Gree Will Throw Another 6 Billion "Protection Plate" Or Super American'S New "Buy Back King" Of A Shares

The highest annual repurchase record of a shares is expected to be renewed again.

On the evening of October 13, Gree Electric Co., Ltd. dropped another 6 billion buyback plan. Zhuhai Mingjun, the company's largest shareholder, proposed to use its own funds to buy back the company's shares through centralized bidding. The total amount of repurchase funds should not be less than 3 billion yuan and not more than 6 billion yuan, and the repurchase price should not exceed 70 yuan / share. The purchased shares should be used for the company's employee stock ownership plan or equity incentive.

This plan is the same as Gree Electric's stock repurchase plan, which was launched for the first time in April. The upper limit of the two buybacks has exceeded 12 billion yuan, which is expected to break the highest buyback record set by Midea.

As soon as the news came out, on October 14, Gree Electric Appliance's share price rebounded strongly, rising more than 3%.

However, the market performance of Gree fell into divergence. Many people in the industry can only rely on the short-term stock price to stimulate the stock market in the 21st century. However, some institutional sources said that the year-on-year change in the company's air-conditioning domestic sales volume in the third quarter has turned positive. Under the recovery of operation, the stock price will rise.

Hillard proposes Gree's second repurchase

According to Gree's announcement, the buyback plan is proposed by Zhuhai Mingjun, a fund of hillock capital.

According to the announcement, the company plans to use its own funds to buy back the company's shares by means of centralized competitive bidding in the coming year. The types of shares to be repurchased are A-shares issued by the company. The total amount of capital is not less than 3 billion yuan (including) and not more than 6 billion yuan (including); the price of repurchase shares is not more than 70 yuan / share.

It is worth mentioning that half a year ago (April 2020), Gree Electric also put forward a buy back plan similar to this plan. As of September 30, 2020, Gree has repurchased 94.1847 million shares of the company, accounting for 1.57% of the company's total share capital. The highest transaction price is 57.00 yuan / share, the lowest transaction price is 53.01 yuan / share, and the total amount paid is 5.182 billion yuan (excluding transaction fees).

Based on this calculation, the total amount of the two buybacks of Gree Electric appliances will reach 12 billion yuan. Before that, the accumulated maximum repurchase amount of A-share was 10.322 billion yuan of Midea Group. As long as Gree Electric Appliance's repurchase of this time exceeds 5.2 billion yuan, it is expected to break the record of Midea's repurchase and become the new king of A-share buyback.

For Gree's intensive buyback plan, many insiders speculate that it is related to the stock price trend. Since 2020, Gree's share price has fallen by 10.42%. In contrast, the old rival Midea Group's stock price has risen by 32.68% since this year, and its market value has exceeded 528.3 billion yuan (Gree Electric's total market value is only 343.9 billion yuan). Haier Zhijia, which is also the first echelon, also rose by 22.44%.

"Gree's repurchase of this round can be regarded as a continuation of the first repurchase. First of all, the repurchase of the stock price is the first time that the stock price falls, which is also the driving force of the stock price to the market. However, the second repo did not improve the investors' confidence in the second repo. " Home appliance analyst Liu buchen pointed out in an interview.

Liang Zhenpeng, a senior industry economic observer, also pointed out: "Midea Group's profitability is stronger than Gree's, and the latter's turnover and profits have declined seriously. On the one hand, the air-conditioning market is saturated and oversupply; on the other hand, due to the new crown pneumonia epidemic, Gree's performance has declined, and Midea has greatly surpassed it. In fact, at present, Gree's 20 times P / E ratio is also a relatively reasonable level, and the share price in the home appliance enterprises is also relatively ideal. "

However, the performance of Gree's secondary market may need further stimulation as far as the stock price is more sensitive.

In 2019, Gree Electric Co., Ltd. officially started the mixed reform, and Hillhouse invested 41.662 billion yuan to acquire 15% shares of Gree Electric (the transfer price of each share was RMB 46.17). However, nearly a year later, Hillard has not yet entered the board of directors of Gree. But the high cost of capital may bring high pressure.

According to public information, nearly half of the transfer funds come from bank loans. In December 2019, Zhuhai Mingjun signed loan agreements with seven banks including China Merchants Bank, Bank of China, Ping An Bank and Shanghai Pudong Development Bank, with a total loan amount of 20.831 billion yuan for the acquisition of Gree Electric appliances.

In the middle of February, Hillard capital pledged all 902 million shares of Gree Electric Appliances to Zhuhai branch of China Merchants Bank for a period of six years as a guarantee for the aforementioned loans.

If the market generally adopts a 50% off pledge rate for the main board companies, as long as the share price of Gree Electric appliance is kept above 46.19 yuan / share, there is no risk in the shares pledged by Hillhead capital. However, from the date when the transfer of shares was officially completed (January 23, 2020), Gree's share price has been declining from 62.69 yuan to 57.60 yuan.

The effect of "protecting disk" remains to be tested

Although the second buyback started, the market for Gree's "disk protection" effect is still holding a wait-and-see attitude.

"It is still a question mark to what extent and for how long this buyback will boost the stock price. Because in the long run, there are two factors that can really affect the stock price of an enterprise. One is the actual operating performance of the company, and the second is the investors' prediction of the development prospect of the enterprise Liu buchen said.

In the first half of this year, the net profit of GEC decreased by RMB 2.853 billion, a record decrease of RMB 2.853 billion in the first half of this year, with a decrease of RMB 2.853 billion. In contrast, Midea Group's revenue in the first half of the year was 139.067 billion yuan, a year-on-year decrease of 9.56%; net profit was 13.928 billion yuan, a year-on-year decrease of 8.29%. Midea Group's air-conditioning revenue also surpassed Gree Electric appliances for the first time.

The excessive dependence of product structure on air conditioning is one of the main reasons for Gree's weak anti risk ability. In the first half of the year, Gree's air-conditioning revenue was 41.333 billion yuan, down 47.89% year-on-year, accounting for 59.48% of the total revenue.

"When we compare Gree and Meili, we can see that Gree is highly dependent on the air conditioning industry and its layout is relatively single. However, Midea is a diversified and balanced layout. This means that once there is a setback in the air conditioning market, the impact on Gree is much greater than that of Midea. At present, China's air conditioning industry has entered the stock market era. " Liu buchen said.

In fact, in recent years, Gree has also tried to explore a diversified road, but the investment in mobile phones, new energy vehicles, chips and other behaviors has caused a lot of controversy, and the incubation effect in the home appliance system has not reached the market expectations. In this context, the market for Gree's future confidence has shaken.

However, in Liang Zhenpeng's view, at present Gree Electric Appliance diversified development and the sales channel reform has taken action, in time may see the effect.

Liang Zhenpeng pointed out: "at present, Gree is also engaged in the business of Jinghong refrigerator, bulk raw materials, various kitchen appliances and small appliances. Although the diversified development strategy started relatively late, it is better than waiting for death."

On the other hand, Gree Electric's sales channel reform is also advancing. Liang Zhenpeng said that in the past, Gree air conditioning sales channels attached too much importance to offline physical channels, especially the layer by layer agent wholesale mode. However, Midea, Oakes and other enterprises have already cut off wholesalers and reduced price increases by promoting the flat channel reform.

"Gree is also vigorously promoting the e-commerce of sales channels this year. Now the pace is relatively slow, because the wholesale agents are relatively strong, but it is absolutely impossible not to promote it." Liang Zhenpeng said.

It is worth mentioning that, entering the third quarter, Gree Electric appliance business has begun to slowly release the recovery signal.

Everbright Securities pointed out that from the perspective of the company's operation, with the moderate price reduction of Gree terminal in the second quarter, increasing the online layout and actively trying the live broadcast mode, the share began to increase steadily, and the dynamic sales had improved significantly. After the second quarter, the inventory level has basically dropped to a reasonable level. In the following 7-8 months, Gree's domestic sales volume for the first time in the year achieved a year-on-year small bit growth.

?