Gree Electric Appliances' net profit increased by 11% last year, with subtle changes emerging in the revenue composition breakdown that had been in use for three years.

Gree Electric Appliances (000651.SZ) released its 2024 annual performance report today, revealing a decline in revenue and an approximately 11% year-on-year increase in net profit attributable to the parent company's shareholders.

Considering the performance of several leading home appliance producers that have already disclosed their results, it is an indisputable fact that the growth of traditional home appliances is sluggish, and finding new sources of performance growth has become one of the most important issues facing these producers. A reporter from Cailian Press noticed that in its 2024 annual report, Gree Electric adjusted its long-standing revenue composition classification, which may reflect a psychological shift in the company's approach to diversification.

According to the financial report data, Gree Electric achieved operating revenue of 189.164 billion yuan in 2024, a 7.26% decrease from 2023, and a net profit attributable to the parent company's shareholders of 32.185 billion yuan, a 10.91% increase from the previous year. During the same period, the net operating cash flow of Gree Electric decreased significantly by 47.93% compared to 2023, and the weighted average return on net assets dropped by 1.11%.

In comparison with peers, Gree Electric's performance report is not unexpected. The previously disclosed performance data showed that Midea Group (000333.SZ) achieved revenue growth of 9.44% and net profit growth of 14.29% in 2024, while Haier Smart Home (600690.SH) saw increases of 4.29% and 12.92% in these two indicators, respectively, compared to the previous year.

Although the three home appliance giants have extended their business reach into more fields, home appliances still remain their highest-weighted source of revenue in terms of revenue proportion. Data shows that in 2024, the average revenue growth rate of the A-share home appliance sector was only 8.16%, and the average net profit growth rate was even lower at -43.27%, marking the lowest level in the past three years.

With the traditional home appliance market showing signs of fatigue, seeking new growth space through diversification has become an inevitable choice for producers. Midea Group's main products now cover fields such as smart homes (including home appliances), new energy, smart buildings, and robots. In addition to consistently promoting refrigeration and washing products, Gree Electric has also expanded its main business to include industrial equipment manufacturing and green energy.

Regarding diversification, a subtle change in Gree Electric's 2024 annual report is worth noting. A reporter from Cailian Press observed that in 2021, Gree Electric began classifying its revenue composition into seven categories in its annual report: air conditioners, household appliances, industrial products, intelligent equipment, green energy, other main businesses, and other businesses, a classification that was maintained until 2023. However, in the 2024 annual report, the revenue composition was adjusted to five categories: consumer appliances, industrial products and green energy, intelligent equipment, other main businesses, and other businesses.

In other words, in the 2024 annual report, Gree Electric no longer separately discloses specific data for air conditioners and household appliances (mainly including refrigeration and washing products, kitchen appliances, etc.), and the same applies to industrial products and green energy.

Against the backdrop of sluggish growth in the traditional white goods market, the expansion of Gree Electric's businesses beyond air conditioners has been a topic of great concern among investors. During the previous shareholders' meeting, topics such as refrigeration and washing businesses and Gree Titanium were also mentioned more frequently. However, according to public media reports, Dong Mingzhu still holds high expectations for Gree's refrigeration and washing businesses. As for Gree Titanium, Dong Mingzhu hopes that the outside world will give it room to grow.

The adjustment in the classification of revenue composition has led to less focus on the specific progress of certain segmented businesses, which may align with Dong Mingzhu's expectation of "giving room to grow." However, Gree Electric's path to diversification obviously cannot completely avoid investors' attention. A long-term investor in Gree Electric previously revealed in an interview with a reporter from Cailian Press that they do not hold high expectations for the short- to medium-term performance contributions of Gree Electric's refrigeration and washing businesses or Gree Titanium. In terms of certainty, the competitiveness of Gree Electric's air conditioning products (especially in the high-end market) and the gradually expanding overseas market may be more worthy of attention.