The global vacuum cleaner market is growing steadily, and domestic production capacity is highly concentrated. The global vacuum cleaner market is expected to maintain steady growth in the future. Euromonitor International predicts that global vacuum cleaner sales may maintain a steady growth trend in 23-25; among them, Europe and the US may maintain the leading share of the region. We believe that the main reason for the large differentiation in the development of the vacuum cleaner market in the region is economic level and lifestyle habits.
After years of development, the global vacuum cleaner market is almost mature; the market concentration is low (CR3 is 24.9%), but the share of leading brands is relatively stable. The brands that have long occupied the top six in the global vacuum cleaner market include:
TTI, Dyson, Pizza, Midea, Electrolux, and SharkNinja; SharkNinja's share increased steadily and maintained a high compound growth rate (sales CAGR of 8.7% in 15-23). China is the most important producer and processing country in the global vacuum cleaner industry. In '21, China's vacuum cleaner production accounted for more than 90% of global vacuum cleaner sales.
Core customers build basic cleaning appliances and enter the high-growth floor washer market. The company began cooperating with Shark in 2004. The history of cooperation is now nearly 20 years, and the scale of cooperation has increased year by year. The company accounts for more than 80% of the long-term revenue of JS global sales, which is highly sticky. Affected by trade frictions in 18-20, the company's revenue fluctuated by a certain margin. The company actively raised funds to build a production base in Vietnam to find solutions. We believe that in a situation where the global vacuum cleaner market is growing steadily and the share of the Shark brand continues to be stable, the company has been the largest supplier of JS Global for a long time, and the JS Global segment's revenue may have high certainty and some room for growth.
Floor scrubbers that simultaneously clean up wet and dry garbage can solve the pain points of domestic hard floor cleaning. Sales grew rapidly by nearly 100% CAGR in 2020-2023, and have now become the second largest cleaning appliance segment. In the context of a high hot+low threshold market, floor washers are still in the blue ocean market. The competitive pattern of the industry is not stable, and there are many market participants.
We believe that Internet brands and cross-border brands that want to enter the market in the short term but lack the manufacturing capacity for corresponding cleaning appliances are likely to cooperate with foundries so that products can be quickly launched and seize the market. With many years of experience in foundry cleaning appliances and rich customer resources, the revenue/competitiveness of the floor washer category is expected to continue to increase.
Expanding new tracks such as energy storage horizontally to shape a second growth curve. The company actively invests in the field of household storage and industrial and commercial energy storage: invests in shares (15%) in Xihe Future to jointly develop household storage and other products; and acquires 51% of Yongneng New Energy's shares to provide energy storage system solutions for industrial and commercial users. We believe that similar to the domestic NEV industry, as more enterprises enter the market, Chinese companies may achieve a leading position in the energy storage market share with manufacturing advantages and rich industrial chain cluster advantages. At the same time, relying on the development of the domestic energy storage industry, the company's active investment in household storage and industrial and commercial energy storage may bring new development opportunities.
With many years of work experience, the company already has certain advantages in customer resources, supply chain integration, project management, quality control, etc. With the gradual development of various businesses such as energy storage and pest control equipment, the company's business is expected to break away from dependence on clean appliances and form a diversified development pattern, and the company's revenue still has great potential for growth.
Investment advice: The company's cleaning appliance foundry is of excellent quality. Looking ahead to 24 years, overseas inventory is expected to gradually be eliminated, and the company's revenue growth rate in the cleaning appliance sector may be restored. Furthermore, domestic floor washing machine customers and commercial beauty equipment business have made the company's revenue structure more diversified and has good potential for growth. At the same time, considering the company's development of a new energy storage business segment, it is expected to bring significant revenue growth to the company in the future; we predict that the company's net profit from 23 to 25 will be 2.6/3.4/40 billion yuan, corresponding to PE of 30.7/23.7/19.8. We are optimistic about the company's long-term layout and development. For the first time, coverage gave a “gain” rating, and we recommend that you pay attention.
Risk warning: risk of high customer concentration; risk of global macroeconomic changes; risk of fluctuations in raw material costs; risk of exchange rate fluctuations; risk of new track expansion; estimation is subjective; risk of recent transaction changes.