Introduction to this report:

The export boom of vacuum cleaners and small air compressors is picking up, and the main business is expected to recover; regional expansion is beginning to show results, and the future of expanding categories can be expected. Increase your holdings.

Key points of investment:

Covered for the first time, a “gain” rating was given. The company's net profit from 2024 to 2026 is estimated to be 236/306/380 million yuan (+35%/+29%/+24%), and EPS is 1.29/1.67/2.08 yuan, respectively. Referring to comparable companies in the same industry, combined with PE valuation and DCF valuation methods, the target price is 30.26 yuan, which is covered for the first time, giving a “gain” rating.

The export boom is picking up, and the main business is about to recover: the company's main business is exporting wet and dry vacuum cleaners and small air compressors to North America. In the past two years, sales were under short-term pressure due to channel inventory removal and downstream customer strategy adjustments. Since 2023Q4, the overall sales volume of related categories exported by China to the US has been corrected year on year. As a leading segment of exports to the US (air compressors account for about 20% of the market share of air compressors and about 3% of vacuum cleaners), it has also been able to improve short-term orders. In addition, the export boom of air compressors and vacuum cleaners to the US is closely related to US real estate. Expectations for a recovery in US real estate in 2024 are strong. Combined with downstream customer demand for inventory replenishment, the improvement in the company's main business is certain.

The results of expanding the region are beginning to show, and the future of expanding categories can be expected: the core competencies of export order companies are manufacturing, and the other is customer maintenance. The company's core executives went to the US earlier, established a first-mover advantage in overseas operations, deeply tied to overseas channels such as Home Depot and Lowe's, and were authorized by famous brands such as Stanley Patek. The company is also gradually developing new markets such as Europe, and overseas incremental markets are expected to open up. Furthermore, since the company developed the first generation nursing robot in 2013, it has now been updated to the fifth generation through continuous iteration. The nursing care circuit has vast space, and it has already had leading successful experiences overseas. The company is expected to gradually expand this business through increased promotion.

Catalyst: The completion of the Malay project within the year will increase overseas orders and enhance the company's profitability.

Risk warning: Geographical conflict affects exports, risk of fluctuations in raw material prices