Recently, there have been many hot spots in Gree Electric Appliances, and Miss Dong has frequently been out of the circle. It's Wang Ziru again, it's Meng Yutong again, and there is the violent theory that employees have to pay training fees for job hopping.
Xingkong Jun is indifferent to these hyped remarks, and is more concerned about the agreement made five years ago: in 2018, Miss Dong said that Gree's revenue will be 600 billion in five years.
Now, five years have passed, is Gree 600 billion?
On December 21, 2023, Gree Electric Appliances released a performance forecast, and the annual revenue in 2023 is expected to be 205 billion yuan and 210 billion yuan, a slight increase of 190.1 billion yuan from the previous yearThe net profit attributable to the parent company was 27 billion yuan to 29.3 billion yuan, an increase of 102%-19.6%。
And the company's revenue scale in 2018 "just happened" to just exceed 200 billion.
The past five years have stood still.
When Gree shouted out 600 billion in revenue, Xingkong Jun also analyzed it carefully. The only way for a company to scale is through mergers and acquisitions.
At that time, the equity of Gree Electric was still in the hands of Gree Group, and Gree Group also tried to wrestle with Miss Dong through administrative appointments, but the person they chose could not succeed. Later, the equity of Gree Electric changed, and the major shareholder became Hillhouse Capital, and Miss Dong could make a bold move.
However, Ms. Dong was unlucky, the epidemic came, and Gree's core business was severely impacted, and the cash flow was not enough to support large-scale mergers and acquisitions.
Ambition hidden in the financial report.
If you want to know Gree's grand plan of 600 billion, you must look at the business sector classification in Gree's annual report.
There is Dong Mingzhu's ambition hidden here, although it has not been realized, but it has indeed worked hard.
Before the official release of the 2023 annual report, take the 2022 annual report as an example.
Data**: Straight Flush ifind, Cartography: Poetry and the Stars.
First, the most noteworthy is intelligent equipment, Gree's intelligent equipment once sold more than 3.1 billion (2018), mainly sold to Yinlong - Dong Mingzhu pushed Gree to acquire Yinlong New Energy, but failed to pass at the general meeting of shareholders, and then Yinlong's development was not smooth, and Gree's intelligent equipment sales gradually shrank.
It is difficult to assume in history, and it is difficult to say what kind of situation Gree really acquired Yinlong. However, Gree's development in recent years is sluggish, and a big reason is the lack of new business growth points.
In contrast, peer giants Midea and Haier have acquired overseas companies, one to develop industrial robots, and the other to include brand-name home appliances from the United States and Japan.
However, Gree did not invest more money in capital operation to mergers and acquisitions, which also led to a growing gap between the company and the original giants.
Second, household appliances (small household appliances) are a pain in Miss Dong's heart.
She has repeatedly personally brought Gree's small household appliances, and the sub-brand of Gree's small household appliances is called Dasong. From the point of view of word of mouth, it is not inferior to similar products of Haier and Midea. But strangely, it is very difficult for Damatsu to open the market.
Xingkong Jun believes that there are two main reasons: one is that Dasong focuses on high-end small household appliances, and the small household appliance market is flooded with a large number of low-end products (including Midea Haier's low-end products), and the other is that Gree's reputation in the field of air conditioning is too loud, and the verticality of the brand has a negative impact on attempts in other fields.
A little secret in cash flow.
The air conditioning industry has a very special business model: sales through dealers.
When the company hands over the goods to the dealer, even if the sale is realized, it is included in the sales revenue. The dealers of many home appliance companies are very powerful, and they can even affect the company's operation.
The way to identify whether a dealer is greasy is through the company's cash flow statement.
Data**: Straight Flush ifind, Cartography: Poetry and the Stars.
Annual anomalous cash-to-cash ratio
According to Flush iFind, Gree Electric's cash-to-cash ratio in 2018 seriously deviated from the normal value.
Generally speaking, the cash-to-cash ratio is greater than 1, indicating that the company's current sales have all been realized, and part of the previous accounts receivable have been recovered.
However, Gree Electric's cash-to-cash ratio in 2018 is much greater than 1, which indicates that the sales revenue of that year is likely to be an "inflated" increase caused by dealers' hoarding. Since this pattern of credit sales was not sustainable, the cash-to-cash ratio gradually returned to normal in the following years.
Poor annual cash flow
Due to the abnormal cash-to-cash ratio of Gree Electric Appliances in 2018, it shows that the sales revenue of that year largely relied on the stockpiling of dealers, rather than real sales.
This makes the company's cash flow situation poor, accounts receivable are on the books, and there is a risk of bad debts. From 2019 to 2022, the cash flow situation gradually improved.
-The cash-to-cash ratio gradually stabilized in 2022
Between 2019 and 2022, Gree Electric's cash-to-cash ratio gradually stabilized.
This shows that the quality of the company's revenue has been improved during this period, and the phenomenon of dealers' hoarding has been effectively controlled. In particular, in 2022, the company's cash-to-cash ratio is close to 1, indicating that the sales revenue of the year is basically the same as the cash received, and the revenue quality is high.
From 2019 to 2022, Gree Electric's cash-to-cash ratio has gradually stabilized, indicating that the company's revenue quality has improved and its cash flow situation has gradually improved. Especially in 2022, the company's revenue is full of gold, indicating that the company's business model has gradually moved away from the dependence on dealers to stock up and achieve real sales.
Hedging and forward foreign exchange contracts.
In the income statement of the company's third quarterly report, the fair value change profit and loss was 11.9 billion, and for the whole of 2022, it is -34.4 billion.
This project is not a big number, but it is significant.
In most years, the Gree project is positive. There are two aspects, one is hedging, and the other is forward foreign exchange contracts.
As one of the largest air conditioning manufacturers in the country and even in the world, Gree's demand for copper is massive, but the change of copper will have an uncertain impact on the company's costs.
This gives rise to hedging business.
The so-called hedging is to lock in advance in the form of purchase. It should be noted that hedging is not for speculative profits, but to stabilize procurement costs and avoid sharp fluctuations in the cost price of raw materials, so it is normal for hedging to have profits and losses.
At the same time, Gree's overseas business has been close to a quarter, and the use of foreign exchange is huge, similar to hedging, forward foreign exchange contracts are also an important means to stabilize foreign exchange costs. In the period of relatively large foreign exchange fluctuations, profits and losses are also normal.
However, hedging and forward FX contracts are very challenging for the company's corresponding investment team. Once you are a little careless, it is a huge loss.
In 2019, Sinopec announced that its subsidiary, United Petrochemical, lost 4.6 billion yuan in hedging business due to misjudging the trend.