\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 51 Gree Electric Appliances Inc.Of Zhuhai(000651) )
Event: 1) Gree Electric Appliances Inc.Of Zhuhai(000651) announced the second phase of the employee stock ownership plan. The stock size does not exceed 94.728 million shares, accounting for 1.6% of the total share capital. The total number of holders does not exceed 12000, and the purchase price is 16.36 yuan / share. 2) If the total cash dividend of the company is not less than RMB 1 billion in the first year of 2020 or the net profit per share of the company is not less than RMB 1 billion in the first year of 2020; The net profit in 2022 will increase by no less than 2 billion yuan compared with that in 2020. The return on net assets in 2022 will not be less than 22%, the cash dividend per share will not be less than 2 yuan, or the total cash dividend will not be less than 50% of the net profit of the current year. If the company’s performance in the first assessment period is not up to standard and the performance in the second assessment period is up to standard, and the sum of the net profit growth in 2021 and 2022 compared with that in 2020 is not less than 3 billion yuan, the attributable stock rights and interests in the two periods can be distributed. We believe that the company’s shareholding plan covers a wide range. In combination with changes in the external environment, timely adjustment of assessment objectives will effectively bind the interests of core employees and listed companies, stimulate employees’ enthusiasm and creativity, and is expected to improve the company’s performance.
The shareholding plan covers a wide range: the total number of participants in Gree’s phase II employee stock ownership plan does not exceed 12000, covering 14.7% of the company’s employees. The directors, supervisors and senior management of the company plan to subscribe 2.4 million shares, accounting for 2.5% of the plan; Other middle-level cadres and core employees of the company plan to subscribe for 92.328 million shares, accounting for 97.5% of the plan. In addition, the shareholding plan shall be subscribed by other participants first. If there is any surplus, the chairman of the company shall subscribe according to law in combination with his own situation. The number of participants in the first phase of the company’s employee stock ownership plan is about 4000. The timely launch of the second phase of the stock ownership plan is expected to bind the interests of a wider range of employees with the company’s performance and realize the sustainable development of the company.
The assessment indicators are appropriate and the dividend requirements are clear: the performance assessment indicators of the second phase of the employee stock ownership plan are that the net profit attributable to the parent company before deducting the share payment expenses involved in the employee stock ownership plan in 2022 and 2023 will increase by no less than 2 and 3 billion yuan respectively compared with 2020, and the cash bonus per share in that year will not be less than 2 yuan or the cash dividend rate will not be less than 50%. In addition, if the performance in the first assessment period is not up to standard, all the attributable shares in the first assessment period will be deferred to the next assessment period for combined assessment. If the performance in the second assessment period is up to standard, and the sum of the net profit growth in 2022 and 2023 compared with that in 2020 is not less than 5 billion yuan, the equity of the two periods can still be attributed and distributed. The draft estimates that the cost of the shareholding plan is about 1.55 billion yuan, and the amortization from 2022 to 2024 is 580 million yuan, 780 million yuan and 190 million yuan respectively. Since 2020q3, the price of bulk raw materials has continued to rise. At the beginning of 2022, the geopolitical tension continued to push up the price of bulk commodities, and the superimposed epidemic repeatedly affected consumer demand and logistics distribution. We believe that considering the changes of the external environment and the risks faced by production and operation, the company has reasonably set the assessment indicators of the second phase of the shareholding plan, and timely adjusted the assessment indicators of the first phase of the shareholding plan. At the same time, the company’s first phase of the shareholding plan has added higher roe assessment indicators, which is expected to establish a benefit sharing and risk sharing mechanism for the management, core employees and listed companies. It is worth noting that the assessment indicators also set clear dividend requirements, and the company can expect stable dividends in the future.
Continue to promote the new retail reform and improve the business performance: 2022q1 Gree revenue yoy + 6.0%, performance yoy + 16.3%. The company continued to build a new Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integrated retail system, improve the production, warehousing and logistics system, strengthen e-commerce operation, and the sales performance continued to improve. According to the industry online data, the domestic and export shipments of Gree air conditioner in April were yoy + 1.5%, – 3.3%. We believe that Gree’s channel reform results continue to be realized, the channel inventory is low, the demand for replenishing inventory is large, and the margin of real estate policy has warmed up, and the company’s income scale is expected to increase steadily.
Investment suggestion: Gree employee stock ownership plan is expected to establish a long-term incentive mechanism to improve the governance structure and operating efficiency. The company continues to build a new retail system and build a stable online and offline business layout, which is expected to benefit from the low channel price increase rate and high retail capacity of the new retail model. We are optimistic about favorable changes in corporate governance and business strategy. It is estimated that the company’s EPS from 2022 to 2024 will be 4.10/4.51/5.04 yuan; Maintain the investment rating of Buy-A, and the six-month target price is 40.95 yuan, which is equivalent to 10 times the dynamic P / E ratio in 2022.
Risk tip: the price of raw materials rises sharply, the real estate boom drops sharply, and the risk of deterioration of the foreign trade environment.
