Poor environment, how do we view Gree’s valuation?
Text | Huang An
Source | Praying Mantis Finance (ID: TanglangFin)
Year-on-year decline of 70% -77%. Does this mean that for an industry giant, it ’s over?
Gree is experiencing such an “accident”.
Recently, Gree Electric released the 2019 and the first quarter results of 2020. The company’s net profit from its mother in 2019 was 24.672 billion yuan, a year-on-year decrease of 5.84%; of which, in the fourth quarter of 2019, it achieved revenue of 43.832 billion yuan, a year-on-year decline of 12.29%; net profit of the mother company reached 2.555 billion yuan, a year-on-year decline of 49.76%. In the first quarter of 2020, the company is expected to achieve a total operating revenue of 207-1229 billion yuan, a 44% -50% year-on-year decline, and is expected to achieve a net profit of 1.33 billion yuan-1.71 billion yuan, a 70% -77% decline year-on-year.
Source: Oriental Fortune Gree Electric Appliances
We can see from Gree ’s performance report in recent years that in the fourth quarter of 2017, it also achieved a good single-quarter profit growth of 63.91%. For more than a year, the profit in the first quarter of this year dropped significantly by 70% to 77% year-on-year, and the chain has also dropped by more than 70%.
One heaven, one underground, which is a terrifying number for a leading company in the industry.
So what does this data mean?
The picture is from the public network
Whether it is from the slowdown in the growth rate of the air-conditioning industry last year, or the substantial decline in the performance caused by the epidemic in the first quarter of this year, various signs seem to imply one thing: the air-conditioning industry Not so good, Gree is not so good. At this time, people are thinking about it. Does Gree still have room for growth?
As soon as the controversy came out, the unpopular crowd increased rapidly, and the previous people’s doubts also regained their heads: “Leading companies’ market expansion is weak” “Single business, difficult performance growth” and so on.
Source: Oriental Fortune Gree Electric Appliance Post Bar
It is undeniable that in 2019, as the growth rate of the real estate industry slows, the air-conditioning industry is facing greater pressure, but there are stillA new growth point is brewing. Last year, the state ’s policy on fine decoration of real estate continued to be tilted, and the proportion of fine decoration was rapidly increased. The total scale of the real estate fine decoration market in 2019 was 3.193 million sets, a year-on-year increase of 26.2%. Among them, the scale of air-conditioning facilities reached 1.183 million sets, a year-on-year increase of 40.4%.
Real estate developers’ demand for partial back-end decoration is gradually increasing, and the matching rate of air conditioners has reached 29.9%, which is an increase of 3.5 percentage points compared with 2018, and the demand for supporting equipment has increased steadily. Among the air-conditioning supporting participants, the head brand (Meidi, Gree, Hitachi) has a stable competition pattern. The three brands together account for nearly 70%. Especially with the active layout of domestic brands, the share of domestic brands has shown an upward trend year by year. In the context of consumption upgrades, Gree, as the industry leader, has more initiative in this new contest. The bargaining power of the brand and the cost advantages of the supply chain can be amplified.
The decline in performance in the first quarter was caused by accidental epidemics and seasonal fluctuations throughout the year. It does n’t matter much for valuation. When people generally accept the impact of the epidemic, they will naturally have a higher tolerance for Gree ’s performance “Waterloo”.
Since talking about performance and valuation, we have to talk about a more important topic-the change in industry standards. On January 6, 2020, the official website of the National Standardization Administration showed that the new national air-conditioning energy efficiency standard approved by the State Administration of Market Supervision and Administration was released on December 31, 2019. The new standard will be officially implemented on July 1, 2020, and air-conditioning manufacturers can no longer produce or import air-conditioning products that do not meet the new standard. After July 1, 2021, inventory air conditioners that do not meet the new standard will also not be allowed to be sold. According to industry experts’ prediction, the new standard will make the current fixed frequency and frequency conversion market elimination rate reach 45%.
pictures are from the public network
This “new energy efficiency standard” has also raised the threshold for research and development. In recent years, some third-tier brands have adopted the OEM assembly model and adopted the e-commerce platform to create a virtual standard for energy efficiency and rely on low prices to grab the market. After the introduction of new energy-efficiency standards for air conditioners, air-conditioning companies that have no ability to upgrade air-conditioning technology and will only fight price wars and marketing routines will face elimination. Previously Gree reported that the “Aux Energy Efficiency False Standard Incident” has a great impact, and the regulatory agencies will also tighten the investigation and punishment of air conditioning energy efficiency virtual standards. andThis is a good thing for those air-conditioning companies that have already developed new energy efficiency technologies in advance and have a large number of technical reserves.
In the face of the new national standard for air conditioning energy efficiency, Gree said that the new energy efficiency standard is not technically difficult, and a full series of products that meet the new energy efficiency standard are ready to be launched in 2020. The reason for being so confident is that as early as May of last year, Gree and the TC143 / SC4 National HVAC Standards Committee hosted the ISO / TC86 / SC6 International Conference on Air Conditioning and Heat Pumps.
Professor Cao Yang of the National HVAC Standards Committee, Liu Hua, deputy chief engineer of Gree Electric Appliances, and Chen Jin, deputy director of the Standards Management Department, attended the meeting as experts. At the meeting, many of Gree’s opinions were adopted by the committee. Although Gree does not directly formulate new national energy efficiency standards, it can be inferred that the new national energy efficiency standards will still draw on international standards to a large extent. When anyone can become a standard setter, anyone can grasp the future development trend.