Gree Electric (000651) Company Research: Expecting the Reform of Stocks
State-owned assets have clear qualification requirements, and the stock transfer is expected to land later.
August 13, 2019 Company Announcement: Zhuhai SASAC has agreed in principle on Gree Electric’s public solicitation of shares, requiring the transferee to be a single legal entity or a consortium of no more than two legal entities controlled by the same actual controller, To thoroughly improve the incentive and governance mechanisms, as well as technical, market and industrial synergy and other strategic resources.
Meet the requirements The transferee will submit the complete application materials within 15 trading days (until September 2).
We believe that the stock reform issue is expected to come to an end in the future, core leaders will maintain stability, and promote the adjustment of the company’s operating strategy and accelerate the diversification strategy.
Air-conditioning sales have not reached the ceiling.
The average domestic sales of air conditioners in 2018 reached 92.8 million units, reaching a historical starting point.
We estimate that the internal sales of long-term air conditioners are expected to stabilize at 1.
About 2.5 billion units (household 1.
4.0 billion units), implying a CAGR of 3% over the next 10 years.
Due to the property of multiple air conditioners in one household, the long-term demand growth of the industry has corresponding advantages.
The industry’s strongest barriers to competition, short-term disturbances are difficult to shake the long-term pattern.
The market share of Gree Electric Air Conditioners in 2019H1 dropped by 6.
06 pct to 32.
07%, the reasons include the company’s product pricing, changes in the industry’s new channels, and distribution and transfer matters.
However, the company has become the industry’s strongest hard core strength in terms of scale effect, product quality and brand reputation, channel network density and control.
The current CR4 for the air-conditioning industry is 78.
91%, we believe that the above pattern is unlikely to undergo substantial changes, and Gree ‘s market share is expected to improve after the company ‘s share reforms are implemented and competitive strategies are adjusted.
Dialectically look at channel inventory.
With reference to industry online data, as of the end of June 2019, the total inventory of the air-conditioning industry was 48.23 million 武汉夜生活网 units, a decrease from the previous month, of which Gree Electric had an inventory of 22.47 million units.
Although the inventory water level is still high, considering the peak season digestion and Gree’s channel inventory storage capacity is further enhanced, we believe that the Gree inventory problem has not been excessively consumed.
Earnings forecasts and investment advice.
We expect the company’s net profit for 2019-2021 to be 29/322/357 billion, respectively, at the current price of 54.
54 yuan, corresponding to PE 11.
The company has strong competition barriers, and its subsequent market share is expected to rebound. After the equity distribution has been implemented, it will try to bring the company’s revenue to repair.
Give the company a target market value of 40 million yuan, 武汉夜网论坛 corresponding to 66.
5 yuan, December 19/20.
4x, covering the first time with a “buy” rating.
Risk warning: the price competition in the air-conditioning industry leads to a decline in the overall profitability of the industry; changes in the price of raw materials lead to an increase in costs; there is uncertainty in the transfer of distribution;