On Monday, Gree Inc. (3632:JP) (OTC: GREZF) experienced a shift in stock rating as a major financial services firm adjusted its perspective on the company's shares. The firm downgraded Gree Inc. from Buy to Hold, also revising the price target significantly downward to RMB40.00 from the previous RMB72.00.
The reassessment follows Gree's second-quarter financial results, which were released after the Hong Kong market closed on Thursday, August 30, 2024. The analyst from the financial services firm highlighted a forecasted decline in air conditioner (AC) volume growth for the new fiscal year, anticipating a decrease of 5-10% year-over-year.
The downgrade was influenced by several challenges identified by the firm's analyst. Gree's distributors are reportedly struggling with receivables from the construction channel, which is exerting pressure on their financials. Additionally, the market for air conditioners is facing intense price competition and is burdened by high channel inventory levels.
These industry pressures were evident in the company's balance sheet for the second quarter of 2024. The financial services firm now expects Gree to encounter significant headwinds in terms of sales, operational expenses, and working capital management.
The revised outlook by the firm suggests a more cautious stance on Gree's stock, recommending investors to hold rather than purchase additional shares at this time.
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