Midea spends no more than 5 billion to repurchase, and the stock price “falls endlessly” and the market value evaporates by 100 billion within the year
▲ Picture source: Internet
Produced | Sohu Finance
Author | Zhang Ying
On the evening of March 10, Midea Group (SZ:000333) announced that it plans to repurchase the company’s shares with a price of 2.5 billion to 5 billion yuan, and the repurchase price does not exceed 70 yuan per share, which will be used to implement the company’s equity incentive plan and/or or an employee stock ownership plan.
This repurchase is the lowest repurchase at the repurchase price in 2021. In February 2021, Midea Group announced that it would repurchase the company’s shares at a price of no more than 140 yuan per share, which is twice the repurchase price.
As of the close, Midea Group reported 59.38 yuan per share, with a total market value of 415.33 billion yuan. Since 2022, the market value has evaporated by 100.9 billion yuan.
Sixth buyback since 2018
According to the announcement, Midea Group plans to repurchase the company’s shares at a price of 2.5 billion to 5 billion yuan, and the repurchase price does not exceed 70 yuan per share. The repurchase purpose will be used to implement the company’s equity incentive plan and/or employee stock ownership plan.
As of September 30, 2021, Midea Group’s total assets were about 376.3 billion yuan, monetary funds were about 55.9 billion yuan, and the net assets attributable to shareholders of listed companies were about 118.5 billion yuan, with an asset-liability ratio of 65.91%.
Assuming that the repurchase amount is subject to the upper limit of RMB 5 billion, according to the financial data on September 30, 2021, the repurchase funds account for about 1.33% of the company’s total assets and about 4.22% of the company’s net assets attributable to shareholders of listed companies.
In fact, since 2018, Midea Group has initiated buybacks basically every year.
Statistics from Sohu Finance found that in addition to this repurchase, Midea Group has initiated 5 rounds of stock repurchase since 2018. Among them, a total of two rounds of repurchase will be launched in 2021, and one repurchase will be conducted in the remaining years.
On February 24, 2021, Midea Group announced that it would repurchase 50 million to 100 million shares at a price of not more than 140 yuan per share, and the repurchased shares will be used to implement the company’s equity incentive plan and/or employee ownership This is also Midea’s largest repurchase.
On June 1, 2021, Midea Group issued another announcement stating that it plans to repurchase shares with a capital of 2.5 billion to 5 billion yuan. The repurchase price is not more than 100 yuan per share. The repurchased shares will be cancelled, thereby reducing the company registered capital.
The amount of the repurchase is no more than 70 yuan per share, which is the lowest repurchase price since 2021 and half of the repurchase price at the beginning of 2021.
Behind the decline in the repurchase price, the share price of Midea Group is also falling.
On February 10, 2021, the highest price of Midea Group reached 108 yuan per share, setting a new high since the listing of Midea Group. But since then, its stock price has been falling all the way, with Midea Group down 25.02% in 2021 and 19.55% since 2022.
As of the close, Midea Group reported 59.38 yuan per share, with a total market value of 415.33 billion yuan. Since 2022, the market value has evaporated by 100.9 billion yuan.
Looking back at Midea Group’s 5 repurchases since 2018, the second repurchase in 2018 and 2021 was cancelled, thereby reducing the company’s registered capital and increasing earnings per share. The remaining repurchases, including this one, are used to implement the company’s equity incentive plan and/or employee stock ownership plan.
Home appliances enter the era of stock competition
The decline in stock prices has become the norm for home appliance stocks. Behind this, home appliance companies have entered the era of stock competition.
Data shows that since 2018, the growth rate of Midea Group’s operating income has slowed down significantly. From 2018 to 2020, the operating income was 259.665 billion yuan, 278.216 billion yuan, and 284.221 billion yuan respectively, with revenue growth rates of 7.87%, 7.14%, and 2.16%, respectively.
In the first three quarters of 2021, Midea Group achieved operating income of 261.341 billion yuan, a year-on-year increase of 20.57%; net profit attributable to the parent was 23.455 billion yuan, a year-on-year increase of 6.53%.
In the context of the peak growth of home appliances, home appliance companies are also looking for the second curve of growth. Midea’s choice is to deploy To B business.
On December 30, 2021, “Midea Electromechanical” officially changed its name to “Midea Industrial Technology“, and announced to challenge the target of 100 billion revenue.
Midea Group’s WeChat announcement account shows that Midea’s industrial technology business group is exploring a wider range of large-scale production of home appliance chips, launching five key new energy vehicle (electric vehicle) parts and automated manufacturing industries.
In the car track, Midea established Guangdong Welling Auto Parts Co., Ltd. in 2018. Its business scope includes research and development, design, manufacturing, sales, technical services and after-sales services of automobiles, motorcycles (motor vehicles) parts, systems and related products.
On February 16, the signing ceremony and groundbreaking ceremony of the strategic new base for new energy auto parts in Anqing Welling, a subsidiary of Midea Industrial Technology, was held, with a total investment of about 11 billion yuan.
From a financial point of view, the current operating income of Midea Group mainly comes from HVAC, consumer appliances, and the proportion of revenue from robots, automation systems and other manufacturing industries needs to be increased.
Data show that in the first half of 2021, Midea Group’s HVAC and consumer appliances contributed operating income of 76.408 billion yuan, 64.964 billion yuan, and 12.693 billion yuan, up 24.60%, 26.08%, and 26.79% year-on-year, respectively.
From 2018 to 2020, the revenue of robots and automation systems accounted for 9.89%, 9.05%, and 7.60%, respectively. In the first half of 2021, the revenue of robots, automation systems and other manufacturing industries accounted for 7.30%, showing a downward trend year by year.