Gree Electric Appliances Inc. (000651.SZ): 3Q26 First Take: Revenue in-line but profits missed on elevated GPM pressure; Neutral

Gree reported 3Q26 revenue of Rmb36,871mn and net profit of Rmb3,996mn, down 8% and 43% yoy, respectively, versus GSe of 0%/-36%. Revenue was in line with expectations, while profit missed mainly due to greater-than-expected gross margin pressure, with GPM down 5.5ppt yoy to 23.1%. The company declared an interim dividend of Rmb1.0 per share, unchanged from last year. We attribute the revenue decline to weak domestic demand and intense competition; Gree's greater reliance on the domestic AC market made it more vulnerable. AC ex-factory shipments fell 19% yoy in 3Q26, with domestic/export shipments down 14%/34% yoy, while offline/online ASPs declined 2%/19%. Contractual liabilities fell 43% yoy to Rmb7.8bn. OPM declined 6.6ppt yoy to 10.3%, and sales expense rose 15% yoy. Maintain Neutral.