Gree's annual operating revenue will exceed 80 billion yuan

When Dongfeng Zhu, president of Gree Electric Appliances, said in an exclusive interview with a China Securities Journal reporter, Gree’s operating income for the first three quarters was RMB 64 billion. If the income of the same period last year is maintained in the fourth quarter of this year, Gree’s annual operating income will exceed RMB 80 billion. .

Yuan Haoran, a researcher at GF Securities, predicts that Gree Electric Appliances has maintained its momentum of development in the off-season. In 2011, its operating income will reach 80% ($80 billion) and 90% ($90 billion). In 2012, it will achieve an increase of more than 20%. The annual revenue is expected to reach 100 billion yuan, and it will enter the domestic appliance industry's 100 billion yuan club.

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Gree third quarter report shows that the company's total revenue in the first three quarters of 64.075 billion yuan, an increase of 44% over the year 2010 operating income of 60.8 billion yuan; net profit of 3.773 billion yuan, an increase of 30%; basic per share The income is 1.33 yuan.

Gree Electric Appliances achieved operating revenue of 16.5 billion yuan in the fourth quarter of 2010. Even if the fourth quarter of 2011 maintained its level last year, Gree Electric Appliances' annual operating revenue in 2011 will reach 80.5 billion yuan, exceeding the threshold of 80 billion yuan.

Yuan Haoran pointed out that the development history of Gree Electric Appliances for many years shows that the company's business is characterized by a non-light season, and the fourth quarter results tend to exceed expectations.

At present, brokerage researchers generally expect Gree's operating income in 2011 will increase about 35% to reach 82 billion yuan level.

Since 1995, Gree air-conditioner production, sales, market share, and sales have been at the forefront of the domestic industry for 16 consecutive years. Since 2005, Gree's home air-conditioner production and sales have ranked at the top of the world for six consecutive years.

Whether or not Gree will face the "ceiling" bottleneck in the future development of Gree Electric Appliances, vice president and director of the Gree Electric Appliances Wang Jingdong said that Gree Electric Appliances has always insisted on the specialization of the air-conditioning industry and will devote efforts to the breadth and depth of specialization in the future. In breadth, extending from home air conditioners to central air conditioners, central air conditioning will be the company's new profit growth point. In terms of depth, Gree has mastered the upstream core technology through technology research and development and continuously enhanced its own technical control capabilities.

Guodu Securities researcher Yang Zhigang believes that with the popularization of central air-conditioning in villas and homes, the central air-conditioning business has become a major profit growth point for mainstream manufacturers outside of home air-conditioning. Judging from the development trend, the central air-conditioning industry will also be like the home air-conditioning industry, from the initial monopoly of international brands to the coexistence of domestic and foreign brands, and finally it is expected to form a domestic brand-led market.

In addition, the domestic air-conditioning market space is still promising. Yuan Haoran believes that driving factors including the demand for urban renewal, the increase in rural market holdings, and the rapid growth of the engineering machine market will drive the domestic air-conditioning consumer market to continue to grow. It is predicted that in 2011, the domestic air-conditioning market sales volume will increase by 19%, and the total sales volume will be 60.5 million units. In 2012, the growth rate was 14%, and the total sales volume was 68.89 million units.

Wang Jingdong stated that the competition among enterprises is no longer limited to individual products and brands, but includes the entire industry chain including upstream and downstream competitions, Gree’s breakthrough in upstream core technologies, and the downstream marketing system. The innovations are all for the purpose of enhancing the competitiveness of the industry chain.

High leverage operation

Gree Electric's third quarter report showed that as of the end of the third quarter, the company’s advanced receipts amounted to RMB 22.94 billion, an increase of 91% compared with RMB 12.0 billion in the same period of last year, and RMB 6.545 billion at the end of the Central Bank reporting period, which represented a growth rate of 250%.

Wang Jingdong introduced that the rapid growth of advance receipts is mainly due to early payment by dealers. The advance payment of RMB 23 billion at the end of the third quarter not only showed the distributors' confidence in Gree, but also laid a good foundation for the company's development next year.

Yuan Haoran pointed out that since Gree Electric Co., Ltd. created the industry rules for dealers to make advance payments in 1995, Gree Electric Appliances always had higher advance receipts on its books, which enabled Gree to maintain a 30% or more ROE in recent years. This is very rare in the whole market.

According to the data, Gree Electric Appliances' ROE for 2008-2010 was 30%, 34% and 37%, respectively, which remained at such a high level for three consecutive years, mainly due to the operation of Greego's leverage, asset-light, and rapid turnover. mode.

Among the three major white power enterprises, Gree Electric Appliances had the highest financial leverage. At the end of 2009 and the end of 2010, the company’s asset-liability ratio was maintained at a high level of 79%, and the financial leverage was fully utilized. Moreover, in the high debt of Gree Electric Appliances, the interest-bearing liabilities are very small, and the accounts payable, advance receipts, and other current liabilities account for more than 85% of the total liabilities. Gree Electric's advance receipts have been growing for many years, further strengthening Gree's high leverage in financial operations.

In order to reduce the burden on dealers caused by large sums of money, Gree absorbed the dealers as shareholders and achieved the same interests in the equity. In 2007, Gree Group transferred its 10% equity interest in Gree Electric Appliances to He Beihai Guarantee Investment Co., Ltd., which has since become the second largest shareholder of Gree Electric Appliances. The company is a joint-venture company established by 10 sales companies including Gree Electric Appliance Chongqing, Henan and Hebei. Its sales accounted for more than 65% of Gree's total domestic sales.

Zhu Jianghong, chairman of Gree Group, once told a reporter from China Securities Journal. “The idea of ​​choosing a strategic investor is very simple and plain. We hope to further help the company's development. Some well-known overseas strategic investors are also with us. Talks, but we think it will not help Gree sell air conditioners. Now that the distributors have been introduced, all of us have the same interests and are desperately selling our Gree air conditioners."

White goods belong to the light asset industry, and the depreciation burden is light. Gree's fixed assets account for less than 10% of total assets, which is the lowest in the industry. In addition, due to the full competition of the household electrical appliance industry, Gree's net profit rate is not too high, maintained at about 7%, but through the improvement of operational efficiency, accelerate asset turnover, and promote the company's return on equity index.

Beware of overseas mergers and acquisitions

As the world's largest home air-conditioning company, Gree Electric will focus on going out and succeeding in internationalization.

Dong Mingzhu told the China Securities Journal reporter that Gree’s internationalization has always adhered to the principle of “preceding the market and having factories afterwards” and gradually led to the internationalization of market demand.

Gree executives revealed that internationalization has always been the focus of Gree, but Gree has been very cautious about internationalization. Compared with the frequent mergers and acquisitions of Midea Electric Appliances in overseas markets, Gree can even call it "conservative." According to the source, from the perspective of overseas acquisitions by China's home appliance industry, the merger and acquisition of companies such as TCL has taken a very difficult path, and the ability of domestic companies to integrate is still relatively limited. Overseas mergers and acquisitions by peers are difficult or difficult to judge.

In the middle of this year, Gree Electric America Branch was established in Southern California, USA. Gree said that as an important part of Gree's globalization strategy, the US subsidiary will play an important role in promoting the construction of Gree brand, business expansion and product internationalization, but whether or not it will set up a factory in the United States is still undecided.