Text: Langya Gongzi
Source: Lilmos
Is Gree Really not working?
As soon as the third quarter of 2021 financial report was released, the news of the decline in the performance of Gree Electric Appliances spread wildly, triggering various hot discussions and speculations in the market.
According to the third quarter financial report, Gree's revenue was 47.083 billion yuan, a year-on-year decrease of 16.50%; net profit was 6.188 billion yuan, a year-on-year decrease of 15.66%. This achievement has become the worst performance of Gree Electric Appliances in the same period in the past 3 years, and it is obviously unable to meet market expectations.
And this year, the stock price of Gree Electric Appliances has been falling and falling, and the market value has dropped sharply by 200 billion yuan within a year!
At the same time, Gree Electric Appliances has a number of institutional shareholders to reduce their holdings. Among them, Hong Kong Securities Clearing Co., Ltd. reduced its holdings by more than 200 million shares, Central Huijin Asset Management Co., Ltd. reduced its holdings by more than 44 million shares, and Zhuhai Gree Group Co., Ltd. reduced its holdings by more than 17 million shares. According to statistics, the total shareholding ratio of the company's top ten shareholders dropped from 51.09% at the end of the second quarter to 46.10%. It can be seen that these investment institutions are gradually withdrawing.
As one of the world's top 500 companies, Gree Electric Appliances is the leading leader in China's air-conditioning industry, and has a pivotal position in the electrical appliance industry in China and even the world, with strong profitability, and in the past few decades of history, it has also created huge profits for investors.
As the head of Gree Electric Appliances, Dong Mingzhu has always been the focus of the news media because of his unique personal charm, and has been regarded as a representative of outstanding entrepreneurs, and is affectionately known as Miss Dong by everyone. Gree Electric Appliances under the control of Miss Dong has always been the object of market pursuit and praise.
However, the situation is changing subtly. Behind the sharp decline in the market value of Gree Electric Appliances is the intertwining of many problems - behind the decline in short-term performance, there are also many long-term strategic issues, such as the dilemma of Gree's acquisition of Yinlong, and the unresolved succession of Dong Mingzhu.
This time, the challenge facing Miss Dong should be said to be unprecedented.
1 The position of the second oldest can not be saved
The decline in the performance of Gree Electric Appliances is not only a decline in performance, it is a decline in the entire market value, and it reflects the decline in market position.
This decline has been evident in recent years, especially in 2021.
Gree, Midea, Haier Zhijia is known as China's three giants of home appliances, for a long time, Gree has been the second oldest in the home appliance industry, the boss of the air conditioning industry, and the market position can be described as impenetrable. However, in recent years, with the decline in Gree's performance, this solid pattern has been repeatedly broken.
According to the 2019 annual report, in terms of total annual revenue, Midea was 278.4 billion yuan, Haier Zhijia was 200.8 billion, and Gree was 200.5 billion, and Gree Electric Appliances was overtaken by Haier Zhijia and fell to third.
Not only that, in terms of revenue in 2020, Midea's air conditioners have exceeded Gree's 117.9 billion yuan with 121.2 billion yuan, and gree has also been replaced by Midea.
In the third quarter of this year, the group revenue of Midea is 87.5 billion, Haier Zhijia revenue is 58.3 billion, and Gree revenue is 47 billion, Gree is not only far behind Midea, but the distance with Haier is also continuing to widen.
Revenue and net profit fell sharply, but inventory continued to rise, approaching 40 billion, a record high, while inventory slightly exceeded 20 billion yuan in the same period of 2020, and inventory increased by 92% year-on-year. Compared with the beginning of the year, the growth also reached 42%. The high inventory is estimated to take a quarter to digest.
In addition, Gree debt bills are also rising, exceeding 40 billion yuan, compared with only 18.9 billion yuan in the same period of 2020, an increase of more than double the year-on-year. The company's long-term borrowings also soared, at 8.84 billion yuan in the third quarter and 1.57 billion yuan in the same period of 2020, an increase of 460%.
On the one hand, the performance decline and shareholder reduction, on the other hand, inventory rises, debt is high, so once the third quarter financial report was released, it immediately led to a decline in the stock price of Gree Electric Appliances. As of November 1, the stock price fell to a minimum of 35.9, the lowest record in the year, compared with the high point of 66.79, Gree Electric has evaporated nearly 200 billion.
As far as the current market value is concerned, the remaining market value of Gree is only 220 billion, the market value of Haier Zhijia is as high as 280 billion, more than 60 billion of Gree, and the market value of the United States is as high as 500 billion, 60 billion higher than the two Grees.
Although The tough style of Miss Dong claims that she has never cared about the stock price, as a bystander, she has to worry about Gree, because whether it is from the perspective of revenue or market value, Gree can't even keep the position of the second oldest.
2 The future of Yinlong is uncertain
At the end of August this year, Gree Electric Appliance also had a strategic move, auctioning 30.47% of the equity of Yinlong New Energy for 1.828 billion yuan.
At the same time, Dong Mingzhu entrusted gree electric appliances with the 17.46% equity of Yinlong New Energy held by him personally, so that Gree Electric Controlled 47.93% of the voting rights of Yinlong New Energy and became the controlling shareholder, that is to say, Yinlong New Energy became a subsidiary of Gree Electric Appliances.
The third quarter financial report is the first report card of Gree Electric Appliances after the acquisition of Yinlong New Energy.
The acquisition of Yinlong has opened up a new track for Gree Electric Appliances on the surface, but it may also make Gree Electric Appliances fall into the abyss, because Yinlong is likely to become a bottomless pit.
In the development process of Gree Electric Appliances, it has long focused on the air conditioning industry, and therefore has occupied the position of the leading boss for a long time, but after many years, as the industry peaks, it is difficult to expand enough market space, and Gree began to seek a new direction of growth.
First in addition to air conditioning, the production of a variety of household appliances, but not a climate, the proportion of revenue has been very low; and then into smart phones, but there is no improvement; so began to look for other tracks, Miss Dong aimed at new energy.
In fact, as early as 2016, Dong Mingzhu believed that new energy vehicles were the future development direction, so it proposed to acquire 100% of the equity of Yinlong for 13 billion yuan, so that Yinlong became a wholly-owned subsidiary of Gree, but this plan failed due to the opposition of small and medium-sized shareholders.
So Dong Mingzhu, who has a strong personality, invested a full 1 billion yuan in his personal name, and continued to increase his holdings by more than 17% in the next few years. Once 13 billion yuan to acquire 100% of the equity, and this year 1.8 billion can acquire 30% of the equity, which clearly tells the world that Yinlong is becoming less and less valuable, but also proves that Dong Mingzhu has actually made serious losses for Yinlong's investment.
Yinlong financial report shows that in 2020, Yinlong's annual revenue was 4.325 billion yuan and net profit was negative 688 million yuan, while from January to July 2021, Yinlong's revenue was 1.058 billion yuan and net profit was negative 763 million yuan. Yinlong's income is decreasing significantly, losses continue to increase, and the situation is becoming more and more severe.
Behind the loss, Yinlong also has a management black hole. In November 2018, it was revealed that Wei Yincang, chairman of Yinlong Group, and President Sun Guohua were suspected of embezzling more than 1 billion yuan in the company's interests, and later Wei Yincang fled to the United States, and Sun Guohua and 6 others were criminally detained. According to media reports, this Wei Yincang is actually a liar, who moved overseas after defrauding Dong Mingzhu of billions, and Yinlong also has high debts.
Therefore, Yinlong has ostensibly brought a new energy track to Dong Mingzhu, but it is also a mess.
Of course, if only billions of dollars are invested, even if all of them are lost, it will not hurt Gree Electric Appliances; however, Miss Dong dares to bet all her wealth to invest in Yinlong, and there is a deeper intention in this backwater battle.
Investing in Yinlong is another transformation of Gree after the failure of smart phones, and this transformation is extremely important, because its success or failure largely determines the future pattern of Gree.
Yinlong's core assets are two, one is the production of lithium titanate batteries, and the other is the production of complete vehicles. As early as 2016, when the acquisition plan of Yinlong was released, Gree announced its intention to take this acquisition as a breakthrough to cut into the field of new energy vehicle production and research and development, and intended to build lithium-ion batteries, new energy vehicles and energy storage business into an important business growth point for the company in the future.
When acquiring Yinlong this year, the announcement issued by Gree Electric Appliances changed its tone, saying that the acquisition of Yinlong was to implement "based on the home appliance industry and steadily expand diversified emerging businesses", which mentioned the need to increase the market share of auto parts, but did not explicitly say that cars were built. Compared with before, Gree is more cautious and cautious this time, like walking on thin ice.
Whether it is making cars or car parts, or even making lithium titanate batteries, it is very important for Gree, because the air conditioning market is nearly saturated, the ceiling is very obvious, and Gree must open up a second growth curve.
Therefore, this time betting on the transformation, for Miss Dong, is really knowing that there are tigers in the mountains and biased towards the tiger mountain line!
3 Succession is unresolved
In addition to the decline in the performance of Gree Electric Appliances and the dilemma of Yinlong, what worries the market even more is that Dong Mingzhu has no successor so far.
In less than 3 months, Dong Mingzhu's term of office will end in January 2022, and her whereabouts are worth paying attention to. More importantly than that, for a Fortune 500 company, it is not uncommon for a successor to be delayed.
As the soul of Gree Electric Appliances, Dong Mingzhu has a strong personality, a tough style and outstanding talents, and is known as the Iron Lady. Since joining Gree in 1990, in these 30 years, Dong Mingzhu's contribution has played an irreplaceable role in the development and growth of Gree Electric Appliances. However, even if Dong Mingzhu has the ambition of Ling Yun and the talent of Qingtian, he has to admit a reality: the Iron Lady is old!
The west wind urges people to grow old overnight, and withers away from the end of Zhu Yanbai. Miss Dong was born in 1954, and now she is 67, and in 3 years, she will be 70 years old, known as the year of ancient rarity. Although there is no retirement in the listed company, her successor has always been hotly discussed, because under miss Dong's strong personality, Gree never seems to have the second person.
Originally, in the management of Gree Electric Appliances, Huang Hui and Wang Jingdong were Dong Mingzhu's right and left arms, and together with Dong Mingzhu formed a management triangle, both of which were regarded as the right candidates for Dong Mingzhu's next successor.
Among them, Huang Hui is the executive president, who belongs to the elderly figure of Gree Electric Appliances, starting from ordinary employees, step by step, all the way to the board of directors, and was promoted to executive president in 2017. Wang Jingdong is the secretary of the board of directors and the head of finance, serving gree for nearly 18 years, serving as the secretary of the board of directors for 11 years, and is also regarded as one of the most powerful figures in Gree.
However, in August 2020, Wang Jingdong was forced to leave his job because of insider trading, and in February 2021, Huang Hui also announced his resignation, thus announcing the complete disintegration of the Iron Triangle of Gree Electric Appliance Management.
Among the new generation of young people, Dong Mingzhu also said that he has been looking for it, but there has been no suitable candidate. Dong Mingzhu once said: "I really hope that there are young people who can stand up now, this is the best time." Because our brand, the whole team, including our system has reached a very perfect state. ”
In contrast, the founder He Xiangjian took precautions, began to cultivate successors 10 years in advance, and handed over the company to Fang Hongbo, who had followed him for 27 years when he retired in 2012, even though he was once just an editor of an internal journal. After Fang Hongbo took office, he did not live up to his trust, carried out strategic reforms, led Midea to open a new round of growth cycle, realized the company's overall listing, and made Midea glow with a new atmosphere.
Dong Mingzhu needs to reflect, why has she been unable to find a successor?
epilogue
Six years ago in 2015, the same is the third quarter report, Gree electrical appliances suffered an unprecedented decline in performance, when people suspected that Gree encountered a crisis, Miss Dong replied bluntly: Gree not only has no crisis this year, in the past 25 years, Gree has never encountered a crisis, in the outside world to think that Gree is facing a crisis, Gree has achieved leapfrog development every time.
Today, six years later, the situation has been very different - in the main battlefield, the status of the air conditioner boss has quietly changed hands and been replaced by the United States; in the second battlefield, small household appliances have not become a climate, the mobile phone business has not improved, and the recently acquired Yinlong New Energy has an uncertain future.
As the soul of Gree Electric Appliances, Miss Dong will also end her term in two months. Gree electric appliances can be described as time, place and people lost.
In 2019, when asked about the successor, Miss Dong said: Listed companies do not have retirement time, do a good job, and retire if they do not do well. That's true, especially for "mercenary" investors. But now, looking at the declining performance, the falling stock price, the market value struggling at the 200 billion mark, compared with 3 years ago, miss Dong's chips to continue to be re-elected have been much less.
This time, under the difficulties, whether Gree Electric Appliances can achieve leapfrog development again is really mysterious and mysterious.
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