On the evening of April 29, Gree Electric, the leader in white appliances, released its 2021 financial report, showing that the company’s revenue was 187.869 billion yuan, a year-on-year increase of 11.69%; the net profit attributable to shareholders of listed companies was 23.064 billion yuan, a year-on-year increase of 4.01%. Although the company’s performance in 2021 has increased year-on-year, compared with 2018-2019, it will still take time to recover.
The company’s air-conditioning revenue in 2021 is 131.713 billion yuan, and the gross profit margin has declined. Gree Electric has changed from “endogenous growth” to “external expansion”. The company controls Yinlong New Energy and plans to acquire part of the equity of Dunan Environment. In addition, the company launched a 15 billion yuan share repurchase plan and an employee stock ownership plan, which attracted much attention.
The industry is weak, and the company’s air-conditioning revenue is 131.7 billion yuan
After the rise of raw materials, double control of energy efficiency, repeated epidemics, and heavy rainfall in peak seasons, the volume of China’s air-conditioning market will drop in 2021. According to the total data pushed by Aowei Cloud, the annual retail sales was 152.7 billion yuan, a year-on-year decrease of 1.2%; the retail sales volume was 46.89 million units, a year-on-year decrease of 8.7%.
This is undoubtedly not conducive to Gree Electric, a large air-conditioning company. The company’s air-conditioning revenue in 2021 is 131.713 billion yuan, a year-on-year increase of 13.96%; the gross profit margin is 31.23%, a year-on-year decrease of 3.54%. The company’s air-conditioning gross profit margin has shown a downward trend in the past two years. To this end, the company continues to develop the HVAC equipment market. In the real estate sector, it will add and renew about 40 customers in 2021, with a market share of 16% in the market for well-decorated air conditioners.
Home appliances are the field that Gree Electric has been expanding. The company has launched air purifiers, sweeping robots, hoods, stoves, dishwashers and other categories. The product matrix of refrigerators and washing machines is constantly enriched. The company’s household electrical appliance revenue in 2021 is 4.882 billion yuan, a year-on-year increase of 7.96%. Market competitiveness is limited.
In 2021, Gree Electric will continue to diversify and expand. At the end of August of that year, Gree Electric obtained 30.47% of Yinlong New Energy’s shares. In addition to the voting rights entrusted by Dong Mingzhu, Gree Electric controls a total of 47.93% of Yinlong New Energy’s voting rights, and Yinlong New Energy has become the A subsidiary of Gree Electric Appliances, and changed its name to Gree Titanium. Gree Electric’s green energy revenue in 2021 is 2.907 billion yuan, a year-on-year increase of 63.13%.
In addition, in November of that year, due to Dunan Environment’s refrigeration and new energy business, Gree Electric announced that it planned to hold a 38.78% stake in Dunan Environment for a total price of 3 billion yuan, and Dunan Environment would become the company’s holding subsidiary. However, the deal was bumpy. As of the release date of the annual report, the shares held by Gree Electric accounted for 29.48% of the total share capital of DunAn Environment.
The financial report also disclosed the progress of the semiconductor business. In 2021, the operating income of Zero Boundary Integrated Circuit Co., Ltd., a wholly-owned subsidiary of Gree Electric, will increase by more than 50%. Gree semiconductors can be used in consumer electronics, wearable devices, household products, health care and other fields.
Talking about the company’s diversification, at the end of 2021, Dong Mingzhu, chairman and president of Gree Electric, said in an interview with the Beijing News Shell Finance reporter, “Gree needs to do two major sectors, one is the coverage of the entire industry chain of the consumer electronics sector, the other It is an industrial sector, including CNC machine tools, precision molds, etc.”
In terms of channels, Gree Electric has 27 sales companies, more than 70 online dealer stores, and more than 30,000 offline stores. In 2021, Gree products have been sold to more than 180 countries and regions, of which self-owned brands account for 51%. The financial report shows that the company’s export revenue was 22.535 billion yuan, a year-on-year increase of 12.56%.
In 2021, 15 billion yuan of stock repurchase will be completed, and the annual cash dividend of 16.6 billion yuan will be distributed
Overlaid with the general market environment, Gree Electric’s share price will be weak in 2021. In May of that year, Gree Electric launched a large-scale stock repurchase plan with a total capital of not less than 7.5 billion yuan and not more than 15 billion yuan. The repurchased shares will be used for employee stock ownership plans or equity incentives.
The stock repurchase program also spawned an employee stock ownership plan. On the evening of June 20 of that year, Gree Electric planned to launch the first phase of the employee stock ownership plan with a capital scale of no more than 3 billion yuan. It is worth noting that the price of Gree employees buying the company’s repurchased shares is 27.68 yuan per share, which is equal to 50% of the company’s average repurchase share price. In other words, according to the stock price at that time, the net profit per share can be doubled, which is equivalent to giving away employees for free.
In addition, Dong Mingzhu’s proposed capital contribution is capped at 830 million yuan, accounting for 27.68% of the plan. The news superimposed the trend of the broader market, and Gree Electric fell by 4.79% that day, and there were many rebounds from small and medium investors for the plan. Then Dong Mingzhu urgently “fired the fire” and adjusted the use of the 100 million shares repurchased, stipulating that employees can exercise their rights after retirement.
As of September of that year, Gree Electric completed the stock repurchase plan with the highest transaction price of 56.11 yuan per share, the lowest transaction price of 40.21 yuan per share, and a total transaction value of 15 billion yuan. A single 15 billion yuan share repurchase plan put Gree Electric on the throne of the A-share repurchase king.
Dong Mingzhu’s pride does not stop there. As of January this year, the three-year term of the 11th board of directors of Gree Electric has expired, and Dong Mingzhu will start a new three-year journey. In order to be re-elected smoothly, Gree Electric decided that on the premise that the company’s cash flow meets the company’s normal operation and long-term development, the company’s cumulative cash dividends from 2022 to 2024 will not be less than 50% of the net profit of the year.
According to the financial report, Gree Electric plans to distribute a cash dividend of 20 yuan for every 10 shares to all shareholders in 2021, with a cash dividend of 11.073 billion yuan. In the first half of 2021, the company has implemented 10 shares to distribute a cash dividend of 10 yuan, with a total cash dividend of 5.537 billion yuan. During the reporting period, the company’s distributable profit reached 60.491 billion yuan.
However, on the day the financial report was released, Gree Electric registered a variety of debt financing instruments, including ultra-short-term financing bills, short-term financing bills, medium-term notes, asset-backed notes, perpetual notes, and directional debt financing instruments. It is estimated that the balance of issuance will not exceed 20 billion yuan.
Beijing News Shell Finance reporter Chen Weicheng
Edited by Song Yuting
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