What Is Midea Gree'S Successive Repo? Raw Material Price Rises, Share Price Is Under Pressure, And Rising Trend Of Household Appliances Is Impending

For two consecutive days, air conditioning companies have issued a strong signal to the secondary market.

On the evening of February 24, Gree Electric (000651. SZ) announced the progress of the first and second phase repurchase shares. The day before that, Midea Group (000333. SZ) issued a share repurchase announcement, intending to buy back no more than 100 million shares and no less than 50 million shares of the company at a price of no more than 140 yuan / share, with an estimated repurchase amount of no more than 14 billion yuan.

This is the fifth buyback conducted by Midea in the past five years, and the last three times occurred after the Spring Festival.

The outbreak of Xinguan epidemic last year cast a shadow over the whole household appliance industry. However, with years of deep ploughing in the field of small household appliances and the rebound in the export market after the epidemic, Midea's share price fully doubled and broke through 100 yuan for the first time at the beginning of this year. On the last trading day before the Spring Festival on February 10, 2021, Midea's stock price closed at 107.11 yuan, once again reaching a record high.

However, after the festival, the stock price of the United States plummeted, falling for four consecutive trading days, with a cumulative decline of more than 15%. During the same period, Gree Electric Appliances (000651. SZ), Haier Zhijia (600690. SH), Hisense appliances (000921. SZ), boss electrical appliances (000921. SZ), Supor (002032. SZ) and other household appliance enterprises also showed similar trends. On February 23, the whole household appliance sector fell nearly 4%.

For this round of downward adjustment, CICC institutions believe that the rapid rise in the prices of raw materials has caused the market to worry about the cost rise of the United States. However, there are also voices that it is the recent transfer of the controlling equity of Wandong Medical (600055. SH) by Midea, and the market has some doubts about its cross-border.

In any case, as soon as the repo news came out, Midea's stock price immediately reacted. It opened high on the 24th, rising to 98.6 yuan / share for a time, and finally closed at 95.02 yuan, up 4.49% from the previous day. As for whether Gree's buyback progress can boost the stock price, it will be known tomorrow.

What about successive repo?

According to Midea's announcement, this share repurchase is "based on confidence in the company's future development prospects and high recognition of the company's value". Therefore, it has decided to continue to buy back the company's shares with its own funds. Through the trading system of Shenzhen Stock Exchange, the repurchase shares will be used to implement the company's equity incentive plan and / or employee stock ownership plan.

As of September 30 last year, Midea's total assets were about 350.443 billion yuan, monetary capital was about 66.490 billion yuan, and the net assets attributable to shareholders of listed companies was about 112.878 billion yuan, and the company's asset liability ratio was 65.72%. For Midea, which has more than 60 billion cash in hand, even if it reaches the upper limit of buyback of 14 billion yuan, "it will not have a significant impact on the company's operation, finance and future development.".

However, in the view of Zhang Jianfeng, Executive Deputy Secretary General of China household appliance business association, Midea's buyback may also be for the purpose of stabilizing market confidence.

Some home appliance industry insiders familiar with Midea and Gree pointed out to our reporter that Midea has paid more and more attention to market value management in recent years, pursuing the maximization of shareholder returns. For many years, Midea's and Gree's share prices have been kept at a gap of about 8-10 yuan. However, in the past year, Midea's share price has been singing all the way, and now it is nearly 40 yuan higher than Gree's. "the increase in recent year is more than 80%, and the market needs time to digest, so it is impossible to keep rising all the time, so far apart from Gree."

From the company's business point of view, although Midea was the home appliance group with the smallest decline in sales last year, it has always been affected by the overall situation of the industry and the rise of raw material prices. In addition, the company increased its reform efforts and re divided its business segments last year, which brought about a lot of personnel changes. The transformation effect still needs time to verify.

The reporter noted that before this share repurchase, Midea has successively carried out four rounds of repurchase, namely, in July 2015, July December 2018, February 2019 February 2020 and February October 2020, with a total of nearly 10.9 billion yuan of shares repurchased. However, compared with the previous two times, the final repurchase amount of the latest two times was less than 50% of the upper limit of the stock repurchase plan.

In contrast, Gree's first repo completion rate is much higher. According to the latest announcement, from July 16, 2020 to February 24, 2021, Gree purchased 108365753 shares of the company's shares through centralized bidding, accounting for 1.8% of the company's total share capital. The highest transaction price is 60.18 yuan / share, and the lowest transaction price is 53.01 yuan / share. The total transaction amount is 5.999 billion yuan (excluding transaction costs), which is close to the upper limit of planned repurchase of 6 billion yuan.

On February 24, Gree first bought back the company's shares in the second phase by means of centralized bidding through the special securities repurchase account. The number of shares repurchased was 7205967, accounting for 0.12% of the company's total share capital. The highest transaction price was 57.42 yuan / share, the lowest transaction price was 57.02 yuan / share, and the total amount paid was 412 million yuan (excluding transaction costs).

It is reported that Gree's second phase repurchase plan is no more than 6 billion yuan, and the repurchase price of shares is no more than 69.02 yuan per share, which is only about 5% higher than the current Gree Electric appliances. In contrast, the current stock price of the United States is around 95 yuan, but the highest repurchase price is set at 140 yuan.

In this regard, the analysis shows that the current stock price of Midea is around 95 yuan, but the maximum repurchase price is set at 140 yuan, which shows that the company hopes to release confidence in the market, including investment in Hekang Xinneng, Lingwang elevator and holding Wandong Medical Co., Ltd. the outside world has seen the series layout of Midea, but whether these new businesses can eventually become a new powerful growth point of Midea and support a higher share price, It remains to be seen.

Rising pressure on raw materials

In addition, Midea will continue to face the industrial problems of sluggish terminal demand and rising raw materials. Since last year, the prices of copper, aluminum, plastic, cold rolled coil and other commonly used household appliances have been rising, which has brought a lot of pressure to major home appliance groups.

According to the official website of the National Bureau of statistics, in late March 2020, the price of electrolytic copper was 38474.1 yuan / ton. By the end of December, the price had risen to 58290 yuan / ton. On January 8 this year, Shanghai copper plate once exceeded 60000 yuan / ton. According to the data of Shanghai Nonferrous Metals network, on November 13, 2020, electrolytic aluminum was 15630 yuan / ton, which was 4410 yuan / ton higher than the lowest price of 11220 yuan / ton since 2020. According to the data of Dayi youplastic data center, the price of ABS in plastics will be 11530 yuan / ton at the beginning of 2020, and the price has soared to 14200 yuan / ton at the end of 2020, with an increase of 23.2% in the whole year.

"Since last year's double 12, the price of air conditioning has been going up. The prices of copper, aluminum and plastics have been rising, and so have our prices." On the 24th, a Midea air conditioner dealer told the 21st century economic report that the terminal price of air conditioners has increased by 4% - 5% compared with the middle of December last year. He predicted that with the start of sales nodes in March, air conditioning prices will usher in a new round of rise.

Zhao Meimei, assistant president of AVC and general manager of research and innovation department, believes that the driving factors for the price increase of home appliances this year include: the impact of the price rise of upstream raw materials, such as copper, aluminum, steel, iron, TV panel, etc.; the increase of labor and logistics costs has also brought pressure on the profits of home appliances enterprises. For the overall situation of the home appliance industry, she still holds a cautious attitude, "affected by the epidemic, the whole industry sales decline, superimposed cost pressure, enterprise profitability will be more difficult."

In fact, Haier Zhijia also said frankly in its semi annual report that "the company's products and core components mainly use metal raw materials such as steel, aluminum, copper, and large quantities of raw materials such as plastics and foaming materials. If the supply price of raw materials continues to rise, it will put a certain pressure on the company's production and operation."

The first thing that doesn't hold up is the air conditioner. As early as the end of November last year, Oakes issued a notice to increase the price of online batch products. Since January 1, this year, the price of online batch products has been adjusted. On the basis of the unit price opened in December last year, the price of online batch products has been increased by 100-200 yuan / set, and the price of cabinet machines has been increased by 200-300 yuan / set.

Subsequently, there was also news that the price of Gree air conditioner was rising. According to relevant reports, Hubei Shengshi Xinxing Gree Electric Appliance Sales Co., Ltd. announced that since December 15, the new national standard hanging machine has increased by 100 yuan / set, and the new national standard cabinet machine has increased by 200 yuan / set.

The 21st century economic report, referring to AVC data, found that since last year, the average prices of air-conditioning online and offline have been rising, with the average online price rising all the way, from 2350 yuan in February 2020 to 3010 yuan in January 2021; during the same period, the average price of offline air conditioning has fluctuated, but it has also risen from 2708 yuan to 3937 yuan. In January 2021, the average price increases of online and offline air conditioners are 14.14% and 3.41% respectively.

In this regard, the relevant person in charge of Guangzhou Gome believes that this is not only related to the rise of raw material prices, but also has a great relationship with the implementation of new energy efficiency of air conditioning. "Under the new energy efficiency, the original first level becomes the second level. The energy efficiency of all products has been raised to a higher level, and the price is bound to rise." But she believes that, except for air conditioning, other categories have not shown an obvious upward trend in terminal prices.

?