Weng Rongtao, an all-media reporter from Southern Finance and Economics, reports from Guangzhou.

On February 19th, Zhuhai Gree Group Co., Ltd. (hereinafter referred to as "Gree Group") issued "Announcement on the Change of Chairman, Directors and Senior Management": Kang Hong succeeded Zhou Lewei as Party Secretary and Chairman of Gree Group, in addition, the positions of Deputy Secretary of Party Committee, President and Vice President of the company have changed.

Gree Group used to be the major shareholder of Gree Electric (000651.SZ), and the similarity of their names makes it easier for investors to associate. However, at present, Gree Group’s shareholding in Gree Electric has dropped from the initial 60% to the current 3.44%, relegating to the fourth largest shareholder, and its operating income has changed from household appliances income to construction and installation income. At present, Gree Group is positioned as a state-owned capital investment and operation platform in Zhuhai. This "coaching change" has little impact on Gree Electric.

High-level changes of leading state-owned enterprises in Zhuhai

According to public information, Kang Hong was born in Peng ‘an, Sichuan Province in August 1976. After graduating from Sun Yat-sen University with a major in taxation in 2000, he mainly worked in Guangzhou and Zhuhai. When he was in Guangzhou, he served as the deputy director of the General Department of Guangzhou University Town Construction Command and the deputy director of the Planning and Coordination Department of Guangzhou Key Public Construction Project Management Office.

After 2010, Kang Hong worked in Hengqin for many years, and successively served as deputy director of Zhuhai Hengqin New Area Coordinated Development Committee, director of Hengqin New Area Development and Reform Bureau, director of Hengqin New Area Commerce Bureau, and deputy director of Hengqin New Area Management Committee (in charge of development and reform, finance, state-owned assets and financial work). After 2021, he served as Deputy Secretary-General of Zhuhai Municipal Government, and at the same time served as Deputy General Manager of China Xiong ‘an Group Urban Development Investment Co., Ltd.

During his tenure in Xiong ‘an, Kang Hong was responsible for the construction of provincial key projects such as Rongdong ‘an Housing Group G, Bao Lian, Xiong ‘an Business Service Center and Xiong ‘an International Hotel, and was in charge of property management, commercial investment, industrial investment and commercial operation in resettlement areas.

Official website showed that as early as the afternoon of February 8th, Kang Hong had attended the party committee meeting of Gree Group as the party secretary and chairman. On the eve of the Spring Festival, in Gree Group’s "Pre-holiday safety inspection and trade union condolence activities", Kang Hong, as the newly appointed "top leader", went to Zhuhai 12-inch TSV three-dimensional integrated production base phase I, Gechuang No.1 and other projects under construction to conduct research.

In addition, there are many changes in the positions of senior executives in Gree Group. Zhaomin Li served as deputy secretary and director of the Party Committee of the company, and served as deputy general manager of Zhuhai Convention and Exhibition Group Co., Ltd. and vice president of Gree Group; Hu Chuanwei is a director and president of Gree Group. He used to be assistant president and deputy general manager of Hengqin Financial Investment Group Co., Ltd. and vice president of Gree Group.

Huang Jianyong, Cheng Min and Chen En served as vice presidents of Gree Group. Among them, Huang Jianyong was the secretary of the Disciplinary Committee of Zhuhai Huafa Group Co., Ltd., while Cheng Min and Chen En were all promoted from the chairman of a wholly-owned subsidiary of Gree Group.

By the third quarter of 2023, Gree Group had achieved a total operating income of 4.783 billion yuan and a net profit of 105 million yuan attributable to the owners of the parent company. By the end of 2023, the total assets of Gree Group exceeded 113.2 billion yuan and the total owner’s equity exceeded 48.3 billion yuan. At present, it has formed a development pattern with "scientific and technological innovation" as the core and "capital operation+industrial investment+industrial introduction+carrier construction+service operation" as the main line.

In the industrial investment sector, Gree Group has invested in 355 industrial projects through "direct investment+fund investment", with an investment amount exceeding 31 billion yuan; Create an industrial fund cluster with a total scale of over 56 billion yuan and a total of 29, including 18 funds settled in Zhuhai, with a scale of over 34 billion yuan.

In terms of equity investment and capital operation, since 2022, the company’s equity investment business has been carried out in an orderly manner, and new shares have been held in Fenda Technology (002681.SZ) and Chongda Technology (002815.SZ). By the end of March 2023, the company had 15 major equity direct investment projects, and mainly held the equity of 12 listed companies, with a total market value of 10.669 billion yuan at the end of the period, covering smart home appliances, medical devices, IC design and so on. In addition, the company intends to acquire part of the equity of Keheng (300340.SZ) through fixed increase and become its controlling shareholder.

However, the China Chengxin rating report indicates that in recent years, Gree Group has made rapid and large-scale investments in industrial investment and fixed assets investment, and most industrial investment projects are in the incubation period, and there is no clear investment exit period, so the capital inflow is difficult to predict; Fixed assets investment projects have the characteristics of long recovery period and uncertain recovery amount. 5.0 The construction of new industrial space projects has intensified the pressure on capital investment, and it is expected that the short-term capital pressure of the company will continue to increase in the future.

Holding Gree Electric’s equity continues to decline

It is worth noting that Gree Group used to be the controlling shareholder of Gree Electric, a listed company. Since 2006, the group has continuously reduced its shareholding in Gree Electric.

In 2019, Gree Group signed a Share Transfer Agreement with Zhuhai Mingjun, a subsidiary of Gaoyan Capital, stipulating that Zhuhai Mingjun would receive 902 million shares of Gree Electric held by Gree Group at a price of 46.17 yuan per share (accounting for 15% of the total share capital of Gree Electric), with a total transfer price of 41.662 billion yuan. After this mixed reform, Gree Electric has become an enterprise without controlling shareholders and actual controllers.

By the end of the third quarter of 2023, Gree Group held 3.44% of the shares in Gree Electric, making it the fourth largest shareholder of listed companies. By the close of February 19th, 2024, the total market value of Gree Electric was 208.2 billion yuan. In addition, the cash dividend contributed by Gree Electric is one of the main sources of the company’s income.

The 2022 annual report shows that with the sale of Gree Electric’s equity, Gree Group’s operating income will change from household appliances income to construction and installation income, and its operating income and gross profit margin will drop significantly.

At present, the main shareholders of Gree Group are Zhuhai State-owned Assets Supervision and Administration Commission and Guangdong Provincial Department of Finance, holding 90% and 10% shares of the company respectively.

The largest shareholder of Gree Electric is Zhuhai Mingjun. As of October 30, 2023, its shareholding accounted for 16.02% of the total share capital; The second largest shareholder is Hong Kong Securities Clearing Company Limited, with a shareholding ratio of 10.93%; Gree Group is the fourth largest shareholder, accounting for 3.44%; Dong Mingzhu, Chairman of Gree Electric, is the seventh largest shareholder, accounting for 0.97%.