Gree Electric (000651) Company In-depth Research Report: Development Stage Reflected by Channel Construction Reform

The main point of view starts from zero, and channel pricing power is gradually transferred.

  Gree’s channel construction has gradually gone from relying on the strength of individuals and dealers, to gradually establishing regional sales companies, binding dealers with capital as the link, and strengthening the management and terminal control of dealers.

Gree is committed to balancing the interests and competition between manufacturers in different periods, and has gradually developed into a professional agency model.

  Break through the retail chain monopoly and build your own specialty store channels.

  With the continuous maturity of the country’s retail business, appliance chains such as Gome and Suning have risen.

In 2004, due to the fact that Gome lowered the price of Gree’s products and disrupted Gree’s price system, Gree embarked on the road of building its own specialty store network after the cooperation between the two parties broke down.

  Gree’s current sales channels are mainly Beijing Shengshi Hengxing Gree International Trade Co., Ltd., and the subsidiary long-term Shengshi Xinxing is responsible for the channel control of the Gree brand.

  Gain and Loss of Gree Channel Construction Domestic appliance companies are at the forefront of self-built channels. Compared to the exclusive sales channels of several major US retail giants, the current national chain channels, local chain channels, department stores, supermarkets, and township 佛山桑拿网 retail stores constitute the entire offlinemarket.
Gree relies on the offline dealer system, and continuously refines the reform direction in the balance of interests and constraints between channels, but lacks awareness and compensation for the early stage of e-commerce channels.

The efficient and gradual progress of online channels has also affected the pattern in the air-conditioning industry, which has the highest concentration of industries in the country. The main reason is that channel segmentation brings higher channel efficiency, and the channel model corresponds to different competition strategies.

Gree gradually launched online channels, established e-commerce companies to re-operate on behalf of the company, and is optimistic about future market integration and online channel construction.

  Earnings forecasts and estimates We maintain our original earnings forecasts and expect the company to achieve operating income growth in 2019-2021.

12% / 7.

74% / 9.

97%, net profit attributable to mother increases by 7.
.

73% / 7.

82% / 11.

10%, EPS is 4.

69/5.

06/5.

62 yuan, corresponding to the current sustainable 13/12/11 times.

Combined with the PE level of comparable companies, we give the company 15 times PE in 2020, corresponding to a target price of 75.

9 yuan, maintain the target price unchanged, maintain “Buy” rating.

  Risks indicate downside risks to the macro economy, risks of changes in raw material prices, and risks of changes in the competitive landscape.