Gree Continue High Speed Increase
After the share encouragement in management class in 2006 and distributors hold shares and big shareholders reduce state-owned shares in 2007, the management of Gree is improving gradually. Under the bright prospect of the industry, Gree will keep its performance increase persistently.
Driven by increase in resident income, upgrade of urban consumption and the real demand in real estate industry, the domestic demand on air conditioners will keep a rapid growth. The boom in air conditioner industry will last at least 3 years. As the leader in domestic air conditioner industry, Gree will share this growth maximally.
The comprehensive advantage in air conditioner and the benefit binding effect of distributors holding shares enable Gree’s air conditioner business to bring into play extraordinarily. The share of total sale of Gree in the first 11 months of 2007 has increased by 3 percentage points and share of internal sale has increased 5 percentage points.
The analyzers have pointed out that Gree’s following performance increase room will reflect on product structure improvement and profit margin increase. From 2007, Gree has started to release a great number of new products and achieved well sale and increase in quantity and price after a period of market cultivation. The end consumers can also experience the change of Gree’s product strategy: releasing high-end image products, such as top grade standing air-conditioner “Supreme King”; releasing detailed function division products, such as “bedroom air conditioner- sleeping guarantee”, pushing the price of air conditioner from RMB 1,000-2,000 in the past to 3,000-4,000 or even more than 10,000; simultaneously, inputting more into advertisement and improving brand positioning, such as the various brand and product advertisements in prime time in CCTV. According to this, it is estimated that the gross profit of Gree in the future will have obvious improvement and the net profit margin will hence pick up reasonably.
According to the data from CIQ for the first 11 months of 2007, the increase speed of air conditioner export of Gree has still exceeded the average level in the industry and the speed of main competitors. That is, air conditioner export has still centralized in Gree.
Continuous capacity expansion and industrial chain completion is an edge tool for Gree to base itself upon fiercely competitive market.
Gree plans to issue less than 50 million shares of stocks publicly, collecting RMB 1.15 billion yuan to invest production line with capacity of 3 million air conditioners and 3.6 million AC compressor project in Hefei Anhui. When they were built, the annual capacity of Gree would reach 20 million and the self supplier rate of compressor would reach nearly 50%.
The Hefei production base plans to establish business air conditioner project with RMB 3 billion yuan annual production value and compressor project with 5 million annual capacity in stage 3. These projects are planned to be completed and start to produce in 2009. At the same time of expanding capacity, it will also promote the reduction on cost.
President Zhu Jianghong of Gree expressed when receiving interview: “After the completion of these invested projects, the capacity of Gree will be further enlarged, the arrangement for production base will be more reasonable and the control on compressor (core part in air conditioner) will be more strengthened.
Researcher Zhu Lijun of Galaxy Securities thought that the newly-issuing stock and investment project of Gree was helpful to strengthen the production supporting capability, intensify industrial chain and improve economic added value and gross profit of the products; furthermore, increasing stock issuance was also helpful to relieve fund pressure. Gree has hold Zhuhai Gree Group Finance Corporation since last year, which contributes to the application of large sum of cash and helps Cree to explore market and increase competitiveness in fund raising and consumption credit.
