Home » Midea restarts repurchase, has home appliance stocks bottomed out?Rising raw material cost pressure comes again

Midea restarts repurchase, has home appliance stocks bottomed out?Rising raw material cost pressure comes again

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Midea restarts repurchase, has home appliance stocks bottomed out?Rising raw material cost pressure comes again

Original title: Midea restarts repurchase, has home appliance stocks bottomed out?Rising raw material cost pressure comes again

Midea restarts repurchase, has home appliance stocks bottomed out?Rising raw material cost pressure comes again

China Times (www.chinatimes.net.cn) reporter Lu Xiao reported in Beijing

Midea Group started its first repurchase in 2022.

After the market close on March 11, Midea Group issued the “Announcement on the Repurchase of Some Public Shares”, announcing that it intends to use its own funds to repurchase some shares in a centralized bidding transaction within 12 months. The total amount of repurchase funds is not more than 5 billion yuan and not less than 2.5 billion yuan, and the repurchase price is not more than 70 yuan per share.

This is not the first time Midea has started repurchases after the Spring Festival. And its closing price of 59.38 yuan on March 11 was also at a relatively low historical level. In fact, many listed companies in the home appliance industry have recently seen historical lows in their stock prices. Behind this, the cost pressure of upstream industry chain transmission has become more and more severe.

repurchase again

Midea Group announced that all the company shares repurchased will be used to implement the company’s equity incentive plan and/or employee stock ownership plan. If it is not used up within 36 months, the remaining shares will be cancelled and the registered capital will be reduced.

Based on the upper limit of the repurchase amount of 5 billion yuan, it is estimated that the number of shares repurchased by Midea this time is not less than 1.02% of the company’s current total issued share capital. If the lower limit of the repurchase amount is calculated at 2.5 billion yuan, the number of shares repurchased by Midea is expected to be no less than 0.51% of its total issued share capital.

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Midea said in its announcement on March 11 that the use of its own funds to buy back would not affect its operations and finances. According to the announcement, according to the financial data at the end of the third quarter of last year, the 5 billion yuan repurchase fund accounted for about 1.33% of its total assets and about 4.22% of the company’s net assets attributable to shareholders of listed companies. The current asset-liability ratio of Midea Group was about 66%.

As of March 10 (the trading day before the company’s board of directors announced the decision to repurchase shares), major shareholder Midea Holdings held 31.01% of Midea Group’s shares. Midea Group Chairman Fang Hongbo and Midea’s special repurchase securities account are tied for the fourth largest shareholder of Midea Group with a shareholding ratio of 1.67%.

It should be mentioned that the repurchase amount of up to 5 billion yuan is not the largest in the history of Midea’s repurchase.

According to the “China Times” reporter, Midea Group’s first repurchase occurred in 2015, when the company announced that it planned to repurchase no more than 1 billion shares. In July 2018, Midea announced a repurchase plan of no more than 4 billion yuan.

From 2019 to 2021, Midea Group has started share repurchase after the Spring Festival. Among them, in 2019, Midea had estimated that the repurchase amount would not exceed 6.6 billion yuan, and in 2020, it was expected that the repurchase amount would not exceed 5.2 billion yuan. In February 2021, Midea Group announced a repurchase plan of more than 14 billion yuan. In addition, Midea also launched the second round of repurchase of the year with a maximum of 5 billion yuan in May 2021.

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According to the announcement, for the above-mentioned six rounds of repurchase, the total amount actually paid by Midea exceeded 24 billion yuan. In contrast, Gree Electric, which ranks with Midea as the top three white goods giants, has implemented three phases of stock repurchase since it first started stock repurchase in 2020, with a total amount of 27 billion yuan.

The upstream industry chain is under pressure

Midea Group stated in the announcement that the repurchase is to further improve the corporate governance structure, build an innovative long-term incentive and restraint mechanism for the management team to hold shares, ensure the realization of the company’s long-term business goals, promote the alignment of interests and revenue sharing among all shareholders, and improve The overall value of the company.

The stock price trend at this time is also an important reason why Midea chooses to start the repurchase.

On March 11, Midea Group’s share price closed at 59.38 yuan, a slight increase of 0.87%. That figure has shrunk by 30 percent from its 52-week high. And its 52-week low of 56.61 yuan appeared in intraday trading on March 9. For reference, in February 2021, the share price of Midea Group once surged to 105 yuan. At that time, the repurchase price announced by Midea was not less than 140 yuan per share.

It wasn’t just Midea that fell. As of the close of market on March 11, among the three white power giants whose stock prices are considered the most falling, Gree Electric’s price of 33.8 yuan has shrunk by more than 40% compared with its 52-week high. The price of Haier Smart Home’s A shares is 22.48 yuan It is also down about 33% from its 52-week high.

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Pan Helin, co-director and researcher of the Digital Economy and Financial Innovation Research Center of Zhejiang University International Business School, told a reporter from China Times that the current stock prices of Midea and Gree are relatively low, and they are repurchasing at their current prices at low price-earnings ratios. The price is reasonable. But he also believes that the repurchase behavior also shows that there is no good capital investment at the listed company level. “The company will position the investor as a cash cow instead of a growth stock.”

But it needs to be mentioned that it is not only the three largest white goods giants whose stock prices continue to fall. As of March 11, the closing prices of “black power stocks” such as Hisense Video, Skyworth Group, and Shenzhen Konka have all dropped by about 40% from their 52-week highs; small household appliances listed companies in Joyoung, Xiaoxiong Electric, etc. The stock’s closing price was down nearly 50 percent from its 52-week high.

Behind this, the upstream industrial chain of home appliance companies continues to be under pressure.

Industry Online analyst Ma Xiaoru told the “China Times” reporter that due to geographical conflicts, the prices of bulk raw materials such as copper and aluminum have been fluctuating at high levels recently. Businesses face cost pressures. She told reporters, “Compared to July 2020, the cost of air conditioners has risen by more than 20%.”Return to Sohu, see more

Editor:

Statement: The opinions of this article only represent the author himself, Sohu is an information publishing platform, and Sohu only provides information storage space services.

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