Is it the biggest buyback in the history of A-share? Gree announced to buy another 6 billion.

SMM News: following the first multi-billion repurchase plan half a year ago, Gree Electric Appliances once again plans to buy back its own shares on a large scale of 6 billion. However, in the capital market, Gree, at the helm of Dong Mingzhu, has been repeatedly questioned by investors this year because of the poor performance of share prices. Can Gree Electric Appliance "save itself" successfully this time? Can this buyback restore investors' confidence?

Then throw away the 6 billion buyback plan.

On the evening of October 13th, Gree Electric Appliance (000651) issued a notice saying that Zhuhai Mingjun, the company's single largest shareholder, proposed to buy back the company's shares, and the company planned to buy back some of the public shares with its own funds, with a total repurchase fund of not less than 3 billion yuan and no more than 6 billion yuan, and the repurchase price did not exceed 70 yuan per share.

With regard to the reason and purpose of the proposed share buyback, Zhuhai Mingjun said that based on the confidence in the development prospects of Gree Electric Appliances and the high recognition of the value of Gree Electric Appliances, it is suggested that listed companies should buy back shares for employee stock ownership plans or equity incentives, in order to further enhance the company's competitiveness and promote the company's long-term, healthy and stable development.

This is not the first time Gree has implemented a share buyback plan. In April, Gree Electric Appliances launched its share buyback program for the first time. At that time, Gree Electric Appliances announced that it planned to use its own funds to buy back the company's shares in a centralized bidding transaction, with a total capital of no less than 3 billion yuan and no more than 6 billion yuan.

At present, Midea ranks first with a total repurchase amount of 10.322 billion yuan, and Gree, which has been added continuously, is expected to become the new buyback king of A shares. October 9, Gree Electric Appliance released the progress of share repurchase, so far, Gree's first repurchase plan has accumulated a total repurchase amount of 5.182 billion yuan.

The share price is far away from the opponent.

Despite the buyback escort, Gree's share price did not perform satisfactorily. Gree shares have fallen 18 per cent since their January peak in an environment where Shanghai and Shenzhen 300 are up 18.13 per cent.

Throughout the old rival Midea, even chairman Fang Hongbo significantly reduced his holdings of 20 million shares and cashed out 1.3 billion yuan, rising 2.58% on October 13, with the share price hitting an all-time high. It has risen more than 50% since the beginning of the year.

It is still favored by public and private fundraisers.

In fact, despite being greatly affected by the epidemic, Gree Electric Appliances' performance in the second quarter has improved significantly. According to the semi-annual report of Gree Electric Appliances, the company's revenue in the first half of the second quarter of 2020 was 69.502 billion yuan, down 28.57% from the same period last year; the net profit of the company was 5.997 billion yuan, down 55.23% from the same period last year. The company's business increased significantly in the second quarter, and its revenue increased by 137.67% to 49.693 billion yuan. The net profit increased by 208.35% to 4.804 billion yuan.

Looking at its top ten circulating shareholders, northward Capital, China Securities Deposit, Central Huijin, and private equity funds are still among them.

It is worth mentioning that Gree's domestic market share returned to the first place in August, surpassing the United States for the first time since the Spring Festival. Gree's domestic shipments mainly depended on Dong Mingzhu's live broadcast in Luoyang in August, which completed 10.1 billion yuan in sales on the same day, and the live broadcast contributed more than 80% of the enterprise shipments in that month.

Wang Xingyuan of Societe Generale Securities said that Gree fundamentals are picking up, and it is speculated that more than 80% of Gree's domestic shipments in August come from 8gamma to live broadcast in Luoyang. Such a high proportion shows that split machine sales have shifted smoothly from the off-season rebate model to the new retail model, which in essence is benefit induction to achieve dealers to pick up and stock in advance, but bypasses the sales company level and achieves the purpose of channel reform. Gree dealer inventory is not high at present, the sales company channel 2.5-3 months, the next period of time is the sales company to reduce prices to the terminal, the second half of the financial report more attention to live sales.

Deng Xin of Zhongtai Securities pointed out that the company's struggle comes from the impact of the epidemic in the industry and the short-term impact of its own inventory and channel reform. But in the long run, the quality attribute of the air-conditioning industry and the core barriers of the company's manufacturing side have not been damaged. The first half of 2020 is already the bottom at the industry level and the company's operating level, and the follow-up reversal is expected. In addition, the recovery of the company's current fundamentals and the growth that lags behind its current beautiful competitors have strengthened its current configuration value.

On October 14, Hurun released the "Top 10 Household Appliance Enterprises in 2020 Hurun China": Midea has become the most valuable household appliance company in China and the world with a value of 510 billion, while Gree Electric Appliances ranks second with a value of 321 billion.

With a market capitalization difference of nearly 200 billion, it remains to be seen whether Gree can catch up.