Everyone seems to have guessed wrong about Sister Dong’s wishful thinking. "I don’t want to build a car. I want new energy technologies. If it is just to build a car and to build Gree’s next 100 billion, then the cooperation between Gree and Yinlong is blind." Facing the media’s doubts about Gree’s car-making, Dong Mingzhu’s "irrelevant answer" made the audience stunned. On August 23rd, Gree Electric (000651.SZ) held a media meeting on the plan of acquiring Yinlong New Energy and supporting fund-raising after 32 announcements brought multiple benefits. Gree Electric CEO Dong Mingzhu "Dong Dajie", with senior executives from both sides, answered questions about Gree’s car-making for the first time.
Dong Mingzhu is 62 years old this year and is the spiritual leader of Gree. On the day of the press conference, Dong Mingzhu wore a long skirt and kept a shallow smile, looking in a good mood. The day before, she was still in Chengdu to discuss the bus order between Yinlong and the local government, and she didn’t see a trace of fatigue. Holding a Gree mobile phone in her hand, she answered hit the floor when the reporter was speaking, accompanied by a signature passionate and powerful gesture. Before the interview, Dong Mingzhu specially asked for a "temporary" video about Gree’s automatic production.
Of course, there is also a paragraph about Gree mobile phones as always. "Take photos with me with Gree mobile phone." Say that finish, Dong Mingzhu couldn’t help myself. Of course, Dong Mingzhu doesn’t think she is a "layman making cars". She said: "Gree making cars is not a cross-border, and electric vehicles are a collection of electrical products." Dong Mingzhu even bluntly said, "Automobile chassis technology is not a problem at all, and there is no threshold." This feeling is similar to the "shooting" when Li Shufu, chairman of Geely Group, said that the car was "four wheels+sofa".
But how does Gree build a car? The outside world is not very clear about this. On August 23rd, after half a year of suspension, Gree purchased 100% equity of Yinlong New Energy at a price of 13 billion yuan. Following the smart phone, Gree diversified and crossed the border to the next city. Ten years ago, there were cases in which home appliance companies such as Midea failed to build cars. Therefore, this time Gree got involved in the field of car-building, and the outside world was mixed, but Sister Dong still said that she had already "got it in mind". "Lithium titanate battery and Yinlong (new energy) are gold buried in the sand, and we are going to be the people who dig the gold out of the sand." Dong Mingzhu said.
Although Sister Dong said that she was not in a hurry to build a car, she was very anxious in an exclusive interview with the reporter of Economic Observer. "Of course I want to build a passenger car, I want to do it now, but now the national policy problem (not solved)." The reporter of the Economic Observer also learned exclusively that Yinlong New Energy will be renamed as "Gree New Energy" after its successful acquisition, and will continue to exert its strength in the field of passenger cars. At the same time, Yinlong New Energy has contacted Tesla and BAIC respectively, or will introduce third-party car-making partners.
Gree’s new opportunity is that the country will give nearly ten new new energy vehicles passenger car manufacturing qualifications. At present, only BAIC New Energy and Changjiang Automobile have obtained the qualification. Among the remaining eight qualifications, Gree may have a chance to get a ticket to Zhang Zhengui.
"Electricity" of Series Gree
What is the motivation for Gree to build a car? At present, the consensus view is that Gree needs new growth points. Gree Electric achieved revenue of 49.182 billion yuan in the first half of this year, down 1.85% from the same period of last year. However, the net profit attributable to the parent company was 6.402 billion yuan, a year-on-year increase of 11.92%; After deducting non-recurring gains and losses, the net profit attributable to the parent company increased by 35.32% year-on-year; Earnings per share is 1.06 yuan. In 2015, Gree experienced the first major turning point in which both revenue and net profit declined in recent nine years. In that year, Gree Electric achieved a year-on-year decline of 28.17% in revenue and 11.46% in net profit.
Although Dong Mingzhu dismissed this view a little, he sharply responded that "the change of company revenue is related to the active adjustment of company strategy", but the growth space of air-conditioning industry is really approaching the ceiling, and Gree is also facing the confusion of development. For this reason, Dong Mingzhu and Lei Jun, the founder of Xiaomi, made a public bet of about 1 billion yuan in the field of mobile phones, and strived to win tickets in new industries and create enough popularity. Under the big goal of "building a Gree again in three years", finding the link point of Gree’s diversified business makes Dong Mingzhu begin to look to the car-making industry.
But even building a car — — This seemingly unrelated industry, Dong Mingzhu also has a thread in his heart, connecting them in series. Dong Mingzhu’s idea is simple and direct — — All of Gree’s diversified choices are synergistic and inseparable from electricity, which has become the key to series connection. "Air conditioners, mobile phones and electric cars all need electricity. In the future, mobile phones may become intelligent control terminals, and cars are a collection of all electrical appliances."
The broad prospects and huge market space of new energy vehicles give Dong Mingzhu more room for imagination. At present, China has become the largest new energy vehicle market in the world. In the first half of this year, the production and sales of new energy vehicles in China reached 177,000 and 170,000 respectively, up by 125% and 126.9% respectively. Such a high growth trend and space have also made outsiders such as LeTV and Ali enter the field of new energy vehicles in different forms.
In order to gain a share in the new energy vehicle market with many participants, Gree has to "find another way". Dong Mingzhu once considered taking the route of BYD and conquering battery technology by himself. The reporter of Economic Observer learned that as early as a few years ago, Gree had quietly set up a new energy research institute, but after two years of research and judgment, Dong Mingzhu found that Gree’s own funds and technology alone could not achieve a breakthrough, and seeking cooperation with foreign countries became the last option. After contacting with many upstream and downstream enterprises in the automobile industry and looking around several times, Dong Mingzhu set his sights on Yinlong New Energy.
The cooperation between Gree Electric and Yinlong is not accidental. The reporter of Economic Observer learned that Dong Mingzhu and Wei Yincang, the chairman of Yinlong New Energy, met very early. They have had many exchanges as deputies to the Jinwan District People’s Congress in Zhuhai, and the real time to put the acquisition on the agenda was in the second half of 2015. "At the end of last year, I contacted and reached the acquisition intention soon, which was in February and March, and then announced the suspension of trading." A senior executive of Yinlong New Energy told the Economic Observer. However, the key role behind the two sides’ ability to put the acquisition on the agenda is Zhuhai SASAC.
Build a passenger car with its back against a big tree
Before being acquired by Gree, Yinlong New Energy, which was in the marginal area, was rarely paid attention to. Yinlong, which started to manufacture batteries in 2009, set its sights on lithium titanate battery technology which is not optimistic in the market. In 2010, Yinlong New Energy spent 49 million US dollars (about 325 million RMB) to acquire 53.6% equity of Altair Nano, an American listed company, and mastered the latest technology of lithium titanate materials. From 2012 to 2013, Yinlong New Energy successively acquired automobile manufacturing enterprises such as Zhuhai Guangtong Automobile and Shijiazhuang Zhongbo Automobile, thus having the qualification of domestic vehicle manufacturing.
So far, Yinlong New Energy has become one of only two enterprises that can have lithium titanate materials and achieve power and industrial application, and the other is Toshiba Corporation of Japan. In this regard, Zhang Bin, assistant to the chairman of Yinlong New Energy and general manager of the marketing department, also told reporters that Yinlong’s technology in lithium titanate batteries is Yinlong’s core strategic advantage. However, frequent acquisitions consume capital, and lithium titanate materials are still in the early stage, which makes Yinlong New Energy once short of funds, and even reached the critical moment of "life and death".
"In the past, CNOOC and Shenhua Group all had cooperation intentions and even negotiations with Yinlong, but they all gave up in the end." People close to the acquisition and the core told this reporter. At the critical moment, the policy trend began to change, and lithium titanate battery technology entered the subsidy policy catalogue. Sensitive capital has always come to the door. Before discussing cooperation with Gree, Zhuhai Yinlong conducted two rounds of financing in June 2015 and February 2016, and many investors such as CITIC Securities, Huarong Assets and Oriental Assets jointly injected billions of RMB.
But why did Yinlong New Energy, which can temporarily breathe a sigh of relief in terms of funds, still embark on the route of being acquired? The answer is still survival. "Yinlong (New Energy) is currently engaged in passenger cars, but the ceiling of the bus industry is there, and the largest scale of Yinlong is 20 billion. Therefore, we must set foot in passenger cars. Although we have products and technical reserves, the demand for production qualifications, capital and brand power for passenger cars is the threshold. Cooperation with Gree is the result of repeated thinking. " The above-mentioned Yinlong New Energy executives told the Economic Observer reporter. "Lithium titanate (battery) has the advantages of safety, long service life and fast charging, but it was not favored by the automobile industry because it did not enter the catalogue of state subsidies and the short cruising range." A technical person in charge of a new energy automobile company told the Economic Observer that "now lithium titanate can enjoy the same subsidy, and the problem of short cruising range can be solved slowly through technological upgrading." Perhaps, this answer is enough to be the answer that Dong Mingzhu is willing to gamble on new energy vehicles.
Gambling or raising money?
The interesting details of Gree’s acquisition of Zhuhai Yinlong are that, in order to show confidence and respond to shareholders’ queries, in addition to the original plan, Gree also issued an additional RMB 10 billion for supporting financing, and at the same time, Dong Mingzhu participated in the additional issuance through its own funds of nearly RMB 1 billion. The fund comes entirely from Sister Dong’s own "private pocket". This seems to show the outside world their confidence in this acquisition and entering the automobile industry in the future.
Dong Mingzhu, who is generous, bluntly said that Gree Electric has fully laid out its electronic control, intelligent manufacturing, motors and precision molds, and among the three major electric appliances (batteries, motors and electronic controls) needed for the production of electric vehicles, all the parts except batteries can be quickly matched and supplied with Yinlong and have a synergistic effect with Yinlong. Wang Jingdong, vice president and director of Gree Electric, further said in the interview: "Gree is famous for its management ability and cost control ability. The acquisition of Yinlong can not only achieve the synergy of core technologies, R&D resources and supply chain, but also greatly reduce management costs, enhance corporate profitability and quickly occupy the market."
At present, Yinlong New Energy’s business is mainly in the passenger car market, but it has not been launched in the passenger car field due to qualification problems. Therefore, Dong Mingzhu and his team started to discuss the layout and production qualification of passenger cars with the management of Yinlong New Energy as soon as they initiated the acquisition of Yinlong New Energy. "Building cars in the field of passenger cars will make progress next year." The reporter of the Economic Observer learned exclusively from insiders that "both the acquisition of (passenger car production) licenses and their own application are going." Dong Mingzhu even told reporters that she was not worried about the qualification of building a car.
The reporter learned that the product layout of Yinlong New Energy in passenger cars has taken shape, which is divided into four categories, including antique models, coupes, SUVs and MPVs. In the process of negotiation with Gree team, both sides tend to be economical in positioning and pricing of passenger cars, and will not take the high-end route. "In the future, we will not rule out the introduction of cooperation between car companies. People from Tesla and BAIC have visited before. Where is the short board for building cars in the future, we will introduce relevant professional teams." The above-mentioned insiders revealed. In addition, it is not ruled out that Gree will enter the management of Yinlong in the future, and Yinlong New Energy is also full of imagination with the layout of nine existing industrial bases of Gree.
However, it is not uncommon for a layman to make a car. Multifluoride (002407), which started as a raw material for lithium iron phosphate batteries, spent 160 million yuan to control Red Star Automobile in order to develop new energy vehicles and obtain automobile production qualifications. However, the latest news is that its car-making process has been temporarily suspended because it is much more difficult than expected. And even Wang Chuanfu, the founder of BYD, who has mastered the technology, has revealed that it is far more difficult to enter the automobile industry than he thought.
But Gree’s cleverness is precisely not to put all your eggs in one basket. This time, Gree Electric acquired Yinlong New Energy, on the one hand, to build a car, on the other hand, to enter the energy storage market as mentioned above — — Yinlong’s lithium titanate battery, supporting charging facilities and energy storage system business are all Gree’s gains. In particular, the business of energy storage system will be a key move for Dong Mingzhu in Gree’s chess game before retirement.
"If it is just to build a car and build Gree’s next 100 billion yuan, then the cooperation between Gree and Yinlong is blind, and the core technology of lithium titanate battery is the most important reason for the acquisition." Dong Mingzhu believes that the advantages of lithium titanate battery in making energy storage equipment are very obvious. "The combination of photovoltaic and energy storage equipment will be a trillion-dollar market."
"I won’t retire for at least four years." Dong Mingzhu looked away, hale and hearty. I just don’t know if Dong Mingzhu’s new energy vehicle and energy storage business can give her a perfect answer after four years. But at present, Gree’s acquisition is being questioned by Shenzhen Stock Exchange, and it is not known whether there are any variables in this acquisition.