The reason why Gree is said to be very good is not just for nothing. Its cash flow is really strong. The current total cash is 155.4 billion yuan, and its market value is only 180 billion yuan. It's simply "inhumane".
1 Comparison of air conditioner income between Gree and Midea
As the world-renowned No. 1 brand in the air conditioner industry, Gree’s profits and market share have remained at the top all year round. In 2021, its operating income reached 131.7 billion yuan, accounting for 70.11% of the total revenue, its main operating profit reached 41.14 billion yuan, accounting for 90.18% of the total profit, and its gross profit margin was 31.23%.
Another leading air-conditioning company corresponding to Gree is Midea. Let’s take a look at its air-conditioning revenue in 2021. Midea's operating income in 2021 will reach 141.9 billion yuan, almost equal to Gree, accounting for 41.58% of total revenue. Its main operating profit will reach 29.87 billion yuan, which is nearly 10 billion yuan behind Gree, accounting for 38.94% of total profits. Its gross profit margin is 21.05%, which is also significantly lower than Gree.
From this point of view, Gree has been working hard in the air-conditioning industry for many years, and the moat it has established still exists. It will take some time for Midea to completely surpass Gree in the air-conditioning industry in the short term.
2, Gree and Midea's cash flow comparison
In today's global economy is facing a recession, having strong cash flow is undoubtedly a magic weapon for business success, and in this aspect, Gree can be said to be unmatched, because it is really too powerful.
As of the third quarter of 2022, Gree has total funds on its books as high as 155.4 billion yuan, total assets of 354.8 billion yuan, total liabilities of 253.7 billion yuan, and a debt ratio of 71.5%. Short-term borrowings were 56.959 billion yuan and long-term borrowings were 25.664 billion yuan.
Midea has also performed quite well. As of the third quarter of 2022, Midea has total funds on its books as high as 66.6 billion yuan, total assets of 417.5 billion yuan, total liabilities of 268.6 billion yuan, and a debt ratio of 64.3%. Short-term borrowings were 8.759 billion yuan and long-term borrowings were 55.484 billion yuan.
From a cash flow perspective, Gree's total cash amount is much larger than Midea's, but its debt ratio is slightly higher, and its total long-term and short-term borrowings are also higher than Midea's.
3, Gree is very proficient in the integration of upstream and downstream resources
Gree can be said to be very proficient in the integration of upstream and downstream resources. Why do you say this? For a manufacturing industry like Gree, how to open up the upstream and downstream industrial chain of , it is very crucial to firmly grasp the initiative of funds. After all, Gree's strength is there, and it is not really a lot of money to keep in the bank for a day. It would be really amazing to be able to master this skill. Gree has done a really good job in this regard.
As of the third quarter of 2022, Gree notes payable and accounts payable are as high as 73.962 billion yuan, and the same is true for Midea, with notes payable and accounts payable as high as 89.908 billion yuan. In fact, this is also a symbol of the company's strength. Only when the upstream and downstream industry chains trust you can you have credibility and be qualified to do this.
4. Gree’s valuation is becoming more and more like large-cap blue chip stocks
In the stock market, Gree can be said to have made great contributions to investors. Why do you say this? Since 199 It was listed at an issue price of 2.5 yuan in 6 years. So far, the stock price has risen 1,566 times. This increase puts even Kweichow Moutai to shame (Kweichow Moutai has increased 312 times since its listing in 2001).
In addition to bringing high returns to investors, another typical feature of Gree is its low valuation and high dividends, which is also one of the important features of large-cap blue-chip stocks.
Gree will pay 30 yuan per ten in 2021, with a dividend rate as high as 9.17%, which is 4.34 times higher than Yu'e Bao . Since its listing, Gree has distributed a total of 106.5 billion yuan in cash, and the cash dividend financing ratio is as high as 2020.46%. In addition to high dividends,
also has a relatively low valuation. Gree currently has a total market value of 180 billion yuan, a dynamic price-to-earnings ratio of 7.42 times, and a price-to-book ratio of 1.89 times. The valuation is relatively not very high.
5, Summary
Generally speaking, Gree is really "very rich", and Dong Mingzhu is very generous to shareholders. This is one of the important reasons why Gree is favored by all parties in the capital market .
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