Every time reporter Guo Rongcun Every time intern reporter Chen Hao Every time editor Liang Xiao
On the evening of September 28, Gree Electric (000651, SZ) issued an announcement stating that the company intends to cancel the third phase of the repurchase of 70% of the purchased shares to reduce the registered capital, and the remaining repurchased shares will still be used for the implementation of employee shareholding plan. On September 9 this year, the third phase of the company’s share repurchase was completed, and the total transaction amount was about 15 billion yuan. Calculated on the basis of the repurchase price, the value of Gree Electric’s proposed cancellation of shares is about 10.5 billion yuan.
The “Daily Business News” reporter noted that since April 2020, Gree Electric has completed three share repurchases, with a total cost of about 27 billion yuan. In addition to the planned cancellation of all stocks worth about 6 billion yuan repurchased in the second phase, Gree Electric has planned to cancel about 16.5 billion stocks.
When the stock price is down, the company often repurchases the stock and writes it off to stabilize the stock price. When the share repurchase was initiated for the first time in April 2020, Gree Electric’s share price once ushered in a wave of rise, but since 2021 (September 28), the company’s share price has continued to fall, with a cumulative decline of 35%. In the first half of this year, Gree Electric achieved revenue of 91.052 billion yuan, a year-on-year increase of 31.01%, and net profit attributable to shareholders of listed companies was 9.457 billion yuan, a year-on-year increase of 48.64%. A number of brokerage research reports believe that Gree Electric’s current valuation is relatively low and is optimistic about the company’s share price trend in the future.
Proposed cancellation of stocks worth about 10.5 billion yuan
On the evening of September 28, Gree Electric issued an announcement stating that in view of the fact that the company has not used the third-phase repurchase shares in the short-term specific plan for employee stock ownership plans or equity incentives, according to the actual situation of the company, the company intends to repay the third phase. The purchase of 70% of the purchased shares (ie 221 million shares) will be cancelled to reduce the registered capital, and the remaining 30% of the purchased shares will still be used to implement the employee stock ownership plan.
On May 26 this year, Gree Electric disclosed that it will carry out the third phase of share repurchase, and the repurchased shares will be used for the company’s employee stock ownership plan or equity incentives. As of September 9, the company said that the third phase of the repurchase had been implemented, and a total of 316 million shares of the company were purchased through centralized bidding through the special securities account for repurchase, and the total transaction amount was about 15 billion yuan. Calculated on the basis of the repurchase price, the value of Gree Electric’s proposed cancellation of shares is about 10.5 billion yuan.
Gree Electric also stated that this change in the third phase of the partial repurchase of shares and cancellation is a decision made by the company based on the current actual situation, which is conducive to further improving the level of earnings per share and effectively increasing the return on investment of the company’s shareholders. The financial status and operating results have a significant impact, and there is no situation that harms the interests of the company and the rights of small and medium investors.
This is not the first time Gree Electric has cancelled the repurchased shares. Since April 2020, the company has completed three share repurchases, spending a total of about 27 billion yuan. In February 2021, the company announced the completion of the first phase of the share repurchase plan, buying a total of 109 million company shares through centralized bidding, with a total transaction amount of approximately 6 billion yuan; in May 2021, the company announced the completion of the second phase of shares The repurchase plan will buy 101 million shares of the company through centralized bidding, with a total transaction amount of approximately 6 billion yuan.
In June of this year, Gree Electric issued an announcement stating that the use of the shares repurchased in the second phase will be adjusted from the original plan that “shares repurchased will be used for employee stock ownership plans or equity incentives” to “shares repurchased for cancellation for cancellation. Reduce registered capital”. In addition to the approximately 10.5 billion shares written off in the third phase, Gree Electric has planned to cancel approximately 16.5 billion shares in total.
Regarding whether the stock will be repurchased and cancelled again in the future, Gree Electric Securities Department staff said that follow-up news will be disclosed in a timely manner.
Continuous repurchase of stocks is difficult to prevent the stock price from falling
When the stock price is down, companies often use the method of repurchasing shares and writing them off to stabilize the stock price. When the share repurchase was initiated for the first time in April 2020, Gree Electric’s share price once ushered in a wave of rise, but since 2021 (September 28), the company’s share price has continued to fall, with a cumulative decline of 35%.
On June 20 this year, Gree Electric launched an employee stock ownership plan. According to the announcement, the total number of employees who intend to participate in the employee stock ownership plan does not exceed 12,000. The capital scale of the employee stock ownership plan does not exceed 3 billion yuan. The stock source is the company’s return. For the shares that have been repurchased in the special account, the price of the company’s repurchased shares is 27.68 yuan per share, which is equal to 50% of the average price of the company’s repurchased shares. It is worth noting that Dong Mingzhu, chairman of Gree Electric, personally plans to invest 830 million yuan to subscribe for 30 million shares, accounting for 27.68% of the shareholding plan. The move also triggered heated discussions in the market, and the company’s share price plummeted 5.07% the next day.
In the first half of this year, Gree Electric achieved revenue of 91.052 billion yuan, a year-on-year increase of 31.01%, and the net profit attributable to shareholders of listed companies was 9.457 billion yuan, a year-on-year increase of 48.64%. The sharp increase in revenue and profit failed to boost the stock price. However, many brokerage firms expressed optimism about the future share price trend of Gree Electric.
The Tianfeng Securities Research Report pointed out that Gree’s domestic sales of air conditioners have gradually recovered after the 2020 epidemic and channel changes, especially after reducing the pressure on the channels, the revenue in the single second quarter exceeded the level of the same period in 2019, which is more dazzling; looking forward, if Copper prices continue the recent downward trend, and the pressure on the industry’s domestic sales on the demand side and cost side will be reduced. Gree Electric is expected to continue to rise after the channel is on the right track; at the same time, the reduction of cost pressure will also be more conducive to the recovery of export sales. Guosen Securities Research Report also believes that Gree Electric has been a leader in the industry for many years, and its performance is full of resilience.
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