Gree Electric Appliance cancels 70% of the shares repurchased in the third phase more than expected. Analyst: it is doubtful whether it can boost market confidence.

On the evening of September 28th, 000651.SZ announced that it planned to write off 70 per cent of the shares it had bought in the third phase of the repurchase. A number of analysts told the Financial Associated Press that the higher-than-expected cancellation of shares will help boost market confidence and is good news. But at the same time, some analysts warned against over-optimism.

According to public information, Gree Electric Appliance buybacks a total of 525387618 shares in the third phase of the repurchase plan, with a total transaction amount of about 27 billion yuan (excluding transaction fees), of which the third repurchase amount is about 15 billion yuan.

Gree Electric Appliance only made it clear that the first phase of the repurchased shares will be used in the first phase of the employee stock ownership plan, the second phase of the repurchased shares will be cancelled to reduce the registered capital (after adjustment), and the third phase of the repurchased shares will be used to implement the company's employee stock ownership plan or equity incentive.

In the latest announcement, Gree disclosed that it intends to write off 70 per cent of the buyback shares in the third phase, or 221032019 shares, to reduce registered capital, while the rest of the repurchased shares will still be used to implement employee stock ownership plans.

Gree said that the company does not have a specific plan to use the third phase of repurchase shares for employee stock ownership plans or equity incentives in the short term, so it chose to write off some of the repurchase shares.

Gree Electric Appliance this part of the cancellation of buyback shares is not in the market expectations. A number of analysts told the Financial Associated Press that the cancellation of the shares will help boost market confidence, which is good news.

Liang Zhenpeng, a senior industrial economic observer, told reporters: "the partial cancellation of repurchased shares is good news for the share price growth of listed companies, which is also a very important purpose of Gree." For the incentive part, it is good for bundling employees, and it is good for the long-term operation of listed companies and the stability of backbone teams. "

Another unnamed analyst pointed out that Gree buybacks first have a real need for equity incentives, and then write-off now will help to thicken earnings per share and boost market confidence in Gree's share price.

However, it is worth noting that Liu Buchen, a senior analyst in the home appliance industry, cautioned that it is not easy to be overly optimistic about the good. Gree Electric Appliance has been released for many times before, but on the whole, the share price of Gree still fell more than rose.

Liu Buchen further pointed out: "share buyback and cancellation does not change the fundamentals of Gree." Now, Gree's fundamentals are that the air-conditioning market has been saturated, and Gree's air-conditioning has been surpassed by its main competitors. In addition, Gree has not made a substantial breakthrough in its diversification, which are the basic factors that affect Gree's share price. Buyback and partial write-off is certainly better than buyback without cancellation, but will it completely reverse the downward trend of Gree's share price? I think it's very difficult. "

The reporter observed on the Internet that although most investors think that the write-off of the market capitalization of 10 billion yuan is positive, but there are also many investors who tease: "good beauty Haier" and "tomorrow's pullback."

Indeed, although the company opened three buybacks, Gree Electric Appliances declined more than ever in 2021, leading to a lack of market confidence. A few days ago, a number of small and medium-sized investors posted posts that exposed their positions, and the news that Zhuhai Mingjun, the largest shareholder, had pledged to Agricultural Bank of China recently also heightened concerns. The extent to which the cancellation of the buyback shares will boost confidence remains to be seen.