$Gree Electric Appliances(SZ000651)$ @Today’s Topic @Today’s Interview
Hello everyone, I am Gree Liu, and I am a rookie apprentice with Xueqiu ID. Friends who are familiar with me on Xueqiu know me as a member of Gree’s first-line provincial distributor. Since my son helped me register Snowball in July last year, many friends have come to buy products from me. I have always been grateful for the customers who care about Gree on Snowball and support Gree and trust me.
Many friends have asked me why the number and time of snowballing is getting shorter and shorter. Since it has entered the peak summer season, Gree’s business is too busy, and there is no time for him. Sometimes the delivery time is long, and I often don’t even have time to read WeChat, which leads to neglecting some customers, not to mention Xueqiu and some nonsensical netizens fighting saliva. Taking advantage of this Sunday, I have a little free time, I will report the progress of Gree’s sales channel reform to you, and give you my own opinion on the recent hot events related to the Gree stock market. By the way, I will write my own performance forecast for Gree’s semi-annual report in 2022 to repay customers who are loyal to the brand and investors who firmly hold stocks.
As far as the reform of sales channels is concerned, everyone knows that Gree’s previous model has always focused on offline, thinking that online is only auxiliary, until Oaks took advantage of the peak of Dongfeng’s online e-commerce shopping frenzy in those years. The 8% share made Gree aware of the online threat, and then backhanded a report. In the following two years, Gree himself began to pay attention to the reform of online channels, and directly attacked the dealers.
In fact, everyone thinks that the reform of the sales model of air conditioners has changed the online to online, just open a few online stores on Taobao Jingdong, Douyin or Kuaishou to do a few live broadcasts is the success of the reform, then it is a big mistake, Gree is online in the early stage The reason why the transformation is difficult is mainly related to the business model of air conditioners. We all know that air conditioners, as commodities, have their particularities. First of all, the air conditioner that leaves the factory is only a semi-finished product. The combination of its logistics installation and after-sales is a complete and mature commodity that can be sold. At present, the manufacturers of Gree Electric Appliances are responsible for the production of air conditioners, logistics, installation, and after-sales services. Most of them are in the hands of the original traditional dealers. The relationship between dealers and Gree manufacturers is more like the Jiedushi of the Tang Dynasty and the central court. Nominally, the headquarters of Gree manufacturers is the superior of all dealers, and Dong Mingzhu is also recognized as the chairman of all dealers. The employees of the company are not actually direct employees of Gree Company, and the personnel and financial rights are not included in the unified jurisdiction of Gree Electric Appliances, which has caused the boss of the dealer to often be in a state of ignorance for all the princes. Some friends once asked me whether other friends, such as Midea, Haier, Oaks, etc., also have similar situations of deeply bound dealers. I can only answer that they are different, because first of all, their air conditioners are not so large in China. It’s big, and I won’t name some friends and businessmen. If you have milk, you are a mother. Many after-sales installations are outsourced, and there is a phenomenon of cross-product and concurrent work. For example, it is common for Haier’s master to take orders from Oaks. However, because of its small scale, Oaks and others cannot support a separate dealer team. They basically do it with other brands. In fact, in terms of logistics, some friends and businessmen had originally engaged in the logistics of “Daily Shun” and wanted to control it in their own hands. Later, they found that the logistics was really a burden to make money, and in the end they simply outsourced it. In fact, these can indeed save costs for the industry, but they also make the industry terminals more disorderly, which is not the mainstream trend of industry development.
At the end of 2020, Gree began to carry out a unified channel reform for dealers. First, it clarified the only legal pickup channel for provincial dealer companies and canceled provincial agents. Many friends are not engaged in home appliance business, and they cannot do it at all. Clear the relationship between distributors and agents. The so-called distributors refer to wholesalers who specialize in a certain brand, while the agents are those who sell Gree on behalf of others and allow home appliance retailers to sell other brands. The typical difference is that the Gree Dong Mingzhu store belongs to the dealer terminal, while Suning, Gome and Jingdong are the agents. In our province, the provincial agent was cancelled early. No matter where the terminal is, the provincial pickup channel is Gree Shengshixin Trading and Sales Company, but I learned through the news that some provinces have always had provincial level. Agents, and what is even worse is that these provincial-level agents are actually opened by provincial-level dealer bosses at the same time. To give a typical example, Duan Xiufeng, who was particularly violent in the reduction of his holdings, was originally a Gree distributor in Shandong Province. Mr. Shang, but at the same time, he also privately opened a Hongwuyue electrical agency company. Usually, when Gree’s goods arrive, he will give priority to his own agents first, and the rest will be distributed to the following regional distributors, which are out of stock during peak seasons. At that time, a provincial distributor like me in Shandong was out of stock and even had to increase the price to pick up the goods from his agency. The last money earned can only be digested by end consumers. Such dealers obviously need to be reformed. Therefore, the interests of dealers such as the cut-off last year were the most damaged, and the final sharp reduction was expected. The rebellion in some provinces was subsequently quelled. After all, in business, no one wants to live with their wallets. The boss can step down, but the money can’t be earned.
Regarding the reduction of Jinghai this year, it is not surprising. After the channel reform, Gree has revised the past rebate model. In the past, Gree’s policy was to rebate and suppress goods based on offline sales, but now it has changed. This year is Gree In the second year of the online channel reform, Gree originally did not allow cross-regional sales of goods, but this year has changed. It encourages offline dealers to bring goods online, and implements an integrated offline and online strategy for marketing in a way of attracting traffic. Redistribution of benefits. I know that some people will be confused when I write this. Let me give a simple example. I sold some air conditioners in our province to customers in Nanjing and Tianjin some time ago. What I can benefit from is the drainage of the air conditioners I sold. The rebate bonus is about 7% sales rebate. The rest is gone, because I don’t need to undertake logistics, installation, after-sales, etc. I just sell goods, and the profits from logistics, installation, and after-sales go to my customer’s local dealer. And the profit from selling the air conditioner goes to the e-commerce department, that is, the manufacturer. In the same way, if a dealer in Nanjing sells air conditioners online to our province, he earns a rebate bonus, and we earn money for logistics installation and after-sales. That is to say, if an air conditioner is sold online, the profit earned by the dealer becomes The profit of the two places is divided, and the profit of the air conditioner itself is reduced. In this way, Gree manufacturers have become the biggest winners, while the profit margins of dealers have become thinner. Due to online marketing, 618 air conditioners have sold well this year, but the money earned this year is not as much as in previous years, but the dealers have more things to do a lot of. Moreover, it has caused serious damage to the interests of some traditional dealers who are not online enough. The reduction of Jinghai’s holdings is largely due to these dealers expressing their dissatisfaction with Gree’s policy.
Of course, having said that, the market share and brand of Gree air conditioners have been significantly improved due to online sales, which is a good thing for both dealers and Gree manufacturers, but no dealer will be willing to sacrifice their own interests to stand In the overall situation, Dong Zongcheng will gain and lose the interests of Gree across the country. I believe that at this year’s dealer conference, someone will propose to make up for the dealer accordingly. For me, the profit and loss are not much different. The biggest feeling this year is that it is more tired, but then again, it is indeed the general trend that powerful dealers transform to logistics warehousing and after-sales installation. After all, the Gree brand has become a household name in China. The Gree dealer industry is like a knockout match in a boxing ring. As long as the dealers quit, new dealers will take over. As long as Gree air conditioners can still make money, Someone must do it, because the world is full of hustle and bustle, all for profit, and funds never sleep.
Regarding the performance forecast of the semi-annual report, in fact, Sister Dong has sometimes revealed to everyone intentionally or unintentionally. In June this year, President Dong once said in the live broadcast room that during the 618 period, Gree basically shipped 270,000 units per day across the country. I calculated the data in our province, which is basically the average of 10,000 units per day, and then divided it by the ratio she said, which is basically not much different from what she said. Therefore, the data is basically reliable. Of course, this is only the peak season data during this period. At other times, the daily average is between 180,000 and 200,000 units. Considering the decline in bulk commodities this year and the increase in profit margins due to the progress of Gree’s channel reform, the data forecast I gave is that the net profit in the second quarter’s semi-annual report will be between 6.6 billion and 7.2 billion, and the cumulative net profit will exceed 10 billion. The forecast is between 10.6-11.2 billion, and the total operating income in the second quarter is expected to be around 72 billion. In fact, it is a rather impressive result.
For Gree stock holders, I still think Gree is a good company worth investing in. I can’t predict the stock price, but I personally don’t think it will be too long to hover between the current 32-34 for a long time, if you feel wrong, you are right.
In addition: This article solemnly declares that the entire article is the author’s subjective opinion, and does not make any suggestions for anyone to invest. It only provides information sharing, does not recommend stocks, does not charge, does not open an official account, and has no intention of fighting a war of words. If you want to gang up, or if you want to spray yourself, I’m really upset, just block it and ignore it. $Gree Electric(SZ000651)$
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