The United States to build a car, can tear off the appliance label?

What exactly is blocking the United States of America’s “protection plan”?

To boost investor confidence, the United States has been working really hard lately. The home appliance giant has played the “buyback card”, “additional license” and “ace bomb” one after another for the disenchanted capital market. -The company has entered the new energy automobile industry chain. But so far, the results are very little.

As of May 28, the closing price of the United States Group 82.53 yuan / share, from the peak of 108 yuan per share in February this year fell by more than 23%, the market value of more than 170 billion yuan evaporated.

What exactly is blocking the United States of America’s “protection plan”?

The United States share price was overdrawn in advance?
After arriving at a record high of 108 yuan per share on February 10 this year, the share price of Midea Group began to “fall and fall”.

The United States to build a car, can tear off the appliance label?

In order to revive the share price, the United States Group has launched a series of large buyback program. Among them, on February 23, the United States Group announced the first round of buyback plan this year, intends to use its own funds to buy back not more than 100 million shares and not less than 50 million shares of the company, the repurchase amount is expected to not exceed 14 billion yuan, the repurchase price of not more than 140 yuan / share.

The buyback plan was called “the largest buyback case in the history of A-share” (Note: this record was later broken by GREE), which aroused strong concern in the market, and the share bar of the United States Group was very lively, “significant good”, “stop tomorrow”, “stop”, “stop tomorrow”, “stop”. “tomorrow up”, “on 120 (yuan / share)” such words are endless.

Unfortunately, things did not go as planned. According to the announcement on April 3 this year, the United States Group finally spent only 8.664 billion yuan to complete the round of buyback, far less than the amount of the upper limit of the program. Among them, the highest transaction price of 95.68 yuan / share, the lowest transaction price of 80.29 yuan / share. This “thunder and rain” operation failed to impress the market, after the completion of the buyback, the United States Group shares continue to slide.

May 10 this year, the United States Group and announced the proposed buyback amount of up to 5 billion yuan, the buyback price does not exceed 100 yuan / share of the second round of buyback program. On the same day, the controlling shareholder of Midea Group – Midea Holdings announced that in the next 12 months, it intends to increase the company’s shares by not less than 800 million yuan.

After that, the founder of the United States Group, the United States Holdings acting in concert with He Xiangjian is personally “under the field” to increase the company’s stock. On May 20 this year, He Xiangjian announced to increase the company’s shares in the form of centralized bidding transactions, the amount of shares to be increased by not less than 800 million yuan.

However, the huge amount of buyback and the controlling shareholder’s “stand”, not for the United States Group to sell the market “happy”.

From the perspective of the capital market and the home appliance industry, since last year, the appliance upstream bulk raw material prices continue to rise sharply, is the main reason for the recent share price fluctuations of the United States and other home appliance companies.

Especially after the Spring Festival this year, the price of copper, aluminum and other materials have reached record highs, resulting in a sharp rise in cost pressures on home appliance companies, have issued a notice of product price increases. Take copper as an example, according to CCTV financial reports, from March last year to May this year, domestic copper prices soared from about 35,000 yuan per ton all the way to 75,000 yuan per ton, reaching a high point in nearly 15 years, copper processing enterprises had to reduce production in response.

Since this year, the domestic brokerage industry research report will be the rising prices of raw materials listed as the primary risk factors for home appliance companies.

May 26, the United States Group in the Shenzhen Stock Exchange interactive response to shareholder questions, admitted that “the (price) of raw materials does have a certain impact on product costs. Midea Group said it would take measures to adjust the product structure, hedge the relevant raw materials and improve production efficiency to deal with the matter.

For the United States share price is not sluggish, well-known home appliance industry analyst Liu Buchen has another opinion. He analyzed to Sina Finance, “The United States is a top-performing stock, why under the continuous buyback and increase in holdings, the share price still fell significantly? This is what many people do not understand. My thinking is: in the past two years, the United States Group stock price continuous upward, the impulse is very big, a bit like a car can not brake, rushing past the finish line is still running forward, seriously overdrawn in the next period of upward momentum.

In other words, the United States Group, although growth, corporate mechanism, diversified layout, corporate culture, management team and other elements of comprehensive competitiveness, indeed better than Gree Electric, but not yet excellent to the extent that the market value exceeds Gree 300 billion (Note: Gree’s current market value).”

He believes that in order for the share price of the United States to continue to attack, it is necessary to inject more new momentum into the enterprise, such as achieving a major breakthrough in the layout of new industries, seeing results in the layout of smart homes, making greater progress in the international market, making substantial gains in the layout of the industrial Internet, and achieving significant results in the high-end of the brand, etc.

“However, so far, none of these assumptions have happened yet, and it is not known when they will happen. Therefore, it is not difficult to understand that the market value of the United States Group touched 700 billion yuan immediately after the turn down. I think the reasonable market value of Midea Group should be 500 billion yuan, which is 100-150 billion yuan higher than Gree Electric”, said Liu Buchen.

New energy vehicles is not the way out?
The beauty of the “protection” action is not all without effect.

On May 14 this year, the United States Group shares bottomed out again, falling to a low of 73.6 yuan per share. Two trading days later, the United States Group announced a comprehensive entry into the field of new energy vehicles. The three major product lines of motor drive, thermal management and auxiliary/autonomous driving of Midea Willing Auto Parts were officially put into production, and five auto parts products were officially released: drive motor, electronic water pump, electronic oil pump, electric compressor and EPS motor.

This news finally made the share price of the United States at that time had a small recovery.

Zhang Yanbin, a senior observer of the home appliance industry, told Sina Finance that the United States is a link in the automotive industry chain, and not the main industry transformation of the automotive industry. The three major product lines involved – drive motors, thermal management and auxiliary/autonomous driving – are all related to home appliances. In this regard, he believes that the prospects are promising.

However, 13 years ago, Midea Group had a failed attempt in the automotive field.

In the early years of the home appliance industry’s first round of “car-making wave”, Midea was one of the “gold diggers”. This round of boom began in November 1997, when the air conditioning giant Chunlan Group took over Dongfeng Automobile Company with 720 million yuan. As the competition in the home appliance market heats up and profits dilute, the “car boom” reached its peak in 2003, with the United States, AUX, BOGO, Xiaxin, Xinfei, and Greencoil all entering the auto industry through mergers and acquisitions to seek new industrial growth points.

From 2003 to 2004, Midea first signed the “Yunnan Midea Automobile Project” with Kunming and established Yunnan Midea Automobile Industry Holding Co. to integrate three automobile manufacturers in Kunming, and then acquired Hunan Sanxiang Bus Group Co. From 2005 to 2006, the U.S. bus production bases in Kunming and Changsha were put into operation.

According to the public reports of that year, the United States in the above two projects in the planned investment amounted to 3.5 billion yuan, “strive to enter the forefront of China’s bus industry in 3-5 years”, the automotive project into the company’s new pillar industry.

The United States to build a car, can tear off the appliance label?

Data: 2007 Medi Bus Changsha Industrial Park show “Dragon King” luxury U.S. buses

But in a few years, the ambitious United States has suffered a “Waterloo”. Because of poor operation, the United States bus base at the end of 2008, a complete halt to production. Ltd. was 100% repurchased by Yunnan Aerospace Industry Corporation and renamed as “Yunnan Aerospace Shenzhou Automobile Co.

The gloomy exit of Midea is not a case, including Chunlan, the aforementioned many home appliance companies’ plans to build cars have ended in failure.

Now the United States again “finger” in the automotive industry, the background and the year is somewhat similar – home appliance industry encountered the ceiling, for the capital, home appliance industry imagination space has shrunk sharply, home appliance giants will focus on a new windfall.

“With the rapid rise of new energy vehicles and smart cars, many non-automotive companies also think that the opportunity to come in and get a piece of the pie has arrived,” Liu Buchen told Sina Finance.

Dong Mingzhu may be thinking this way. Her personal investment of 1 billion yuan in Yinlong New Energy Automobile not only did not deliver a satisfactory performance answer sheet, but also fell into a huge loss and debt quagmire, and the former chairman Wei Yinchang absconded from the country for embezzling the company’s interests.

Also on the new energy car leap also Skyworth Group founder Huang Hongsheng. On April 27 this year, Huang Hongsheng controlled the Kaiwoo New Energy Automobile Group (“Kaiwoo Auto”) released the “Skyworth Auto” brand. Huang Hongsheng claimed to invest 30 billion yuan to achieve Skyworth Auto’s goal of entering the top ten in the world and achieving a market value of 300 billion in the capital market.

Although Huang Hongsheng drew a big pie, but Skyworth Group has hastened to clarify that Skyworth only transferred the brand to Kaiwoo Auto, Skyworth Group is not involved in the manufacture of cars. The Skyworth car is evaluated by the industry as “lacking core technology selling point”.

In the current “everything can make a car” background, home appliance companies back to the automotive industry, is the general trend? Or is it another blind diversification?

“In the opinion of the management of the United States, the development of the home appliance industry today, has entered the era of stock competition, the increment is getting smaller and smaller, and there is no incremental space, the enterprise wants to continue to achieve revenue growth, it is necessary to extend to areas other than home appliances. Into the automotive field, it is this background of the decision”, Liu Buchen pointed out.

It is worth noting that, as an important part of the diversified business of the United States Group and the transformation of science and technology, the company has focused on building the robotics industry in recent years, the performance is hardly optimistic.

Since 2017, the United States spent 30 billion yuan to acquire the industrial robot manufacturer Germany KUKA (KUKA), KUKA revenue has been declining year by year, and the share price has nearly halved. The financial report shows that in 2020 the United States Group robotics business revenue 21.589 billion yuan, a sharp decline of 14.3%. At the same time, the huge goodwill formed by the acquisition of Kuka is still hanging over the head of the United States – as of December 31, 2020, the goodwill generated by the acquisition of Kuka is still as high as 22.836 billion yuan.

Trying to tear off the label of home appliances, the United States is facing many tests on the road of technological transformation. In the future, can Kuka and Welling become the fundamentals that will support Midea’s share price in the long run? The answer is still unclear.

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