Gree Electric (000651): Long-term logic for mixed reforms to settle and not to change epidemic situation

Gree Electric (000651): Long-term logic for mixed reforms to settle and not to change epidemic situation

Event review: On April 1, 2019, Gree Electric announced that the controlling shareholder Gree Group intends to transfer 15% of the company’s total share capital.

On August 13, Gree released a public solicitation plan for the transferee.

On September 2, Zhuhai Mingjun, a subsidiary of Gaojing Capital, submitted an application for transfer to Gree Group and paid the contract deposit in full.

On October 28, the company determined that the final assignee was Zhuhai Mingjun.

On December 2, the company issued a temporary suspension of trading announcement and signed the “Assignment and Transfer Agreement” with the final transferee, Zhuhai Mingjun.

On February 3, 2020, the company’s share transfer registration procedures were completed, and the company would have no controlling shareholders and actual controlling persons.

At this point, the transfer of Gree Electric Appliances has been successfully completed.

Optimized governance and stable leaders.

After the company’s share transfer was completed, Gree Group’s shareholding ratio was 18.

2% dropped to 3.

2%, the largest shareholder changed to Zhuhai Mingjun, with a 15% stake.

With the implementation of this mixed reform, the nature of the company’s original state-owned enterprises has changed, and its shareholding structure has become more diversified. In the fully competitive home appliance industry, the company will be more flexible and diverse in the capital market.

In terms of capital contribution, leaders of Gezhen Investment held a total of 24.

300 million, accounting for 11 of Zhuhai 佛山桑拿网 Mingjun’s total investment.

1%, which is 1 of the company’s total share capital.

7%.

After the completion of the equity transfer, the shareholder’s shareholding ratio will increase, and related interests will be better tied to listed companies.

After the completion of the delivery, the company will implement an equity incentive plan of no more than 4% of the company’s executives and key employees.

If the implementation of the equity incentive plan is taken into account, the combined shareholding ratio will further increase.

Although the company has no controlling shareholder and actual controller after the successful completion of the share transfer, it has not reached a cooperation agreement that requires the nomination of director candidates for Zhuhai Mingjun, the largest shareholder, and has replaced the second 杭州夜生活网 largest shareholder, Hejinghai Guarantee andThe company leaders have close ties, and leaders have a real weight in the board.

Promotions increase market share, and the epidemic does not change its long-term logic.

Since November 2019, the company reduced its prices to promote inventory adjustments, grabbing a low-end market share, and domestic sales also rebounded.

In December, the average retail price of Gree air conditioners was 3636 yuan, a year-on-year decrease of 1393 yuan; the market share was 38%, and the growth was increased by 1pp; the domestic sales reached 2.83 million units, which continued to grow6.

8%.

In December 2019, a pneumonia outbreak of a new coronavirus infection occurred in Wuhan.

Affected by the prevention and control of the epidemic, the closure of stores and the delay in rework of installers, the sales of air conditioners may shift in the short term.

In the medium term, the suppressed consumer demand will be released in the short term, and air-conditioning sales may grow rapidly.

Air-conditioning with sterilization or disinfection may become a consumer hot spot.

In the long run, as a durable consumer product, consumer demand will still be released.

Earnings forecasts and investment advice.

The EPS is expected to be 4 in 2019-2021.

67 yuan, 5.

34 yuan, 5.

97 yuan, considering the company’s mixed reform implementation, optimized governance, enhanced expansion, and maintain a “buy” rating.

Risk warning: raw material prices may fluctuate greatly, trade barriers are escalated, and the epidemic lasts too long.

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