Company Reports

Gree's revenue grew 8%, and operating profit grew 2% year-on-year in the first half of 2026. While contraction in overseas revenue and other business income hit the topline, operating margin still rose to 16.1% from 15.1% a year ago, driven by positive earnings mix shifts and cost optimization.

Gree has been one of the leading air conditioner manufacturers in China for the past decade, with high-quality products for residential, commercial, and industrial uses. We think the company’s sector leadership is cemented by its superior brand equity, strong technological capabilities, and effective distribution through online and offline channels. While Gree focuses on cost-competitive air conditioning products in the domestic market, it has seen continued progress in premiumization, such as leading by sales value in high-end central air conditioners to household and commercial clients in China, as per Aircon.com.cn. We also expect Gree's core product sales to keep benefiting from ongoing national subsidies in China.

Gree's 2025 revenue and operating profit declined 10% and 7% year on year, respectively, due to sluggish domestic sales of air conditioners and other appliances. Conversely, the firm saw 3% and 1% respective growth in revenue and operating profit in the first quarter of 2026.

Gree has been one of the leading air conditioner manufacturers in China for the past decade, with high-quality products for residential, commercial, and industrial uses. We think the company’s sector leadership is cemented by its superior brand equity, strong technological capabilities, and effective distribution through online and offline channels. While Gree focuses on cost-competitive air conditioning products in the domestic market, it has seen continued progress in premiumization, such as leading by sales value in high-end central air conditioners to household and commercial clients in China, as per Aircon.com.cn. We also expect Gree's core product sales to keep benefiting from ongoing national subsidies in China.

China's National Development and Reform Commission announced renewed subsidies for home appliance purchases in 2026. The updated scheme cuts eligible categories to six from 12 in 2025, and subsidies will cover 15% of the selling price for grade 1 energy-efficient products, down from 20% last year.

Gree posted a 15% year-on-year revenue decline in the third quarter of 2025, worsening from the 2% decrease in the first half. Operating profit fell by a narrower 9%, supported by cost optimization, resulting in a 150-basis-point improvement in operating margin to 21.2%.

Gree has been one of the leading air conditioner manufacturers in China for the past decade, with high-quality products for residential, commercial, and industrial uses. We think the company’s sector leadership is cemented by its superior brand equity, strong technological capabilities, and effective distribution through online and offline channels. While Gree focuses on cost-competitive air conditioning products in the domestic market, it has seen continuing progress in premiumization, such as leading by sales value in high-end central air conditioners to household and commercial clients in China, as per Aircon.com.cn. We also expect Gree's core product sales to keep benefitting from ongoing national subsidies in China.

Gree has been one of the leading air conditioner manufacturers in China for the past decade, with high-quality products for residential, commercial, and industrial uses. We think the company’s sector leadership is cemented by its superior brand equity, strong technological capabilities, and effective distribution through online and offline channels. While Gree focuses on cost-competitive air conditioning products in the domestic market, it has seen continuing progress in premiumization, such as leading by sales value in high-end central air conditioners to household and commercial clients in China, as per Aircon.com.cn. We also expect Gree's core product sales to keep benefitting from ongoing national subsidies in China.

Gree saw a 3% year-on-year decline in revenue for the first half of 2025, largely due to a 5% pullback in consumer appliance (mostly air conditioner) revenue. Operating profit also decreased 8% amid operating deleverage and contraction in consumer appliance gross margin.

Gree has been one of the leading air conditioner manufacturers in China for the past decade, with high-quality products for residential, commercial, and industrial uses. We think the company’s sector leadership is cemented by its superior brand equity, strong technological capabilities, and effective distribution through online and offline channels. While Gree focuses on cost-competitive air conditioning products in the domestic market, it has seen continuing progress in premiumization, such as leading by sales value in high-end central air conditioners to household and commercial clients in China, as per Aircon.com.cn. We also expect Gree's core product sales to keep benefitting from ongoing national subsidies in China.

Gree's 2024 revenue decreased by 7%, but operating profit rose by 11% on material marketing cost savings. More positively, its revenue and operating profit increased by a respective 14% and 17% year on year in the first quarter of 2025 thanks to better air conditioner sales in China.

On April 22, Gree's incumbent Chair, Dong Mingzhu, was re-elected as chair for a three-year tenure ending in February 2028. The firm also appointed a new management team, and its shareholders approved an interim dividend of CNY 1 per share for 2024.

China's National Development and Reform Commission announced expansion of the subsidy program for home appliances. The number of categories included will increase to 12 in 2025 from eight in 2024. Each consumer can utilize the subsidies for three air conditioners versus one previously.

Gree has been one of the leading air conditioner manufacturers in China for the past decade, with high-quality products for residential, commercial, and industrial uses. We think the company’s sector leadership is cemented by its superior brand equity, strong technological capabilities, and effective distribution through online and offline channels. While Gree focuses on cost-competitive air conditioning products in the domestic market, it has seen continuing progress in premiumization, such as leading by sales value in high-end central air conditioners to household and commercial clients in China, as per Aircon.com.cn.

China's National Development and Reform Commission shared the impact of government subsidies on home appliances on Nov. 19 and vowed to ramp up support. In particular, domestic home appliance and audiovisual equipment sales surged by 40% year on year in October, with 90% of home appliances sold being first-class energy-efficient. We believe that subsidies should drive material improvements in home appliance sales in the fourth quarter, and we've factored in mid- to high-single-digit 2024 domestic revenue growth for top manufacturers such as Midea and Haier. While we expect the government to extend subsidies in 2025, we keep our long-run forecasts unchanged amid uncertainty about their scale. We also think demand brought forward by current subsidies may compress subsequent sales. Hence, we maintain our fair value estimates on our China home appliance coverage. Our preferred name remains Midea as we like its product mix upgrade, effective cost optimization, and the 5% upside to our valuation.

Gree has been one of the leading air conditioner manufacturers in China for the past decade, with high-quality products for residential, commercial, and industrial uses. We think the company’s sector leadership is cemented by its superior brand equity, strong technological capabilities, and effective distribution through online and offline channels. While Gree focuses on cost-competitive air conditioning products in the domestic market, it has seen continuing progress in premiumization, such as holding the top two market shares by sales value in high-end central air conditioners to household and commercial clients in China, as per Aircon.com.cn. Looking forward, we expect Gree to maintain a sound brand reputation and sales network, which should translate into mid-single-digit top-line growth over the next few years.

We maintain our fair value estimates of CNY 82.0, CNY 33.0, and CNY 48.0 on Midea’s, Haier’s, and Gree’s A-shares, as well as HKD 91.10 and HKD 36.70 on Midea’s and Haier’s H-shares, respectively, following their third-quarter 2024 results. While Midea’s and Haier’s respective 8% and 1% revenue growth year over year align with our forecasts, Gree underperformed with a 15% top-line decrease due to an over 40% revenue slump in new businesses such as energy storage. Positively, these three companies expanded operating profit by 7%-10% compared with the same period last year, which we ascribe to higher revenue mixes of more profitable consumer appliances and better marketing cost control.

Narrow-moat Gree posted flat revenue year on year for the first half, as the air conditioner sales increase was offset by other businesses’ decline. That said, the 180-basis-point operating margin expansion to 15.9% versus a year ago beat our estimate, thanks to a favorable mix shift to more profitable air conditioners. Despite soft domestic demand, Gree’s 11% year-on-year air conditioner revenue growth was driven by robust sales overseas. While we expect foreign demand to temper off higher bases, we are constructive about the new government subsidies’ boost on home appliance consumption in China. Consequently, we cut our revenue forecasts by 3%-4% while raising operating margin assumptions by 110-130 basis points for 2024-26. This translates to an unchanged CNY 48 per share fair value estimate, and we view shares as undervalued. However, our sector top pick remains Midea, as Gree’s heavy exposure to air conditioners implies a higher concentration risk.

Gree has been one of the leading air conditioner manufacturers in China for the past decade, with high-quality products for residential, commercial, and industrial uses. We think the company’s sector leadership is cemented by its superior brand equity, strong technological capabilities, and effective distribution through online and offline channels. While Gree focuses on cost-competitive air conditioning products in the domestic market, it has seen continuing progress in premiumization, such as holding the top two market shares by sales value in high-end central air conditioners to household and commercial clients in China, as per Aircon.com.cn. Looking forward, we expect Gree to maintain a sound brand reputation and sales network, which should translate into mid-single-digit top-line growth over the next few years.

We are positive about the incremental subsidies to the nationwide home appliance trade-in program revealed by the National Development and Reform Commission, or NDRC, and the Minister of Finance, or MOF, on July 25, 2024. The subsidies will span eight categories, including air conditioners, fridges, and washing machines. Each consumer can enjoy a subsidy for one product per category, with 15%-20% discount on the selling prices of energy-efficient units. Compared with prior subsidies, we are upbeat that more clarity is provided on the funding, which is mostly backed by the issuance of super-long-term government bonds. While the CNY 150 billion in total subsidies also incorporates automobile and consumer electronic products, we expect a material proportion to flow to home appliances.