#FMCG Eight Talks##Consumption##Gree#On December 21, it was hard to think that a single announcement would evaporate the market value of Gree Electric Appliances by tens of billions. Previously, Gree Electric announced that the company intends to increase its holdings of Gree Titanium by transferring the shares held by the existing 12 shareholders. Investors have heard the news have "voted with their feet", as soon as the market opened on December 20, Gree Electric Appliances fell sharply, the main force chose to sell, closing down 7.09% to 30.8 yuan, the full-day turnover was 3.885 billion yuan, the turnover rate was 2.22%, and the market value evaporated 13.2 billion yuan. Wind data shows that the net outflow of Gree Electric's main funds was 390 million yuan, a new high since May 4, 2023.
Gree titanium "trouble"
Gree Electric Appliances said in the announcement that the company has signed the "Share Transfer Agreement" with 12 counterparties on December 19, 2023, and intends to transfer 271 million shares of Gree Titanium held by them, which accounts for 24.54% of the total share capital of Gree Titanium, and the transaction consideration is 1.015 billion yuan.
Gree Titanium, formerly known as Yinlong New Energy, the intersection of Gree Electric Appliances and Yinlong New Energy originated in 2016, Dong Mingzhu had planned to acquire Yinlong through Gree Electric Appliances for 13 billion yuan, from household air conditioning to the automotive air conditioning market, and at the same time lay out energy storage, new energy vehicles and other related industries, but the acquisition plan was rejected by shareholders, and then Dong Mingzhu invested in Yinlong in his personal name and became the second shareholder.
At the beginning of 2018, Yinlong New Energy was revealed to have owed more than 1 billion yuan to a number of suppliers, and the Wu'an factory in Hebei Province reduced production in a large area, and Nanjing Industrial Park was once seized by the court.
In November 2018, the major shareholder Yinlong Group, Wei Yincang, the actual controller of Yinlong Group, and Sun Guohua, a former executive, were suspected of embezzling more than 1 billion yuan of the company's interests. In April 2019, Yinlong's official Weibo issued a statement that six people, including Sun Guohua, the company's director and former president of the company, had been criminally detained, involving a total of more than 1.4 billion yuan in embezzlement of the company's interests. Wei Yincang, the former chairman and major shareholder, fled to the United States.
Gree Electric announced in August 2021 that the company won 30.47% of the equity of Yinlong New Energy by participating in the judicial auction, and Dong Mingzhu entrusted the company with the voting rights corresponding to the 17.46% equity of Yinlong New Energy. After the completion of the transaction, Gree Electric will control a total of 47.93% of the voting rights of Yinlong New Energy, and Yinlong New Energy will become a holding subsidiary.
According to the data, Greti's operating income in 2022 will be 2.587 billion yuan, with an operating profit loss of 1.969 billion yuan and a net profit loss of 1.905 billion yuan, and an operating income of 1.440 billion yuan, an operating profit loss of 142 million yuan and a net profit loss of 171 million yuan in the first half of 2023.
Which way to go for transformation
Despite the constant doubts, Gree seems to be quite confident. Gree Electric said in the announcement that the company has established a new ecology of zero-carbon energy products integrating "light, storage, direct and flexible". In order to accelerate the implementation of the company's green energy strategy, the company intends to strengthen the management and control of Gree titanium by increasing its shareholding in Gretitanium, give full play to the synergy effect of both parties, and reduce internal management costs.
From the point of view of the industry, Gree Electric bet on Gree titanium is a part of its diversified development, industry observer Major General Ding told the Beijing Business Daily reporter that new energy is a blue ocean market, Gree Electric Appliances involved in the track will help open the second growth runway, but the most fundamental thing is that Gree Titanium needs to use technology and financial performance to prove that it is a high-quality asset.
Diversification is the slogan that Gree Electric has been shouting, and Gree Electric said in its 2022 financial report that Gree Electric is a diversified, technology-based global industrial group, with three major consumer brands such as Gree, TOSOT and Jinghong and industrial brands such as Lingda, Kaibang and Xinyuan, covering two major fields of household consumer goods and industrial equipment.
However, as of now, the fact of relying on large air conditioning products has not changed significantly, and the 2023 semi-annual report shows that Gree Electric's "air conditioning" accounts for 70.54% of revenue, and other "household appliances" account for only 2.19%, and the continuous increase in green energy and intelligent equipment accounts for only 2.94% and 0.25% respectively. In recent years, Gree has been involved in a variety of businesses such as lithium batteries, mobile phones, new energy vehicles, medical health, and prefabricated dishes, but its diversification has not achieved significant results.
Experts point out that the relationship between household appliances and the energy field is relatively close, and Gree Electric Appliances is based on home appliance manufacturing and marches into the field of new energy, which is reasonable in the general direction, but in the case that Gree Titanium has no signs of profitability, it is difficult to convince the majority of investors to spend a lot of money.
A reporter from Beijing Business Daily interviewed Gree Electric on this matter, but did not receive a reply as of press time.
Beijing Business Daily reporter Tao Feng Wang Zhuli