\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 51 Gree Electric Appliances Inc.Of Zhuhai(000651) )
Events
Recently, the company released 2021 annual report and 2022 first quarter report. In 2021, the company achieved operating revenue of 187869 billion yuan / + 11.69%, net profit attributable to parent company of 23.064 billion yuan / + 4.01%, net profit deducted from non attributable to parent company of 21.85 billion yuan / + 7.71%, and basic earnings per share of 4.04 yuan / + 8.89%.
In the first quarter of 2022, the company’s operating revenue totaled 35.260 billion yuan / + 6.24%, the net profit attributable to the parent company was 4.003 billion yuan / + 16.28%, the net profit deducted from non attributable to the parent company was 3.775 billion yuan / + 14.40%, and the basic earnings per share was 0.68 yuan / + 17.24%.
Key investment points
Focus on the core air conditioning business, consolidate the leading position, and export driven. The company achieved a revenue of 187869 billion yuan in 2021, with a year-on-year increase of 11.69%, and the revenue scale is close to the pre epidemic level. Among them, the domestic sales revenue is 122305 billion yuan / + 10.78%, and the export sales revenue is 22.535 billion yuan / + 12.56%. The export business has recovered strongly, and the income scale has exceeded the level in 2018. The main reason is that the overall export of the core air conditioning business industry has increased, and the advantage of leading aggregation has emerged – according to the industry online data, the sales volume of domestic air conditioners in China in 2021 increased by 7.9% year-on-year to 152.59 million units, returning to the pre epidemic level, including 67.89 million units / + 11.0% Domestic sales of 84.7 million units / + 5.5%, and the industry is driven by export sales. Relying on its leading advantage, the company achieved revenue of 131713 billion yuan from air conditioning business in 2021, accounting for 70.11% of the total revenue. The scale achieved a double-digit steady growth of 13.96% compared with 2020, and the growth rate was higher than its overall growth rate. The leading position is consolidated. According to the data of HVAC information, Gree central air conditioning is the only brand with a sales scale of more than 20 billion in China’s central air conditioning industry in 2021. According to the data of industry online, Gree air conditioning defended its title in the 27th year with a domestic sales volume of 37.4% in 2021.
Profit pressure, strengthen fee control, diversify and create industrial synergy. The overall gross profit margin of the company in 2021 was 24.28%, a year-on-year decrease of 1.86 percentage points, of which the gross profit margin of air conditioning was 31.23% / -3.54pct, and the raw material cost of home appliance business accounted for 88.27% of the total operating cost. The rise of raw material price had a great impact on it. Last year, the raw material cost of the company increased sharply by 13.64%, reducing the overall profit space. On the one hand, the company strengthened cost control, and the change rate of sales / management / R & D expenses in 2021 was -1.52pct / + 0.03pct / – 0.23pct; On the other hand, accelerate the pace of diversification to broaden the market boundary. In addition to deepening the influence in the subdivided field of household appliances, Gree also focuses on the upstream and downstream of the industrial chain and arranges promising industries such as intelligent equipment and new energy. In 2021, Gree entered the fields of lithium-ion batteries and new energy commercial vehicles through the acquisition of Gree titanium; In the same year, the operating revenue of its wholly-owned subsidiary zero boundary integrated circuit Co., Ltd. increased by more than 50%, and the product shipment exceeded 70 million. It provided chip support in many fields such as smart home appliances and new energy, forming industrial synergy. In 2021, the revenue of industrial products, intelligent equipment and green energy was 3.195 billion yuan / 858 million yuan / 2.907 billion yuan respectively, with a year-on-year high-speed growth of + 38.60% / + 42.77% / + 63.13%.
Strong channel foundation, grasp the sinking market, and the transformation of online marketing has achieved remarkable results. At the lower end of the line, the government work report in March this year again mentioned that home appliances go to the countryside. Gree, as a national brand, has sales outlets all over urban and rural areas at all levels across the country. 27 sales companies and more than 30000 specialty stores constitute channel advantages. According to the statistics of the annual report, the sinking market accounted for 31.5% of the scale of the home appliance market in 2021 with 70% of the population base, reaching 277.5 billion yuan, an increase of 8.9% over 2020, and the growth rate is much higher than 5.7% of the overall market; Its penetration rate is far lower than that in cities. The urban ownership of the company’s core category of air conditioners is 150 units / 100 households, while only 74 units / 100 households in rural areas. At the top of the line, the annual report points out that in 2021, China’s online channel retail sales accounted for 52.9% of the overall household appliance market, more than half for two consecutive years; Under the company’s e-commerce operation and comprehensive transformation and drainage for online stores, as well as the strategy of live delivery and cash explosion, the sales of new household appliances dominated by fans and air energy water heaters increased in 2021. According to ovicloud, the share of online retail sales of Gree Electric heaters, electric fans, dehumidifiers, air energy water heaters and other products was in the top 2 last year, and the online marketing effect was obvious.
Investment suggestion: Gree Electric Appliances Inc.Of Zhuhai(000651) as one of the leaders of China’s household appliances, it has maintained steady growth under the complex and changeable international economic situation. On the basis of diversified products in the same industry, it is also committed to cutting into the upstream and downstream related industries such as high-end manufacturing and new energy. We predict that the company’s earnings per share from 2022 to 2024 will be 4.71 yuan, 5.38 yuan and 5.99 yuan respectively, and PE will be 6.6 times, 5.8 times and 5.2 times in the next three years, maintaining the Buy-A proposal.
Risk tip: the promotion of diversification is not ideal; The epidemic situation is repeated or continues to exceed expectations; The price of raw materials continues to rise; Overseas consumption is weak in the international situation.
