It is planned to temporarily use the total number of 5.833 billion shares with profit distribution rights as of April 28, 2021 (the total share capital of 6.016 billion shares minus the number of 183 million shares held in the company's repurchase account) as the base number. All shareholders will be distributed a cash dividend of 30 yuan (tax included) for every 10 shares, with a total cash distribution of 17.499 billion yuan, accounting for 79% of the net profit in 2020. Generally speaking, when the profits of listed companies in the previous year are not satisfactory, they often choose to reduce the dividend rate to retain more cash and prepare for the next year's operations, but Gree does the opposite.
Before May Day, the 2020 annual report of Gree Electric Appliances (000651, Stock Bar) has arrived: in 2020, the company achieved revenue of 170.497 billion yuan, a year-on-year decrease of 14.97%; it achieved net profit attributable to the parent company of 22.175 billion yuan, a year-on-year decrease of 22.175 billion yuan. down 10.21%. Against the background of Midea's 2020 performance growth against the trend, Gree handed over a report card with both revenue and net profit falling. Although Gree also announced its first quarter report for 2021, the company's revenue in the first quarter was 33.517 billion yuan, a year-on-year increase of 60.3%; net profit was 3.443 billion yuan, a year-on-year increase of 120.98%. However, this is based on the fact that Gree's business was almost stagnant in the first quarter of 2020. Against the background of the epidemic, if compared with the revenue of 41 billion and the net profit of 5.672 billion in the first quarter of 2019, Gree is still far from returning to its peak.
From once being equal to a revenue gap of more than 100 billion, Gree has been completely crushed by Midea. It is true that the epidemic last year had a huge impact on the manufacturing industry, but Gree’s rapid decline is still a bit disappointing. Unexpected, but anyone with a discerning eye knows where Gree's problem lies. Over-reliance on the air-conditioning business; wants to transform but progress in diversification is slow; unable to get rid of the inherent dealer model, and is incompatible with the marketing era where online channels are king. Even if "Aunt Dong" brought tens of billions of goods through live broadcast, she still It failed to reverse the result of Gree's "abdication".
What is the reason for launching a super high proportion of dividends against the trend?
However, under such conditions, Gree launched a very high proportion of dividends
First of all, there are image and stock price issues. As a white horse among home appliance stocks, Gree naturally cares about its image as a high-quality listed company. After its performance is completely surpassed by Midea, its status in the hearts of investors will inevitably be affected. At this time, launching a high proportion of dividends will help maintain its The image of a high-quality company creates a tall figure for the outside world that "even if its performance declines, it cannot let down institutions and investors."
At the same time, as Midea overtakes Gree, the gap between the stock prices of Gree and Midea is getting wider and wider. Midea touched the 100-yuan mark not long ago, while Gree is almost standing still. If the performance is superimposed at this time, Its stock price is likely to face an impact due to the decline, and the stock buyback launched by Gree previously did not have much stimulating effect on the stock price. Therefore, the launch of a high proportion of dividends will also help maintain the stability of the stock price.
But these are still matters of appearance. If you imagine yourself as the head of a listed company, how can you obtain greater benefits when you cannot reduce your holdings for cash or transfer your shares at will? ? The obvious answer is dividends. Gree's ultra-high proportion of dividends is naturally a good thing for shareholders, but the real "joy" is Dong Mingzhu, Hillhouse Capital and other Gree executives who hold more than 44 million shares.
In 2019, Gree completed its mixed-ownership reform. Hillhouse Capital defeated many opponents and successfully entered Gree Electric under the name Zhuhai Mingjun. Among them, Gezhen Investment composed of Gree's management subscribed for 6.3794% of Zhuhai Mingjun's capital contribution for 1.394 billion yuan, and at the same time received 4.7236% of Zhuhai Mingjun's capital contribution held by Zhuhai Botao for 1.032 billion yuan, that is, In total, it holds 11.1% of Zhuhai Mingjun's investment amount with 2.426 billion yuan, and indirectly holds 1.665% of the shares of the listed company. At the same time, Gree Investment also enjoys 41% of Zhuhai Mingjun's GP share for 4.305 million yuan. Not only can it continue to control Gree, but it can also receive corresponding profit sharing and fund management fees.
In Gezhen Investment, Dong Mingzhu holds 95.48% of the shares. This so-called management is close to Aunt Dong herself. Regardless of where the investment comes from, Aunt Dong has become the biggest winner.
This time Gree has launched a dividend policy of paying 30 yuan in cash for every 10 shares. Based on the calculation that Zhuhai Mingjun holds about 900 million shares, the amount of this dividend will exceed 2.7 billion yuan. Adding the two dividends last year, Hillhouse Capital recovered approximately 4.7 billion yuan through dividends. Dong Mingzhu herself directly holds 44.488 million shares of Gree, and the amount of dividends this time exceeds 130 million yuan. Coupled with her indirect GP share in Zhuhai Mingjun, she can get the corresponding profit share. Will Aunt Dong get this time? You can figure out how much dividends to pay.
But a closer look shows that all the shares held by Zhuhai Mingjun have been pledged, and 98.08% of Dong Mingzhu’s own shares have been pledged. This goes back to the time of Gree’s mixed reform. . In December 2019, Zhuhai Mingjun signed a loan agreement with a total of seven banks including China Merchants Bank (600036, Stock Bar). The total loan amount was 20.831 billion yuan. The financing was used for Zhuhai Mingjun to transfer 15% of the shares of Gree Electric Appliances held by Gree Group. . Zhuhai Mingjun pledged its Gree Electric shares to the lending bank, which is one of the main conditions for this loan. In addition, Zhuhai Mingjun promised in the loan agreement to try its best to ensure that Gree Electric’s annual net profit dividend ratio is no less than 50%.
On the evening of February 16, 2020, Gree Electric announced that Zhuhai Mingjun, the largest shareholder, had pledged all 902 million shares it held, accounting for 15% of the company’s total share capital. At the same time, Dong Mingzhu, chairman and president of Gree Electric Appliances, has pledged 43.63 million shares of the 44.488 million shares he holds, accounting for approximately 98% of the shares he holds.
Therefore, Gree’s huge dividends also fulfilled the commitments in the Hillhouse Capital loan agreement at that time. Things have gradually become clear at this point. Capital is cruel and profit-seeking. Gree's launch of such a large-scale dividend will end up enriching the management's pockets, especially when Dong Mingzhu has pledged almost all of his shares. Being able to look at A-share executives with a smile, as for the returns to shareholders, well, let’s just go to bed and get 30 yuan in cash for every 10 shares. It sounds really touching, but it is far from what it was like to hold Midea Group shares last year. Make a lot of money.