Major Move by Home Appliance Giant with 170 Billion Market Cap: What's Happening?
-
On the morning of December 20, Gree Electric Appliances (SZ000651, stock price 31.60 yuan, total market value 177.9 billion yuan), a leading home appliance company, opened with a rapid 6% drop, hitting a recent low. As of the time of writing, Gree Electric Appliances was temporarily trading at 31.56 yuan, down 4.77%.
On the news front, on the evening of December 19, Gree Electric Appliances announced plans to increase its stake in Gree Titanium New Energy Co., Ltd. (hereinafter referred to as "Gree Titanium") by acquiring approximately 271 million shares (accounting for 24.54% of Gree Titanium's total shares) from 12 counterparties, with a transaction value of about 1.015 billion yuan.
Dong Mingzhu, Chairman of Gree Electric Appliances, did not participate in this transaction with her shares in Gree Titanium.
Upon completion of the transaction, Gree Electric Appliances will control 72.47% of the voting rights in Gree Titanium's total shares, directly holding 55.01% of Gree Titanium's shares and, through a voting rights delegation arrangement, gaining voting rights corresponding to approximately 193 million shares (17.46% of Gree Titanium's total shares) held by Dong Mingzhu. Dong Mingzhu's shareholding in Gree Titanium remains unchanged.
It is reported that Gree Titanium is a comprehensive new energy industry group integrating the R&D, production, and sales of lithium titanate battery core materials, batteries, intelligent energy storage systems, new energy vehicles, as well as the recycling and cascading utilization of power batteries. Headquartered in Zhuhai, it has industrial parks in Chengdu, Tianjin, Shijiazhuang, Handan, and other locations.
Since becoming a subsidiary of Gree Electric Appliances in October 2021, Gree Titanium's operational performance has continued to improve.
In 2022, Gree Titanium reported operating revenue of 2.587 billion yuan and gross profit of 413 million yuan, representing year-on-year growth of 27.69% and 230.20%, respectively.
From January to June 2023, Gree Titanium achieved operating revenue of 1.440 billion yuan, an increase of 23.31% compared to the same period in 2022.
However, in terms of net profit, Gree Titanium recorded a net loss of 1.905 billion yuan in 2022 and a net loss of 171 million yuan in the first half of 2023.
Gree Electric plans to acquire a 24.54% stake in Gree Titanium for 1.015 billion yuan, valuing the entire company at approximately 4.136 billion yuan.
In fact, back in 2016, Gree Electric had proposed a full acquisition of Yinlong New Energy for 13 billion yuan, but this plan was vetoed during the shareholders' meeting that year.
Nevertheless, Dong Mingzhu, Chairman of Gree Electric, did not give up. She later invested in Yinlong New Energy in her personal capacity and gradually facilitated Gree Electric's controlling stake in the company, thereby realizing her 'car-making dream' in another way.
According to Securities Times, Dong Mingzhu has publicly praised Gree Titanium on multiple occasions.
At Gree Electric's 2022 annual shareholders' meeting held in June this year, Dong Mingzhu stated: 'Without Gree Titanium's technology, our light storage and air conditioning solutions would not be possible. Moreover, Gree Titanium has opened up a channel for us in the automotive market, such as car air conditioning, compressors, electronic controls, capacitors, etc. In the past, we interacted with many automotive industry clients and found it extremely difficult to sell our car air conditioning and compressors. But with Gree Titanium as a platform, we can test the adaptability of our automotive air conditioning products and other components, thereby expanding new opportunities and significantly extending our industrial chain.'
Data shows that Gree Electric's net profit for the first three quarters of 2023 was 20.092 billion yuan, a year-on-year increase of 9.77%.
Over the past five years, Gree Electric has distributed over 70.365 billion yuan in cash dividends, paid over 61.684 billion yuan in taxes, and repurchased more than 587 million shares, totaling over 29.012 billion yuan in buybacks.
On October 31, Gree announced another positive development: a 3 billion yuan share buyback.
Gree Electric has consistently adhered to the real economy, delivering solid performance to reward shareholders and contribute to society.
The company's plan to increase its stake in Gree Titanium is both a proactive response to the low-carbon sustainable development strategy and a reflection of its strong confidence in the continued growth of China's new energy sector.
As an emerging industry, the new energy sector will drive the sustained development and expansion of related industrial chains, injecting continuous growth momentum into China's economic development.
The recent volatility in Gree Electric's stock price has been particularly challenging for retail investors.
Online, one investor wrote, "I still believe in you, but this kind of decline is hard to bear."
Another investor commented, "Keep falling, why stop now? I'm waiting for it to drop further so I can buy more. I've been stuck for a year; a little longer won't hurt."
In reality, Gree Electric's recent stock performance has been commendable.
Although the broader market has been trending downward, Gree Electric's stock price has maintained a sideways oscillation pattern.
This resilient performance naturally raises higher expectations for its future development.
However, as Gree Electric's intraday stock price recently dropped over 6%, hitting a new low for the year, market attention has intensified accordingly.
Despite this, it's important to note that Gree Electric's overall performance this year remains positive.
At the current price of 31.05 yuan, the year-to-date increase stands at 2.41%, which still ranks as outstanding among listed companies.
The significant volatility in Gree Electric's stock price might be related to its recently announced bulletin.
The company announced plans to increase its stake in subsidiary Gree Titanium New Energy Co., Ltd. by acquiring shares from existing shareholders.
The transaction involves approximately 1.015 billion yuan, with additional plans to acquire 27.53% of Gree Titanium shares through agreement transfer within the next twelve months.
In the stock market, the sharp decline of new energy stocks has become a persistent pain for many investors over the past two years.
Now, Gree Electric's increased stake in Gree Titanium might have made many investors "frightened by the shadow of a bow in the cup," leading them to "exit prematurely."
In the stock market, unexpected events frequently occur, often catching investors off guard and causing significant disruptions.
These unforeseen incidents are among the most challenging aspects of the stock market to predict.
Even though some investors may use various channels and methods to understand a company's fundamentals, they still cannot entirely avoid the impact of these sudden events.
However, we can observe that, in the long run, a stock's price is not entirely determined by market sentiment or unexpected events.
Instead, a stock's price is largely influenced by the performance of the listed company.
Therefore, if investors can thoroughly understand a company's fundamentals, they can better grasp the long-term trends of the stock market.
Moreover, Gree Electric Appliances, as one of the classic value investment stocks, will likely turn its current challenges into the most talked-about story in an investor's career—if they believe in value investing!
Risk Warning: The views expressed here are for discussion only and do not constitute investment advice. Investing carries risks, and caution is advised when entering the market.