Gree Electric (000651) Review of Major Events: Equity Reform Dust Settles, Company Expects Future Development
On December 2, 2019, Gree Electric Appliances issued a series of announcements such as “Informative Announcement on the Signing of the Controlling Shareholders of the Company and the Proposed Change of Control of the Company”, and Zhuhai Mingjun issued 46.
The price of 17 yuan / share is transferred to 15% of the company’s shares held by Gree Group, with a total transfer price of 416.
After the change in equity, the company will change to no controlling shareholder and actual controller.
Comment: Zhuhai Mingjun is the final assignee and entered the game with Gao Capital to help sustainable development.
Zhuhai Mingjun Investment Partnership (Limited Partnership) with 416.
The 6.2 billion transferee Gree Group holds 15% of the equity of Gree Electric, becoming the largest shareholder of Gree Electric. After this change in equity, the company will have no controlling shareholders and no actual controllers.
1) Joined Zhuhai Mingjun.
Gezhen Investment holds Zhuhai Mingjun 6.
40% of the subscribed capital contribution ratio, Gezhen Investment sponsors Dong Mingzhu and other 18 company executives.
According to the announcement, Zhuhai Mingjun may appoint three director candidates, and at least one of the director candidates should be a person recognized by the shareholder entity. According to this, the corporate governance structure remains stable, which promotes the protection of the company’s future dividends, marketing, and strategy.Continuity in important policies such as layout.
According to the announcement, Zhuhai Mingjun promised to try its best to launch the listed company’s annual net profit dividend 佛山桑拿网 ratio at not less than 50% at the shareholders’ meeting of the listed company involving dividends.
2) Gaocheng Capital joined the company to assist the company’s development. The manager of Zhuhai Mingjun Fund is Zhuhai Gaocheng Equity Investment Management Co., Ltd., which is behind the power of Gaocheng Capital.
Gaolong Capital’s entry into the company is of great significance to the company. As a leading domestic private equity investment institution, Gaolong Capital has assisted the traditional transformation of traditional retail companies such as Blue Moon and Belle International.Good cooperative relationship and sufficient resource coordination capabilities are expected to help Gree’s business layout and channel system improve in the future; and Zhuhai Mingjun promises to maintain the overall stability of the company’s operation and management team within the scope of authority, so as to effectively carry out economic development in ZhuhaiIndustrial investment and the introduction of strategic resources, and promote the company to make new contributions to the sustainable and healthy development of Zhuhai’s economy.
The disappearance of Gree’s state-owned enterprises will promote the implementation of more favorable incentive plans.
Before the mixed shareholding reform, compared with Midea Group, Gree Electric was a local state-owned enterprise, and the share of senior executives’ shares was relatively substituted. It had implemented a normalized equity incentive plan.
After the assignment and transfer, the state-owned properties of Gree Electric Appliances faded, and the actual controller was changed from Zhuhai SASAC to no actual controller.
The company plans to promote the equity incentive plan for the integration of shares recognized by key entities and backbone employees up to 4% of the shares of listed companies after the completion of the transaction.
After the share reform, channel interests may be deeply bound to further improve the channel system.
Gree Electric’s sales rely on the offline dealer model.
Regional sales companies no longer control Gree’s offline distributor retail terminals, and are also important shareholders of the company. As of the third quarter of 2019, Jinghai Guarantee still holds the company8.
91% equity, with important right to speak.
Regional sales companies are important intermediaries, external to listed companies and profit-making institutions, and they are also the focus of possible channel reforms in our opinion.
If the future is at stake, we believe that there is a possibility for the sales company to profit from both ends (listed company, consumer).
Investment suggestion: Considering the company’s recent “ten billion yuan profit” and other promotional activities, we slightly adjust the company’s EPS forecast for 19/20/21 to 4.
83 yuan (previous value: 4).
83 yuan), corresponding PE is 12/11/10 times.
As an absolute leader in the air-conditioning industry, the company has gradually improved its profitability, mixed reforms and optimized governance, and a steadily advancing diversification strategy, providing strong support for sustainable and stable development in the future.
Maintain target price of 69 yuan, corresponding to 13 times PE in 20 years, maintain “strong push” level.
Risk warning: real estate growth is intensified; industry competition is intensified; raw material prices fluctuate sharply.