Gree Electric (000651): President Dong talks about how to achieve the goal of 600 billion yuan

Gree Electric (000651): President Dong talks about how to achieve the goal of 600 billion yuan

The company’s recent situation On January 7th, a reporter from Ri Cai Xin Weekly interviewed the chairman of the board, Ms. Dong Mingzhu, and issued an exclusive interview report on January 18.

600 billion revenue targets: 1) President Dong initially proposed in August 2018 to achieve the 600 billion sales target by 2023.

In this interview, Mr. Dong stated that he would continue to insist and hoped that the industrial sector’s revenue share would increase to 30% and the non-air-conditioning home appliance business would also increase its share.

2) Be cautious about overseas investments and in principle will not merge.

3) 3 billion investment in Wingtech (600745).

SH), 2 billion investment in Sanan Optoelectronics (600703.

(SH) is because it has industrial synergy with Gree and supports national strategy.

In 1H19, Gree’s own air-conditioning chips reached 100 million pieces.

Mixed state-owned enterprise reform: 1) President Dong participates in the mixed state-owned enterprise reform for the purpose of long-term holding and strives to pay off related debts in 5-8 years.

2) Hope that Gao Yong holds it for a long time; it can help Gree broaden its horizons and thinking, bring new ideas; and exert industrial synergy in Gree’s upstream and downstream.

3) There will be a reasonable dividend, but it will not be paid based on the merger.

Successor: I have tried to train successors several times in the past few years. They are qualified for a single business, but they will encounter problems when they are integrated.

Sales and marketing were decentralized for three years and did not meet the expectations of President Dong. Recently, he has personally been responsible for sales.

In the future, we will continue to train successors.

杭州夜网 Comment on diversification is Gree’s development strategy, the direction is in the expansion of home appliance categories and industrial sectors (molds, intelligent equipment, etc.).

Whether there will be a major breakthrough in 2020, we will further observe that the current market is mainly concerned with air conditioning business.

The company mainly invests in semiconductors through equity participation. At present, the investment of Wingtech and Sanan Optoelectronics has risen by 380% and more than 150%.

We are optimistic about the estimated international convergence after the improvement of the governance structure, and we do not have to worry about the price war in the short-term air-conditioning market.

The high-intensity price war since Double Eleven in 2019 will reshape the competitive landscape 合肥夜网 of the air-conditioning industry, and the share of second-tier brands will rapidly decline.

We expect that Gree will have more adjustments in sales channels and marketing methods in 2020, better adapt to the channel channelization, and the trend of increasing online share.

Estimates suggest that we maintain our EPS forecast for 2019/2020/20214.

52/5.

20/6.

03 yuan.

Maintain Outperform industry rating and target price of 78.

00 yuan, corresponding to 17x / 15x / 13x 2019/20 / 21e P / E, an increase of 14%.

The company currently expects 15x / 13x / 11x 2019/20 / 21e P / E.

Risk Market demand fluctuation risk; market competition risk.