Key takeaway

GREE's revenue and net profit came under pressure in 2Q26, mainly because geopolitical conflicts in the Middle East weighed on its overseas business, while the phase-out of national subsidies and the sluggish property market suppressed domestic demand. The company's earnings quality remained relatively stable: its net margin was broadly flat YoY, its gross margin on overseas sales improved due to a higher share of proprietary brands, and its core domestic sales business maintained positive growth. The company remains committed to independently developed and controllable core technologies. It continues to expand high-value-added businesses such as AI-powered energy efficiency, magnetic levitation, and low-temperature heat pumps. Overseas proprietary brands now contribute 70% of export revenue, with rapid sales growth in Spain, Portugal, France, and Northwestern Europe. The company offers both medium- to long-term growth and resilient profitability. Watch for an operational turnaround opportunity in the air-conditioner market leader.

Event

On August 27, GREE released its 2026 interim report. In 2Q, the company recorded operating revenue of RMB46.593bn, down 16.8% YoY, and net profit attributable to shareholders of the parent company of RMB7.196bn, down 15.4% YoY.

In 1H26, the company recorded operating revenue of RMB89.673bn, down 8.14% YoY; net profit attributable to shareholders of the parent company of RMB13.278bn, down 7.87% YoY; and net profit attributable to shareholders of the parent company excluding non-recurring gains and losses of RMB12.707bn, down 8.89% YoY.

Risk reminder: 1. Macroeconomic growth may fall short of expectations, as home appliance sales are closely related to macroeconomic performance. If global economic growth falls short of expectations or real estate growth slows, the company’s product sales may be significantly affected; 2. Significant fluctuations in raw material prices: Raw material costs account for a large share of the company’s cost of revenue. If commodity prices rise again, the company’s profitability will weaken; 3. Overseas market risks: Uncertainty in overseas markets has increased in recent years, while overseas sales account for a high share of the company’s total sales. A decline in external demand would adversely affect its performance; 4. Intensifying market competi tion: Competition in the industry becomes more intense amid weak market conditions. The company faces the risks of losing market share and reduced profitability due to low-price competition.