A leading lithium battery OPE manufacturer with a leading commercial market layout. The company was founded in 2002, and initially focused on contract manufacturing. In 2009, the company first launched its own brand, Greenworks. Currently, the company has become one of the leading enterprises in the global lithium battery garden machinery industry. The company's own brand, Greenworks, has a high reputation and reputation in North America and Europe. Various products, such as lawnmowers and hair dryers, are on the Amazon platform “BestSeller” (best-selling products) all year round.
Lithium electrification in the OPE industry is expected to continue to improve, and the commercial market potential is huge. We believe that the OPE industry is a racetrack with high investment, mainly based on: 1) the large market that is just needed. Frost & Sullivan data predicts that 2022 will be 26.4 billion US dollars, and there are structural growth opportunities for lithium electrification; 2) Currently, the OPE industry has a high level of lithium electrification in the household market, and there is still a lot of room for improvement in the lithium electrification rate of progressive, especially household riding lawnmowers, while lithium electrification in the commercial market is very low. As leading manufacturers in the industry, represented by Greebo, begin to promote the commercial market through breakthroughs in product power and market-aware education In the process of lithium electrification, the lithium electrification of the industry is still expected to continue to improve rapidly in the future; 3) The traditional fuel market is dominated by foreign investment, but the competitive advantage of domestic producers of lithium battery OPE is remarkable. This can be verified from the current household lithium battery market pattern, and the future commercial market is also expected to reinterpret the situation led by domestic manufacturers.
Household business: Diversified channels continue to advance, and it is expected to continue to grow steadily after going out of storage. As a pioneer of lithium battery OPE, the household business is the company's basic business. Following adverse adjustments in Lowe's business, the largest customer in the second half of 2020, the company quickly adjusted its own business strategy, taking diversified channel expansion and independent brand building as the core driving force for the growth of the company's household business, which also further strengthened the company's ability to withstand risks. Recently, a cooperation agreement was reached with global retail giant Walmart. This is another major breakthrough after the company established cooperative relationships with many retailers such as Amazon, Bestbuy, Costco, Lowe's, and TSC. It is expected to provide important support for the company's household business revenue growth in the future.
Commercial business: In the early stages of growth, the company was in a leading position. The commercial market is the biggest increase in lithium battery OPE in the future. Currently, the lithium battery commercial market is in its infancy, and the lithium electrification rate is less than 5%. In terms of commercial market layout, the company is ahead of the main competitors in the lithium battery OPE industry. The company officially launched lithium battery OPE commercial products with Optimus Z series lawnmowers as the core. This series of products currently has an advantage in terms of high power, high efficiency and cost savings for customers. In terms of channels, the company has also reached a strategic cooperation with TSC, the leading mounted lawnmower channel in North America, and has cooperated with the largest landscaping service company in the US on commercial mounted lithium battery lawnmowers.
Investment suggestions: We expect the company's operating income for 2023-2025 to be 46.80/54.53/6.61 billion yuan, net profit of -1.30/4.19/517 billion yuan, EPS of -0.27/0.86/1.06 yuan, and 21/17 times the corresponding PE in 2024 and 2025. As a leading lithium battery OPE brand enterprise, the company has a complete diversified channel layout and a first-mover advantage in the commercial market, and is expected to continue to enjoy the dividends of the lithium battery wave in the industry. First coverage, giving a “recommended” rating.
Risk warning: Overseas demand falls short of expectations; competitive landscape worsens; risk of international trade friction