Analysis of the Reasons for GREE Electric (000651.SZ) Being Popular and Its Market Prospects

GREE Electric (000651.SZ) belongs to the Home Furnishings, Furniture & Appliances sector of the consumer cyclical industry. Its current market capitalization is $225.74B[0], and the closing price as of December 24, 2025, was $40.76. The company’s 52-week price range is $39.20-$48.47, with a price-to-earnings ratio of 7.10x (low valuation) and a return on equity of 22.62% (strong profitability)[0]. However, its performance from the start of 2025 to date and over the past six months has been negative, dropping by 12.04% and 9.22% respectively.

Around December 14, 19 major air-conditioning companies including Midea, Haier, and Xiaomi launched a self-regulatory convention for the ‘aluminum replacing copper’ standard, planning to replace copper tubes (core components of air conditioners) with aluminum tubes to reduce costs[1]. GREE Electric subsequently stated clearly that it ‘has no plan to replace copper with aluminum for the time being’, emphasizing the quality reliability of copper as a core raw material and saying it would only consider the technology under the premise of ensuring performance, quality, and reliability[2]. This differentiated quality stance sparked widespread market discussions and became the core driver for the stock to enter the popular list.

At the extraordinary shareholders’ meeting on December 3, Chairman Dong Mingzhu spoke about the dividend issue, mentioning that the company has distributed cumulative dividends exceeding 172.2 billion yuan, while emphasizing that ‘shareholders hope the horse runs, but please let the horse have grass to eat’[3]. Despite the strong dividend payout, the 2025 third-quarter report shows both revenue and net profit declined (revenue decreased by 6% year-on-year, net profit fell by 2.27% year-on-year), creating a contradiction between the embarrassing performance decline and high dividends, which intensified market attention.

• Recent Trend
  : From December 15 to December 24, 2025, the stock price fluctuated slightly in the range of $40.64-$41.20. As of December 24, it fell by 0.27% compared to December 15[0].
• Trading Volume
  : The average trading volume over the past 8 trading days was 32.29M, which is below the long-term average of 39.81M; only on December 17 (when the industry ‘aluminum replacing copper’ topic fermented) did the trading volume reach 42.93M (above the average), while activity was low in other trading days[0].
• Key Price Levels
  : Support level at $39.20 (52-week low), resistance level at $41.20 (high over the past 8 trading days)[0].

On platforms like Snowball, investors discussed the impact of ‘aluminum replacing copper’ on GREE’s costs and quality, strategies for performance recovery, and the sustainability of dividends. Some investors recognize the long-term brand value of GREE’s adherence to quality, while others worry about market share loss due to intensified competition[1]. Technical indicators show a ‘strong buy’ signal, but overall market participation is limited and sentiment is divided[1].

1. Trade-off Between Quality Positioning and Industry Trends
   : GREE’s stance in the ‘aluminum replacing copper’ controversy reflects its long-term quality-oriented strategy, but it needs to be alert to possible loss of price-sensitive consumers under cost pressure.
2. Risk of Single Business Structure
   : GREE’s revenue is mainly from air conditioners, and the effectiveness of its diversification layout is inferior to competitors, leading to a lack of new drivers for performance growth.
3. Contradiction Between Dividends and Performance
   : The high dividend strategy contrasts with the performance decline; attention needs to be paid to whether the company has sustainable profit growth to support future dividends.

• Intensified Competition
  : Competitors like Midea and Xiaomi are seizing market share through diversification and cost-effective strategies; Xiaomi’s air conditioner shipment volume increased by 60% year-on-year in the second quarter of 2025, squeezing GREE’s mid-to-low-end market[3].
• Declining Performance
  : Both revenue and net profit have declined, and the single business structure increases growth pressure[3].
• Technical Strategy Risk
  : Refusing ‘aluminum replacing copper’ may lead to cost disadvantages; if consumers switch to cheaper aluminum tube air conditioners, it may affect market share[1][2].

• Brand Advantage
  : Long-term adherence to quality helps consolidate high-end market share.
• Valuation Advantage
  : A P/E ratio of 7.10x indicates low company valuation, with potential room for value restoration.

GREE Electric (000651.SZ) became a popular stock mainly driven by the ‘aluminum replacing copper’ controversy and dividend topic. Market sentiment is divided, trading volume is below the long-term average, with a short-term support level of $39.20 and resistance level of $41.20. Investors should focus on changes in the competitive landscape, performance improvement, and the company’s response strategy to the ‘aluminum replacing copper’ trend. Current valuation is low, but the single business structure and competitive pressure pose short-term challenges.