Company discloses 24Q3 results

Q3: Revenue of $47.1 billion (-16%), net profit to mother of 7.8 billion yuan (+5.5%), net profit of 7.3 billion (+2%); Q1-3: Revenue of 147.4 billion yuan (-5%), net profit to mother of 22 billion yuan (+9%), net profit of non-attributable net income of 21.2 billion yuan (+10%).

Q3 revenue: There is no apparent difference in the actual growth rate. It is mainly dragged down by other businesses, such as Q3 air conditioning and other business revenue -10% (24H1 +10%), and revenue from other businesses such as A Supply (that is, purchasing raw materials and selling them upstream) -48% (24H 1-44%).

According to Industry Online, Q3 Gree shipments were -7%, domestic sales -20%, and export sales +43%. Affected by the downgrade in domestic sales consumption, the decline in Q3 was slightly larger than the industry (-10%), and export sales were slightly faster than the industry (+38%).

Q3 Profit: Channel reforms have been effective, leading to lower sales rates 1) Gross profit margin -0.5%: We expect it to be related to an increase in raw material price+a downgrade in consumption.

2) Expense rate 10.3% (-2.6% YoY): This year is Gree's first cold opening year after completing the national channel reform. We expect the channel reform to flatten and accelerate, and profits to return to listed companies, driving the Q3 sales rate to drop sharply (4% compared to -4% year on year).

Profit forecasting, valuation and investment ratings

1) Domestic sales: Looking ahead to Q4, on the retail side, Gree's share and average price both reversed the downward trend after the September trade-in (GFK omnichannel W42 Gree sales share +3.7%), and it is expected that the trade-in will significantly boost high-end brands such as Gree.

2) Export sales: Air conditioning is the only category in Q4 that continues to significantly increase production schedule expectations. The Q4 production growth rate increased to around +50%, which is faster than Q3, and Gree is expected to continue to benefit.

3) Looking at performance: The company's Q1-3 has continued to perform better/in line with market expectations for 3 Q4. Both domestic and foreign sales have bright spots; domestic sales channel improvements have been very effective on the reporting side.

4) Looking at PE: The company's export revenue accounts for only 15-20%, which is lower than that of peers. It is expected that PE will be less affected by the risk of additional tariffs disrupting PE.

We adjusted the company's performance according to Q1-3. We expect revenue for 24-26 to be 205.9/212.6/219.5 billion yuan, YOY +0%/+3%/+3% (previous value was 208.9/215.8/222.8 billion yuan, YOY +2%/+3%).

Net profit to mother was 31.9/33.2/35 billion yuan, YOY +10%/+4%/+5% (previous value was 32.3/33.5/35.6 billion yuan, YOY +11%/+4%/+6%), corresponding to the 24/25/26 PE was 8/7/7X, maintaining a “buy” rating.

Risk warning: Real estate completion risk, risk of air conditioning growth falling short of expectations, risk of raw material price fluctuations, export sales falling short of expectations, risk of exchange rate fluctuations, risk of untimely research information updates.