explaining why he had acquired Zhuhai Yinlong, Gree has exceeded 40% of the air-conditioning sector, and there is little room for growth. She said at the time that Gree’s net profit rate also increased from 6% in 2011 to 13%. The 2017 financial report showed that Gree’s current net profit was 15%.

Gree has been looking for new growth points. In addition to the failure of the acquisition of Silver Dragon, Gree has expanded in the fields of mobile phones, household appliances, and smart equipment. However, it is difficult for diversified businesses to provoke heavy revenue growth. 2017 The annual financial report shows that the ratio of living appliances in Gree Electric Appliances' revenue was 1.55%, which was basically the same as that of the same period of last year. 21.26 billion yuan of smart equipment accounted for 1.43% of Gree's revenue, and the share was nearly 10 times that of last year.

It is worth mentioning that Heil, who once worked with Gree as a member of the 100 billion club, has achieved qualitative change in recent years through large-scale overseas mergers and acquisitions and cross-industry mergers and acquisitions. In 2017, the revenues of Midea Group and Haier Group were simultaneously To reach 241.9 billion yuan, Liu Buchen believes that Gree wants to continue to expand on the scale, it must cross the border, transnational to do more investment in mergers and acquisitions. He believes that these generous investments may occur within 1-2 years.

From the perspective of Gree’s newly disclosed investment plan, it may not be necessary to wait a year or two.

2016 GoodChinaBrand | ICP: 12011751 | China Exports