Gree Electric’s market value fell by 13.2 billion in one day. What happened?

According to news on December 21, Gree Electric announced a big move on the evening of the 19th. When the market opened on December 20, Gree Electric’s stock price plummeted. As of the close of trading on the 20th, Gree Electric's stock price fell 7.09% in a single day, with a cumulative market value of more than 13.2 billion yuan. An announcement on the evening of the 19th showed that Gree Electric Appliances planned to acquire 24.54% of the shares of Gree Titanium New Energy Co., Ltd. (hereinafter referred to as Gree Titanium) for 1.015 billion yuan.

Gree Titanium is a comprehensive new energy industry group that integrates lithium titanate battery core materials, batteries, intelligent energy storage systems, new energy vehicle research, production and sales, and power appliance recycling and utilization. It is headquartered in Zhuhai and owns industrial parks in Chengdu, Tianjin, Shijiazhuang, Handan, etc.

The announcement disclosed that as of the end of June this year, Gree Titanium’s total assets were 24.311 billion yuan, total liabilities were 24.245 billion yuan, and net assets were only 66 million yuan. In the first half of this year, Gree Titanium's revenue was 1.44 billion yuan, a year-on-year increase of 23.31%; operating profit was -1.969 billion yuan, and net profit was -1.905 billion yuan. It has not yet emerged from the quagmire of losses.

Gree Electric stated in the announcement that increasing its holdings in Gree Titanium will help the company strengthen its management and control of Gree Titanium, give full play to the synergy between the two parties, reduce internal management costs, and respond more actively and proactively to the rapid development and changes in the new energy industry.

However, judging from the reaction of the capital market, investors do not seem to buy into Gree Electric’s move. On December 20, Gree Electric's stock price fell as soon as the market opened, with the largest intraday drop reaching 7.15%. As of the close, Gree Electric's stock price fell by 7.09%, and its market value fell by more than 13.2 billion yuan in a single day.

According to the "Daily Economic News" report, some investors do not recognize the development prospects of Gree Titanium and believe that lithium titanate batteries have obvious advantages in some niche markets, such as long cycle life and high safety. But the disadvantages are also obvious, such as the high price in terms of storage power.

On the evening of the 20th, Gree Electric released its performance forecast for 2023. It expects total revenue in 2023 to be 205 billion yuan to 210 billion yuan, compared with 190.15 billion yuan in the same period last year; net profit is 27 billion yuan to 29.3 billion yuan, a year-on-year increase of 10.2%-19.6%; non-net profit after deducting is 26.1 billion to 27.8 billion yuan, an increase of 8.8%-15.9% over the same period last year.