Gree Electric (000651) 2018 Annual Report Review

Gree Electric (000651) 2018 Annual Report Review

Investment Highlights Gree Electric announced its 2018 financial report with revenue of 200 billion yuan and an increase of 33 in the future.

33%, net profit attributable to mothers was 26.2 billion yuan, a year-on-year increase of 16.

97%, net profit after deducting non-attribution to mothers increased by 20 per year.

83%, with an average return on equity of 33.

36%, performance in line with market expectations.

Dividends were 48 per second in 2018.

2%, including 6 yuan for every 10 shares in 2018 semi-annual and 15 yuan for every 10 shares at the end of 2018.

In terms of discrete businesses, the reported growth rate is that air-conditioning revenue accounts for 79%, a year-on-year increase of 26%, consumer electronics revenues account for 2%, a year-over-year increase of 65%, and other business revenues account for 14%, an increase of 71%.

Specifically, the concentration of the air-conditioning industry further increased in 2018, with CR3 increasing from 72.

1% increased to 73.

At 6%, Gree’s sales growth rate significantly exceeded the industry growth rate (+ 6%, Industry Online).

During the period, the internal sales volume of Jinghong refrigerators increased by 50% each year, ranking first in the industry, ninth in total sales, and the industry growth rate fell by 4% (Industry Online).

Gree expanded its offline channels, and its outlets increased 12 times.

5% has reached 40,000; Gree has continued to invest in research and development, with an annual increase of 26%, and ranked sixth in invention patents nationwide.

Gree’s profitability remained stable, and the gross profit margin of air-conditioning business during the reporting period.

48% /-0.

59pp.

,lead the industry.

On the whole, the number of reports, the company’s overall gross profit margin is 30.

23% /-2.

63pp.

The selling expense ratio is 9.

45% /-1.

66pp.

, Management expense ratio 5.

68% / + 1.

63pp.

The financial expense ratio is -0.

47% /-0.

76pp.

, Net interest rate 13.

31% /-1.

87pp.

.
The growth rate of gross profit margin is 杭州夜生活网 mainly derived from the growth of gross profit margin of businesses other than air conditioning, which is expected to be related to declining demand and price reduction promotions.

Profit forecast and investment advice: Gree is the leader of China’s air-conditioning industry, with strong profitability, and the leading effect is obvious.

The core air conditioner of the company’s report maintained rapid growth, and the profitability of the gross margin response was stable, which supported the company’s stable growth. The channel inventory that the market is worried about deserves further attention.

The data from the first three months of 2019 show that the growth rate of air-conditioning terminal sales has resumed. During the period of online data from the industry, Gree air-conditioner domestic sales and export volume have 北京夜网 alternately increased at around 5%. Overall, the company has remained stable at a high base in the same period last year.Gree has made rapid progress in mixed equity reforms, and in the short term, it can increase the company’s valuation.

We have adjusted our profit forecast and expect EPS to be 4 in 2019-2021.

43 yuan, 5.

85 yuan and 7.

09 yuan, the closing price on April 26 corresponding to PE were 12.

7 times, 9.

6 times and 7.

9 times.

Risk reminder: high channel inventory continues to be subject to inventory pressure constraints, air conditioning price wars, insufficient demand in the El Ni?o climate in summer,