In 2012, when the entire air-conditioning industry was in the doldrums, Gree Electric Co., Ltd. delivered a brilliant performance report for the third consecutive quarter. On the evening of October 30th, Gree Electric released the third quarterly report of 2012 that Gree Electric Appliances realized total operating income of 28.86 billion yuan in the third quarter, an increase of 21.09% year-on-year, and net profit of 2.46 billion yuan, a year-on-year increase of 57.25%.

This is the first full quarterly transcript of Gree’s entry into the Dong Mingzhu era in May this year. In the economic downturn, Gree is the only company in the air-conditioning industry to achieve sustained high growth this year.

Gree's "strong growth"

Since 2011, the era of arrogance has stopped. The domestic air-conditioning industry has entered a period of significant downturn from the previous high-speed growth period: the withdrawal of the state subsidy policy, the relatively stable market scale, the slower rate of expansion of production capacity, the intensified competition in different channels, the increasingly obvious trend of industry reshuffling, and the development of air-conditioning manufacturers. Brought a lot of pressure.

The downturn in business performance is also a microcosm of the industry downturn. The statistics of the “2012 Refrigerated Annual Air Conditioning Market in China” show that under the influence of market pressure, inventory pressure, and poor policy convergence, in the cold year of 2012, the domestic air conditioner market sales fell by 25.12% year-on-year, and the sales volume was year-on-year It fell 19.36%.

In the darkness of the industry, Gree’s “strong growth” is particularly eye-catching. According to the report data, the net profit attributable to the company in the first three quarters was 5.332 billion yuan, an increase of 41.34% over the same period of last year. The operating income was 77.165 billion yuan, an increase of 20.43%. The trend rose steadily and the development momentum was clearly superior to that of peer companies.

Industry experts said that according to the growth of this year's performance, Gree’s annual operating revenue of more than 100 billion yuan in 2012 is a foregone conclusion. This will be the only Chinese appliance industry to rely on air-conditioning single category to achieve 100 billion yuan of enterprises, creating a new historical record for the appliance industry, Gree Electric investment value highlights.

The continuous and unexpected increase in performance has led various agencies to be optimistic about Gree’s profit prospects. CICC's research report stated that Gree was the "super-expected king." Since the peak of the stock market, it has exceeded its expectations for the sixth year. The company's gross profit margin rose to 28.6%, setting a record high. Although the demand for the air-conditioning industry was insufficient, Gree's market share rose sharply and shipments remained stable. At the end of the reporting period, the company's advance receipts amounted to 22.7 billion yuan, an increase of nearly 60% compared with the previous period, indicating that the new cold year was opened, and the company's dealers were optimistic about the demand for the next year, and the funds were active. At the same time, the company’s fixed assets increased by 34% year-on-month in the current period, and fund-raising projects were centralized and completed, indicating that the company is also confident in its future business.

Analysts in the industry said that after getting rid of the general-purpose system for the air-conditioning industry, the air-conditioning industry has entered a new era of strong and permanent, and Gree’s leading position has been consolidated, and competitors will not be able to surpass it.

"One share big" set

For a long time, in the air-conditioning industry, people have always regarded Gree and Midea as the industry's two strongest and the two strongest contenders to jointly promote the development of this industry. However, in the past two years or so, due to the completely different strategies adopted by the two companies, the performance growth and industry status of the two companies have undergone a marked change: Gree continued to accelerate, and the United States drove off the “fast track”.

On October 27, 2012, Midea’s revenue for the third quarter was 14.843 billion yuan, a decrease of 25.19% from the same period of last year, and the net profit attributable to shareholders of listed companies was 912 million yuan, 0.80% more than the same period of last year. The revenue in the first three quarters was It was 53.833 billion yuan, a decrease of 34.25% from the same period of last year. The net profit in the first three quarters was 3 billion yuan, up 4.18% from the same period of last year.

For such a report, some investors said that the transformation and upgrading of the United States electrical appliances, take the high-end line, the gross margin increased, but the market gave it to others, sales also fell sharply.

In the first three quarters of 2011, Midea achieved a total sales revenue of 81.9 billion yuan and a net profit of 2.88 billion yuan. In the year of the transformation of the United States, the net profit has not been improved, but the sales revenue and market have been reduced by 1/3.

On the other hand, the gap between the United States and Gree is widening. The first three quarters, Gree's total revenue was 77.16 billion yuan, the United States only 53.833 billion yuan, the gap reached 23.3 billion yuan, close to nearly half of the US revenue, in addition to the United States is across the board compared Gree air conditioner single product.

For such two performance reports, industry insiders said that "the comparison of data between Gree and the United States in the three quarterly reports and the increase in the gap indicate that the pattern of the air conditioner market has undergone profound changes, and the air-conditioning industry is striving for the hegemony. The situation is being rewritten and Gree is breaking out of the ice during the difficult times. The performance of “outstanding” is increasing the distance between the brand and the competition.”

The above-mentioned sources also stated that “according to Gree’s transcript of 77.16 billion yuan in the first three quarters, the company sprinted 100 billion yuan in revenue for the whole year, and it would be entirely possible to enter the one hundred billion yuan club. This will not only make Gree and the United States thoroughly open the gap, but also Gree. With a single air-conditioning product, it has entered the 100 billion yuan club, and its core competitiveness accumulated in this field will become more apparent."

"Specialization" Wins

Gree Electric third quarter report shows that the first three quarters of operating income and net profit have increased, mainly due to the development of the market, adjust the product structure, a substantial increase in product sales.

“ Gree Electric Appliances has long since increased its R&D investment, adhered to independent innovation, and focused on product quality, winning a reputation in the minds of consumers. In addition, the company pays close attention to management, giving full play to the company’s production capacity, logistics distribution, scale advantages, and continuously reducing production. Cost, increase the export of self-owned brand products, and further enhance the company's overall profitability.” Dong Mingzhu, chairman and president of Gree Electric, explained.

When other companies feel that the white goods industry has become the Red Sea, Gree firmly believes that as long as it leads the trend of technology, white electricity is still blue ocean. After experiencing the rapid growth of the industry and enterprises, Gree rejected the diversified road of great expansion, and persisted in the path of air-conditioning specialization.

Dong Mingzhu said that diversification strategy can create more back-end roads for enterprises, but it will also decentralize the energy and financial resources of enterprises. The air-conditioning market is always there and new technologies are emerging. As long as Gree has mastered the core technology, it has always grasped the competition. Advantage.

In the second half of 2011, the slowdown in the growth of the home appliance industry has become the most concerned topic in the industry, and the air-conditioning industry as an important white goods product has not been spared. While many air-conditioning manufacturers had to shrink their front lines in the face of a new “cold year,” Gree continued to take the road to capacity expansion with a stable share of the air-conditioning market, and even raised nearly 33 percent of its shares in January this year through additional shares. 100 million yuan is used for expansion and technological upgrading. The secret of this is that Gree has mastered the core technology and has a strong ability to resist risks.

Today, Gree sets a benchmark for Chinese companies in technological innovation. It holds close to 6,000 domestic and foreign patents and more than 1300 invention patents. Gree has made great achievements in innovative technologies and its independent research and development capabilities have reached an international level. s level.

One of the crystallizations of Gree's core technology is the 1 Hz inverter air conditioner. It is undoubtedly a tool Gree uses to improve consumer home life experience and enhance its influence in the inverter air conditioner market. Gree third quarter report shows that during the reporting period, Gree 1 Hz inverter air conditioner sales momentum is strong, the market share exceeded 50%, reaching 52.31%, is nearly 3 times the second, continue to occupy half of the inverter market with absolute advantage.

It was also learned that Gree had previously successfully succeeded in researching the world’s most energy-efficient large-scale central air conditioners. Once it can be put into the market in large quantities, Gree’s future growth rate will be significantly higher than that of the industry. With this core technology, Gree Central Air has successfully won the bidding for the 2014 Sochi Winter Olympics commercial project, and its sales orders have already reached the beginning of 2013.

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Air-conditioning industry enters the era of strong Hengqiang

The worse the environment, the more able to reflect the comprehensive competitiveness of a company, Gree Electric is such a sample of adverse power. In 2012, when the overall household appliance industry performance was unsatisfactory, Gree continued to lead the industry in a trend of rising, and gradually opened a gap with the second place.

People can not help but ask, in the harsh economic environment, the lack of demand for air-conditioning market, Gree can break out of the ice? What factors support this sustainable growth?

The financial report shows that Gree's growth in operating income and net profit for the first three quarters of the year was mainly due to the development of the market, adjustment of product structure, and a substantial increase in product sales. Chairman of the Gree Electric Appliances and President Dong Mingzhu said Gree Electric Appliances has been increasing its investment in R&D for a long time, insisting on independent innovation and focusing on product quality. It has won a good reputation in the minds of consumers. In addition, the company pays close attention to management and gives full play to the company's production capacity and logistics. The advantages of layout and scale, continuously reducing production costs, increasing the export intensity of self-owned brand products, and further enhancing the company's overall profitability.

Indeed, R&D, technology, and quality are becoming Gregg's important magic weapon far beyond its competitors. Data show that in the reporting period, Gree 1 Hz inverter air conditioner sales momentum is strong, the market share exceeded 50%, reaching 52.31%, is nearly 3 times the second, continues to occupy half of the inverter market with absolute advantage.

The research and development of the 1 Hz frequency conversion technology is precisely the positioning of Gree Zhiyuan. This technology not only enabled Gree to obtain the National Science and Technology Progress Award, but also filled the history of this national award for the first time with air conditioning technology, and also enabled Gree to Get the market. The promise of two-year free replacement of inverter air conditioners, as described in the "signal theory" of economics, gives consumers ultimate trust in its quality.

The support of enterprise R&D, technology, and quality is always in the leading position in the industry, but also in Gree's dedication to the air-conditioning industry. When other companies begin to diversify, it means that the company's investment in each business will become smaller. Therefore, the dedication spirit has shaped Gree’s technological leadership, while insisting on the strategy of non-merger acquisition, which has greatly reduced the company’s transaction costs. Ultimately, all the strategies are integrated into one, forming Gree’s most focused research on cutting-edge technology and market demand for air conditioning. .

Some analysts pointed out that “when a competitor puts a large amount of opportunity cost on the structural adjustment and transformation of the company, Gree has given up its own opportunity cost to the company’s internal R&D and talent cultivation. This is the company’s differentiation. The result of the strategy."

For this differentiation strategy, industry experts said, “Some competitive brand transformations are intended to reduce costs, but they have resulted in lower profit margins. While Gree has increased R&D costs, profit margins are leading its peers. It proves a principle of economics that the important thing is not to reduce costs, but to be cost leaders. This is the key to the success of Gree's strategy."

Professionals predict that in the next two years, the air-conditioner market structure will enter a new round of reshuffling stage driven by changes in frequency conversion technology and rising raw material costs. By then, Gree’s leading enterprise market share will further increase.