Gree Electric (000651): The Group intends to transfer 15% equity

Gree Electric (000651): The Group intends to transfer 15% 失败:重查 equity

Event: Gree Group intends to negotiate the transfer of 15% of the total share capital of Gree Electric held by Gree Group through the public solicitation of the transferee.

The transfer price is not lower than the arithmetical change of the average daily income price for the 30 trading days before the reminder announcement date (April 9, 2019).

After the transfer is completed, the company’s controlling shareholder and actual controller may change.

Gree Group will then further study and formulate specific plans for public solicitation of transfers. This public solicitation of transfers still needs the approval of competent institutions such as the state-owned assets regulatory department. There is uncertainty about whether the approval can be obtained and the time of approval.

  The transfer of 15% equity means 深圳桑拿网 that the value will reach at least 41.2 billion.

Following the arithmetic operation that exceeds the average price per day for the first 30 trading days (April 9, 2019), the pricing is 45.

67 yuan / share, 15% of the equity value will reach 412 trillion, we expect a large probability to pass some conditions to ensure that there will not be too many decentralized equity transfer programs, which means that the transferee must haveCapital strength.

  It is expected that this will have a significant impact on the results of the bid.

From previous expectations, the capital side, which is more friendly with the relationship, will definitely be more welcome.

We believe that referring to large enterprises such as Vanke, multiple strategic shareholders do not have absolute control and are run by an excellent management team. This will greatly reduce the problem of agency and improve the company’s capital governance structure.

  In addition, we believe that Gree Electric has its own “poison pill plan” to avoid vicious bidding risks.

  From the balance sheet of Gree Electric, by the third quarter of 2018, Gree had 1042 monetary funds on its books.

With a corresponding debt end of 700 million U.S. dollars, in addition to conventional short-term debt and accounts payable, other current debt subjects have 603.

7.8 billion.

The 2018 Interim Breakdown Explanation item indicates that a large amount of unallocated rebate costs was 591.

9.5 billion is Gree’s potential pool of profit accumulation over the years.

However, we are outstanding. From the perspective of ownership of its accounting subjects, it has been outstanding rebates payable to dealers for a long time.

  Will there be media reports of expected union or dealer MBOs?

Based on the current equal relationship between Gree Electric Appliances, the deep binding of the company and the distributors, and the deep development of the industry together, is a key to the success of Gree’s business model.

There is no doubt that Gree Electric can also support dealers through its affiliated Gree Finance Company, which can also make Gree have a stronger say for dealers.

We believe that as the second largest shareholder, Jinghai Guarantee does have the possibility of further increasing its holdings.

However, from the perspective of the strength of Jinghai Guaranty, since Jinghai Guaranty took a stake in Gree in 2007, it changed its dividend from Gree to 39.

3.7 billion.

From the perspective of capital strength, there is still a lack of funding capacity to take over equity completely.

  Investment advice and ratings.

On the whole, Gree Group will transfer its control of the company and will conduct corporate governance in a more market-oriented direction.

If the follow-up is consistent with the interests of the company’s new actual controller, it will reduce more agency issues.

As of April 8, 2019, the company’s EV / EBITDA is 7.

3 times, referring to 8-10 times of overseas home appliance leaders, there is still room for improvement.

We maintain the company’s profit forecast for 2018-2019, and forecast a profit of 267 for 2018-2020.

2.1 billion, 294.

4.4 billion and 325.

9 trillion, the current sustainable corresponding PE is 18-20 years10.

6 times, 9.

7 times and 8.

7x, maintain “Buy” rating.

  Risk warning: there is uncertainty in the transfer of control; transfer of control may have a change in operations