1. Gree Electric: A leader in the domestic air conditioning industry, covering a wide range of categories. 1) Development history: A leading domestic air conditioning company, started with the “Gree Air Conditioner Factory” in 1991 and developed into an international industrial group covering multiple B+C products within 30 years. We divide the company's development process into 4 stages: start-up period, growth period, and expansion period. 2) Performance: In terms of revenue, it showed a steady growth trend, while showing the characteristics of a diversified revenue structure centered on domestic sales. On the profit side, due to product structure upgrades and channel reforms, gross margin resumed growth, driving steady profit side growth. 3) Organizational structure: The company's equity structure is scattered, the management has long been experienced in the industry, and is supported by a perfect equity distribution mechanism to return investors and enable the company's long-term development.
2. Household scenario: The air conditioning business is growing steadily, and other categories have accurately entered the market. 1) Air conditioning: A mature product system guarantees diverse needs. Strict quality control and long-term after-sales strengthen the core competitiveness of products. In the future, there will still be growth points in the three major sectors of domestic central air conditioning and heating, special environment and climate, and differentiated needs. 2) Other categories: Lay out all categories of home appliances, directly target consumer demand pain points, and use brand endorsements to enter the middle and high-end markets of refrigerators, washing machines, etc.
3. Commercial scenario: Central air conditioning is still an important business growth point, and the refrigeration business is gaining momentum. 1) Central air conditioning and other HVAC: Commercial central air conditioning has many technology-leading industries. Its brand effect is obvious, and it has won large-scale projects many times. 2) Refrigeration: The product matrix is rich and suitable for multiple scenarios. Strong R&D strength and energy-saving design concepts are the core competitiveness of its performance growth, and the refrigeration category may become a new performance growth point.
Investment advice: On the industry side, channels may be actively preparing goods due to rising copper prices and the Red Sea incident. At the same time, a new round of trade-in home appliances may help the domestic white electronics industry grow, and overseas market demand continues to recover. On the company side, it continues to build a refined product matrix, deeply cultivate the household air conditioning and HVAC equipment sector, and maintain a high market share of central air conditioning; it plans to increase its subsidiary Gree Titanium Co., Ltd. to help accelerate the development of the new energy business, and superposition innovation to empower green development, which is expected to provide new support for performance growth. We estimate that in 2024-2026, the company's net profit to mother will be 322.97/356.76/38.691 billion yuan, and the corresponding EPS will be 5.74/6.34/6.87 yuan, respectively. The PE corresponding to the current stock price is 7.17/6.49/5.98 times, respectively. Maintain a “buy” rating.
Risk warning: risk of macroeconomic fluctuations, risk of factor price fluctuations, exchange rate fluctuations, risk of increased market competition, overseas political risks, etc.