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譚思聰先生 (Gary Tam)
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格力電器 (000651.SZ)

Wednesday, March 27, 2019 Views396

GREE

格力電器 (000651.SZ)

 

Business Summary:

 

Gree Electric Appliances is an international air conditioning enterprise which has integrated R & D, manufacturing, marketing and service. She has developed three brands, namely GREE, TOSOT and KINGHOME; with product range including residential air conditioners, central air conditioners, air source water heaters, smart phones, home appliances, refrigerators, and etc.

Gree was founded in 1991, with its headquarters in Zhuhai of currently over 80,000 employees. She has established 11 production bases globally. 9 are located in China, with another 2 in Brazil and Pakistan. Since 2005, Gree has topped No. 1 in production and sales volume of residential air conditioners for 13 consecutive years. In 2006, she was awarded “World Brand”. In 2018, GREE ranked No. 294 on the list of orbes Global 2000 Public Companies.  

 

Founded at 1989, GREE Group is listed on Shenzhen Stock Exchange since 18 Nov,1996. (listing price as of RMB $2.5). She has been listed on the China Fortune 500 since 2010, which ranked 56 on 2018.

 

 

Financial Summary and Prospect:

 

2017 final results (closing date: 31 Dec 2017) were detailed as follows:

(a) the net profit attributed to parent company rose 44.8% yearly from RMB $15.46B to a record high of RMB $22.4B. Weighted earnings per share (deducted) equalled RMB $3.52 cents versus RMB $2.59 cents previously; increased by 35.9%.

(b) During the period, the operating income rose 36.2% yearly to a record high of RMB $150.0B from RMB $110.1B. Operating cost increased 36.3% to RMB $124.7 B. Operating profit increased 49.3% to RMB $26.1 B

(c) Gross profit margin remained at around 33%; which had kept at this level for the past three financial year. Whole-year dividend of RMB $18 per 10 share was declared; an increase by 20%. 3-Year Arithmetic average return on equity (ROE) and ROA stood at 29.7% and 13.8%.  Shareholder equity and total labilities stood at RMB $65.6B and RMB $148B respectively.

 

Risk:

 

(a) Keep competition with other local brands such as Midea Group (000333.SZ), Suning Commerce (002024.SZ), Wuxi Little Swan Co. Ltd. B (200418.SZ) and GOME Electrical Appliances (0493.HK), Haier Electric (1169.HK), Hisense keoon Electrical (000921.SZ) and other international brands.

(b) Trade war dispute between China and US.

(c) Facing higher than expected labour and operating costs.

(d) Distributors often undercut manufacturers by offering discounts or financing for purchases, which will decrease the profit margin of manufacturers.

 

Technical Analysis:

 

The current stock price stood at RMB$44.8 (as of 26 Mar 2019), which has risen than 27% from 52-week low of $35.35 on December, 2018. It is suggested to accumulate buy when the stock price is below $44.5. The target price for medium term is $50. Cut-loss price will be $40.0.

References

www.aastocks.com.hk ; www.etnet.com.hk; www.afe-solutions.com

 

I, Gary Tam, am a licensed person under the Securities and Futures Commission. Until the date this commentary was published, neither I and/or my affiliates are the beneficiary of the securities mentioned herein or are entitled to any financial interests in relation thereto.

 

 

 

This report is produced and is being distributed in Hong Kong by Phillip Securities Group with the Securities and Futures Commission (“SFC”) licence under Phillip Securities (HK) LTD and/ or Phillip Commodities (HK) LTD (“Phillip”). Information contained herein is based on sources that Phillip believed to be accurate. Phillip does not bear responsibility for any loss occasioned by reliance placed upon the contents hereof. The information is for informative purposes only and is not intended to or create/induce the creation of any binding legal relations. The information provided do not constitute investment advice, solicitation, purchase or sell any investment product(s). Investments are subject to investment risks including possible loss of the principal amount invested. You should refer to your Financial Advisor for investment advice based on your investment experience, financial situation, any of your particular needs and risk preference. For details of different product's risks, please visit the Risk Disclosures Statement on http://www.phillip.com.hk. Phillip (or employees) may have positions/ interests in relevant investment products. Phillip (or one of its affiliates) may from time to time provide services for, or solicit services or other business from, any company mentioned in this report. The above information is owned by Phillip and protected by copyright and intellectual property Laws. It may not be reproduced, distributed or published for any purpose without prior written consent from Phillip.
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