Core Viewpoint - Gree Electric Appliances is focusing on diversifying its business and expanding its global presence, with plans for product development and market expansion in both domestic and international markets [1][4]. Group 1: Business Development - Gree Electric Appliances is structured into two main business areas: consumer electronics and industrial equipment, with air conditioning as the core of the consumer electronics segment [1]. - The company is facing growth challenges in its air conditioning business and is looking to ice washing and home appliances as new growth points, with plans to accelerate product development in these areas by 2025 [1][3]. - The company reported a revenue decline of 10.3 billion yuan year-on-year, primarily due to underperformance in its diversified business [3]. Group 2: Product and Market Strategy - Gree Electric Appliances is actively promoting its "Dong Mingzhu Healthy Home" initiative, with over 600 stores upgraded and plans to complete 3,000 store renovations by 2025 [2]. - The company is expanding its product offerings in the smart equipment sector, targeting the new energy vehicle market with three new components and launching various robotic products for different industrial applications [3]. - Gree's overseas sales revenue reached 28.202 billion yuan in 2024, a year-on-year increase of 13.25%, with a gross margin of 24.01% [4]. Group 3: Brand Strategy - The company has introduced a new air conditioning sub-brand "Jinghong," which aims to capture the market with high cost-performance advantages and complement the main Gree brand [5]. - The Jinghong brand will adopt a differentiated pricing strategy to meet the needs of price-sensitive consumers, thereby enhancing the overall product matrix of Gree Electric Appliances [5].

Core Viewpoint - Gree Electric Appliances is exploring the potential for spin-off listings of various business segments, including industrial products, high-end equipment, precision molds, electronic components, and renewable resources, based on market conditions and strategic needs [3] Group 1: Management and Strategy - The recent online performance briefing was the first led by Zhang Wei after his appointment as president, showcasing a younger management team [3] - Gree's sub-brand, Jinghong, is targeting both the engineering and consumer markets with a focus on high cost-performance products [3][4] - The company aims to achieve complementary pricing strategies between the Gree and Jinghong brands to cater to price-sensitive consumers [4] Group 2: Product Development and Innovation - Gree Electric has no immediate plans to replace copper with aluminum in air conditioning units due to significant performance and reliability concerns, despite aluminum's lower cost [3] - The company has been involved in the chip business since 2015, with an initial planned capacity of 240,000 pieces per year, funded by its own resources [4] - Gree's self-developed chips are now widely used in home air conditioners, with approximately 30% of applications being self-researched, and are also utilized in commercial air conditioning, smart equipment, and industrial robots [4] Group 3: International Expansion - Gree is expanding its multi-brand strategy overseas, with plans to establish regional sales companies and smart manufacturing bases [4] - The company has achieved over 20% market share in the Middle East and several Eastern European countries, as well as in Brazil, Indonesia, and Canada [4] - Gree's international diversification has extended beyond air conditioning to include refrigerators, washing machines, and other home appliances [4]

Investment Rating - The report maintains a "Strong Buy" investment rating for Gree Electric Appliances [4][7]. Core Views - The company's performance significantly exceeded market expectations, with a projected cumulative dividend payout ratio of 52% for 2024, resulting in a dividend yield of nearly 7% [1][7]. - Domestic demand is expected to be boosted by national subsidies, while exports continue to grow, with a 19% increase in air conditioning export volume in 2024 [7]. - The company has achieved a historical high in net profit margin, reaching 24% in Q4 2024, driven by operational efficiency improvements and digital transformation [7]. Financial Data and Valuation - Total revenue for 2023 is projected at 205,018 million yuan, with a year-on-year growth of 8%. However, a decline of 7% is expected in 2024, followed by a recovery with a 10% increase in 2025 [3][13]. - The net profit attributable to the parent company is expected to grow from 29,017 million yuan in 2023 to 35,034 million yuan in 2025, reflecting a compound annual growth rate of approximately 9% [3][13]. - The price-to-earnings (PE) ratio is projected to decrease from 9.0 in 2023 to 7.4 in 2025, indicating an attractive valuation [3][13]. Shareholder Returns - The company plans to distribute a total cash dividend of 167 billion yuan, with a proposed dividend of 111.7 billion yuan for the annual report and an interim dividend of 55.2 billion yuan [7]. - The dividend per share is expected to increase from 2.39 yuan in 2023 to 3.13 yuan in 2025 [13]. Market Performance - Gree Electric Appliances has shown a strong market performance, with a 27% increase over the past 12 months, outperforming the CSI 300 index [6].

Investment Rating - The report maintains a "Buy" rating for Gree Electric Appliances, indicating an expected relative price increase of over 15% [10]. Core Views - Gree Electric Appliances is positioned favorably with multiple advantages including an upward trend in fundamentals, high dividends, and low valuation. The company is expected to benefit from the long-term national subsidy policy for high-end air conditioners, which has significantly boosted its retail market share since Q4 2024 [1][2]. - The introduction of the Jinghong air conditioner brand aims to penetrate the lower-tier market, leveraging Gree's strong brand reputation to create a second growth curve [1][9]. - Recent share purchases by the dealer group Jinghai Interconnect reflect a stabilization of channel relationships and confidence in Gree's long-term development [1][8]. - The report emphasizes the increasing focus on high dividend yields in the current investment environment, suggesting that Gree's low valuation presents a rebound opportunity [1]. Summary by Sections Market Dynamics - The long-term national subsidy policy has positively impacted the high-end air conditioning market, leading to a notable rebound in Gree's market share. The subsidy for high-efficiency air conditioners can reach up to 20%, stimulating consumer demand for high-performance products [2]. - Gree's market share showed a decline in the first three quarters of 2024 but rebounded by 2.00 percentage points in Q4, with further growth of 4.63% in January-February 2025 [2]. Financial Performance - Key financial metrics for Gree Electric Appliances are as follows: - Revenue (in million): 188,988.38 in 2022, projected to reach 232,403.65 by 2026, with a CAGR of approximately 5.35% [3]. - Net Profit (in million): 24,506.62 in 2022, expected to grow to 37,297.65 by 2026, reflecting a CAGR of about 7.72% [3]. - Gross Margin: Expected to increase from 26.04% in 2022 to 31.20% by 2026 [3]. - P/E Ratio: Projected to decrease from 10.39 in 2022 to 6.83 by 2026, indicating improving valuation [3]. Strategic Initiatives - Gree plans to launch the Jinghong air conditioner brand to target the engineering and low-price market segments, aiming to regain market share in the lower-tier market where competitors have been gaining ground [9]. - The company maintains a robust dividend policy, with a proposed dividend of 2.38 yuan per share for 2024, totaling 131.42 billion yuan, resulting in a dividend rate of 45.29% and a yield exceeding 6% [10]. Industry Outlook - The global air conditioning demand is expected to remain stable, with domestic sales projected to grow by 1.9% to 10.38 million units in 2025, driven by the national subsidy policy [7]. - Gree is well-positioned to benefit from the overall industry demand increase, particularly in the high-end segment [7].