After Stock Price Plunge, Gree Releases Earnings Forecast Late at Night—Expects Annual Net Profit of 27–29.3 Billion Yuan
-
An earnings forecast released in the early hours—this move by home appliance giant Gree Electric is truly rare!
Shortly before 2 a.m. on December 21, Gree Electric suddenly issued its latest earnings forecast. The announcement revealed an expected net profit attributable to shareholders of 27–29.3 billion yuan for 2023, a year-on-year increase of 10.2%–19.6%; operating revenue of 205–210 billion yuan, compared to 190.151 billion yuan in the same period last year; and basic earnings per share of 4.82–5.23 yuan/share, up from 4.43 yuan/share in the previous year. Notably, this earnings forecast also exceeded market expectations, as the market had generally anticipated Gree Electric's operating revenue to be 204 billion yuan and net profit attributable to shareholders to be 27.085 billion yuan. After the stock price plunge, Gree released its earnings forecast late at night!
In 2023, the company's operating performance showed steady growth, with both revenue and profits increasing year-on-year. Gree has consistently focused on its core air conditioning business, adhering to consumer demand as its guide, diversifying its product range, and actively expanding sales channels. At the same time, the company has continued its industrial transformation, making strides in diversified sectors such as high-end equipment, industrial products, and green energy, creating more leading technologies to drive performance growth.
Just on December 20, Gree Electric's stock price suffered a rare sharp drop, with its market value shrinking by over 10 billion yuan in a single day.
On the evening of December 19, Gree Electric announced its intention to acquire 24.54% of Gree Titanium New Energy Co., Ltd. (hereinafter referred to as Gree Titanium) for 1.015 billion yuan. When the market opened on December 20, Gree Electric's stock price plummeted. By the close of trading on the 20th, Gree Electric's stock price had fallen by 7.09% in a single day, wiping out over 13 billion yuan in market value. The price Gree Electric is offering for the Gree Titanium shares implies a 100% equity value of 4.138 billion yuan for Gree Titanium.
In August 2021, Gree Electric acquired 30.47% of Gree Titanium through a public auction for 1.828 billion yuan. Based on the auction price at that time, Gree Titanium's 100% equity was valued at nearly 6 billion yuan. Going back further to August 2016, Gree Electric had planned to acquire 100% of Gree Titanium (then known as Zhuhai Yinlong New Energy Co., Ltd.) for 13 billion yuan, but the deal was not approved by Gree Electric's shareholders' meeting. It is clear that Gree Titanium's current overall valuation has declined significantly compared to 2016. After the stock price crash, Gree issued a performance forecast late at night!
In fact, since Gree Electric took control of Gree Titanium in 2021, some investors have been skeptical about its market prospects. Reporters learned that at Gree Electric's 2022 annual shareholders' meeting in late June this year, many shareholders present were concerned about Gree Titanium's situation. According to Gree Electric's latest disclosed financial data, as of the end of June this year, Gree Titanium's total assets were 24.311 billion yuan, with total liabilities of 24.245 billion yuan, leaving net assets of only 66 million yuan. In 2022, Gree Titanium's consolidated operating income was 2.587 billion yuan, a year-on-year increase of 27.69%; in the first half of this year, it achieved revenue of 1.44 billion yuan, up 23.31% year-on-year. However, in terms of net profit, Gree Titanium has yet to emerge from the quagmire of losses.
Image source: Daily Economic News archive photo
Home appliance industry analyst Liu Buchen told reporters that whether Gree Titanium is a good asset has already been answered by investors. Mo Ke, founder and president of Zhenli Research, said in an interview that the advantages and disadvantages of lithium titanate batteries are very distinct. In some specific, niche markets, lithium titanate has its value. But don't expect lithium titanate to become mainstream because it truly serves a niche market.
According to the Securities Daily, a representative from Gree Electric stated: "As a crucial part of our new energy strategy, Gree Electric plans to increase its stake in Gree Titanium to better match the strategic importance with our shareholding ratio. This move not only actively responds to the low-carbon sustainable development strategy but also reflects our strong confidence in the continuous growth of China's new energy sector."
Gree Titanium is a comprehensive new energy industrial group specializing in the R&D, production, and sales of lithium titanate battery core materials, batteries, intelligent energy storage systems, new energy vehicles, and the recycling of power equipment. Currently, Gree Electric and its chairperson Dong Mingzhu appear highly optimistic about Gree Titanium's prospects.
In mid-June this year, during Gree Electric's 2022 annual performance briefing, company secretary Deng Xiaobo mentioned that the company is intensifying efforts in the green energy sector, focusing on photovoltaic (storage) air conditioning, new energy vehicles, and lithium batteries. Notably, Gree Titanium's new energy vehicles are already operating in over 230 cities across China.
Moke, founder and president of True Lithium Research, told reporters that lithium titanate batteries still have their value in some niche markets. Their advantages are particularly notable: first, they have an exceptionally long cycle life, easily achieving 10,000 charge cycles; they perform well in high-power fast charging; and they offer high safety. However, their drawbacks are also evident. "The energy density of lithium titanate is low, currently only about half that of lithium iron phosphate batteries."