Analysis Of Investment Value On Gree Electric Appliances

Gree Electric Appliances is one of the largest corporation specializing in R&D,production,sales and service of air conditioning.As the leading enterprises in the area of Air-conditioning,Gree Air Conditioners have been exported to more than 100 countries and regions of the world after 20 years rapid development,and Gree has been in the list on top enterprises on the United States "Fortune" magazine for nine years.Gree is also the only enterprise enjoying “world famous brand” reputation in the line of electric appliances.Gree Electric Appliances has been received great attentions since successfully listed in Shenzhen Stock Exchange in 1996,This article make analysis and assessment of the company from macro-environment,industry and development of company using fundamental analysis methods so as to reveal the real investment value,and taking the results as the basis to make investment decision.From the macroscopic environment level,China’s economy has come to the metamorphosis stage after 30 years of reform and opening,economic development now is slow but overall stable.In 2014,China’s Gross Domestic Product(GDP)is 63.6 trillion yuan,increased by 7.4% over the previous year,is among the best in the world’s major economies.Besides,The national disposable income per capita grew by 8%,which is better than economic growth,the contribution of consumption to economic growth is 51.2% which rose by 3%.With the increase of living standards and living quality,government will also pay more attention to the livelihood of the people,and under the motivation of consumption policy of home appliances,it is a good time to integrate the home appliances industry,and Gree will benefit from it.From the point of industry,Gree Electric Appliances is worth long-term attention and investment for its good ability of R&D and innovation,and the future development of the company will be promising.Business valuation aims at assessing the internal value of enterprises.This article assesses the internal value of Gree Electric Appliances through the method of discounted free cash flow in income approach and modifies the value of Gree through PE ratio method.The value per share of Gree was estimated to be 76.2 depending on the method of discounted free cash flow,to be 60.27 depending on PE ratio method,and the adjusted value would be 68.24,which is higher than the current share price of Gree.It indicates that there is investment value for Gree because the share price of Gree is undervalued in current security market.