Gree is generous in dividends, what is the investment situation of Hillhouse?

The “dividend period” of $Gree Electric (SZ000651)$ A-share listed companies has arrived. Statistics show that on the basis of the equity registration date, the distribution plan of 18 companies will be implemented on August 4. Judging from the dividend distribution plans of these companies, there are 14 companies with a cash amount of 1 yuan (tax included) and above for every 10 shares, among which Gree Electric is the most generous.

On July 29, Gree announced the 2021 annual dividend implementation plan. Based on the 5.537 billion share capital, it will distribute a cash dividend of 20 yuan (including tax, after tax) to all shareholders for every 10 shares (tax included, 18 yuan after tax), with a total of 110.73 yuan in cash dividends. The equity registration date for this equity distribution is: August 4, 2022. Gree’s accumulated dividends in history have approached 100 billion yuan.

According to Gree Electric’s 2021 annual report, as of December 31, 2021, the company’s total operating income was 189.654 billion yuan, a year-on-year increase of 11.24%; net profit attributable to shareholders of the parent company was 23.064 billion yuan, a year-on-year increase of 4.01%; basic earnings per share was 4.04 Yuan.

In recent years, Gree Electric’s dividends have been very “generous”. The previous dividends are shown in the table below:

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In recent years, the annual dividend rate trend of Gree Electric is as follows:

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In addition, since its listing, Gree Electric has raised funds of 5.152 billion yuan for 5 times, and distributed 28 times with a total of 100.928 billion yuan. The cumulative fund-raising ratio is 1959.01%. The comparison of dividend distribution and raised funds is as follows:

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(Data source: Oriental Fortune Choice data)

In the past six months, there have been rumors of “giant losses” of Gree’s heavy holdings in Hillhouse, and there are even rumors that “Hillhouse’s losses have exceeded 10 billion.” However, this article finds that, based on the inertia of Gree’s high dividends, the real loss of this investment in Hillhouse may be far less exaggerated than outside estimates.

Going back to December 2, 2019, the share transfer of Gree Electric Appliances, which has attracted much attention from the outside world, finally came to an end.

Gree Electric issued an announcement stating that as the transferor and transferee of this equity transfer, Gree Group and Zhuhai Mingjun Investment Partnership (Limited Partnership) (hereinafter referred to as “Zhuhai Mingjun”) officially signed the “Zhuhai Gree Group Co., Ltd.” Share transfer agreement with Zhuhai Mingjun Investment Partnership (Limited Partnership) regarding 15% shares of Zhuhai Gree Electric Appliances Co., Ltd. Zhuhai Mingjun will take over a 15% stake in Gree Electric Appliances, which was sold by Gree Group. Gree Electric Appliances, a global home appliance giant, announced its change of ownership. Hillhouse behind Zhuhai Mingjun has also further strengthened its investment in Gree.

There is a bright spot in this announcement that deserves attention: Zhuhai Mingjun will actively exercise the voting rights of shareholders, and try its best to make Gree’s annual net profit dividend ratio not less than 50%.

Therefore, as early as the beginning of Hillhouse’s entry into Gree, it is already “traceable” that it will receive long-term high dividends in the future.

Regarding the so-called “Hillhouse Investment Gree’s huge loss” rumors, incomplete facts can only become a burning point of blind “carnival”, and the truth still needs to return to the objective data on the long-term time axis to judge.

On July 29, 2022, Gree announced the 2021 annual dividend implementation plan. Based on 5.537 billion shares, it will distribute a cash dividend of 20 yuan (including tax, after tax) to all shareholders for every 10 shares. 11.073 billion yuan.

On the surface, Hillhouse purchased 902 million shares of Gree, and as of the close on July 22, the floating loss was 11 billion, which also caused a lot of rumors. In fact, in the 2021 annual dividend that will be implemented this time and the first four dividends implemented by Gree in 2019-2021, Hillhouse will receive a total of 7.4 billion, which is equivalent to the loss of Hillhouse’s stock price through dividends. Partially warmed up. Subtracting the floating loss amount from the stock price and the dividend income, the real net loss of Hillhouse was only 3.6 billion, a drawdown of 8.6%.

As a result, the rumors that “Hillhouse invested in Gree and lost tens of billions of dollars” are not self-defeating.

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