A global leader in new energy garden machinery, the launch of new commercial lithium battery products has opened up space for the medium to long term. The company focuses on the new energy and AC garden machinery business, and its products cover lawn mowers, lawn mowers, washers, hair dryers, pruners, chain saws, etc. The company's 18-21 revenue CAGR = 17%, and the business grew rapidly. Delivery of the core product, the second-generation lithium battery commercial mounted lawn mower, began in '23, and is expected to contribute to an important increase in performance in the future.
The penetration rate of lithium batteries in garden machinery has increased rapidly, and the company's multi-platform product matrix has helped increase performance. According to Global Market Insights statistics, the global lawn and garden equipment market in 2018 was 28.3 billion US dollars, and is expected to exceed 45 billion US dollars by 2025; according to TraqLine statistics, the market share of new energy garden machinery in the OPE field in North America rose rapidly to 36% in 2021. The company's product line covers multiple battery pack power platforms such as 24V, 40V, 60V, 80V and 82V to achieve interoperability and interoperability of battery packs among different products, enhancing customer stickiness and repurchase rates. We expect the company's new energy garden machinery business revenue to be 40.09/57.24/7915 billion yuan in 22-24, compared to +17%/+43%/+38%, and gross margin of 24%/30%/29% respectively.
Pay attention to investment in technology research and development to form a vertically integrated intelligent manufacturing system that responds quickly to customer needs.
The company's R&D expenses for the 2019-2022 H1 were 17L/1.87/2.08/107 million yuan respectively, and the R&D expenses accounted for 4.58%/4.35%/4.16%/3.37% of operating income, respectively. The company is committed to building a vertical, intelligent and information-based intelligent manufacturing production system, forming a collaborative advantage between machine design and component development, shortening the new product development cycle, and being able to respond quickly to customer needs.
With the formation of a “own+supermarket+ODM” multi-category and “online+offline” multi-channel sales model, sales revenue is expected to increase at an accelerated pace. The company's own brand business has increased year by year. 2019-2022H1's own brand accounts for 53.13%/54.05%/56.97%/65.53% respectively, which has become the company's main source of revenue; Lowe's business adjustments have affected basic digestion, and the company has accelerated cooperation with downstream supermarkets or brands such as Amazon and Costco, which is expected to become a new growth point for the company's revenue.
Investment advice: The company's net profit for 2022-2024 is estimated to be 304/803/1,086 million yuan respectively, compared with +8.7%/+164.2%/+35.2%, and EPS is 0.63/1.65/2.23 yuan respectively. Considering the continued high growth in the new energy garden machinery industry, the company's net profit CAGR = 57% in 21-24, giving it a target price-earnings ratio of 22x in '23, with a target price of 36.30 yuan, covering the “buy” rating for the first time.
Risk warning: Industry competition has intensified, raw material prices have risen sharply, and the overseas business environment has deteriorated.