Gree Electric Appliances Investment Quality Review (000651.SZ)
Data timestamp: 2026-07-24 22:04 UTC
Quality score: 76/100
Valuation position: current price/base fair value (FV) 0.87
Final signal: WATCHLIST
Core Conclusion
Gree is a WATCHLIST name. The price is below base FV but not low enough for a 2x signal, and the negative five-year revenue CAGR keeps the thesis dependent on FCF repeatability and capital allocation.
- Quality: 76/100, a good-company watch score. Cash flow and balance sheet are strong, while growth quality and evidence depth hold the score down.
- Price: current price is CNY40.46 and market value is about CNY226.63 billion. Conservative/base FV is CNY46.43/CNY46.43 per share.
Business Breakdown
Consolidated revenue was CNY189.65 billion in 2021, CNY190.15 billion in 2022, CNY205.02 billion in 2023, CNY190.04 billion in 2024, and CNY171.12 billion in 2025, a -2.5% five-year CAGR. Latest annual FCF was CNY44.67 billion. Segment margin or profit was not disclosed in the structured source.
Quality Gate
The score is 76/100: business model 7/10, moat 13/20, cash flow 17/20, capital return 13/15, balance sheet 10/10, growth quality 5/10, and management/accounting 11.1/15. FCF/Net Income averaged 1.02 and OCF/Net Income averaged 1.18. Average ROE was 23.6% and average ROIC was 12.8%.
Management/accounting is 74/100, converted to 11.1/15. The evidence framework keeps capital allocation, incentives, accounting, governance, related parties, and segment disclosure under continued review.
Financial Audit
The valuation uses five complete fiscal years, 2025 through 2021, all in CNY. 2025 revenue/net profit/OCF/capex/FCF were CNY171.12/CNY29.00/CNY46.38/CNY1.72/CNY44.67 billion. The five-year FCF series includes one negative year in 2021 at -CNY3.83 billion, followed by CNY22.63 billion, CNY50.97 billion, CNY26.07 billion, and CNY44.67 billion.
Latest cash was CNY110.55 billion, total debt CNY85.41 billion, and net cash CNY25.14 billion. Financial-asset composition remains a filing follow-up item.
Valuation
CNY 10Y government yield was 1.7% from ChinaBond on 2026-07-24.
| Scenario | Core Assumption | Multiple Basis | Fair Market Value | FV/Share | Price/FV | Weight | Next Check |
|---|---|---|---|---|---|---|---|
| Conservative | Normalized FCF CNY28.10bn with heavier haircut | g -1.0%, 8.0x | CNY260.10bn | CNY46.43 | 0.87 | 30% | FCF durability |
| Base | Five-year FCF and current state continue | g 0.0%, 8.0x | CNY260.10bn | CNY46.43 | 0.87 | 50% | Revenue and ROIC trend |
| Optimistic | Quality rerating without exceeding cap | g 1.5%, 9.8x | CNY310.45bn | CNY55.42 | 0.73 | 20% | Competition and capital allocation |
The balance-sheet bridge contributes CNY35.29 billion: cash CNY99.50 billion, current financial assets CNY11.90 billion, non-current financial assets CNY9.30 billion, and debt subtracting CNY85.41 billion. Price/base FV of 0.87 is not enough for the 2x gate.
Buy And Monitor
Current action is watch. Upgrade requires price/base FV below 0.70, quality score at least 75, and better mispricing evidence. Monitor revenue trend, FCF/Net Income, ROIC, net cash/debt, dividends, buybacks, and governance.
Risks
FCF quality is an observation item because historical FCF includes a negative year and working-capital swings. Balance sheet passes, but larger debt or financial-asset haircuts would reduce FV. Governance and shareholder return evidence also remain observation items.
Research only. Not personalized investment advice.
Sources
Current price, market value, share count, and five-year financial baseline came from public quote and financial platforms. Annual reports and company disclosures remain the required sources for dividends, buybacks, governance, related-party, incentive, and risk evidence. Risk-free rate: ChinaBond, 2026-07-24.