Key investment points:

Micromotor is a high-quality enterprise with remarkable advantages in segmented racetracks. The company was founded in 2004. Its main business is R&D, production and sales of micro motors and related products. The products cover the three types of AC series motors, DC brushless motors, and DC brushed motors. They are mainly used in the field of cleaning appliances represented by vacuum cleaners, and have also developed simultaneously into other terminal applications such as power tools and garden tools. 2020-2023H1, the company's motor products accounted for more than 83% of the revenue, and the company's main suction motor products reached more than 27% in the global market share in 2020-2022; in the first three quarters of 2024, the company's revenue and net profit to the mother were 1.79/0.138 billion yuan respectively, +20.93%/-5.21% year-on-year, and profits were slightly pressured by product structure and increased competition.

The micro motor industry is growing steadily, brushless DC motors. According to QYResearch data, the global micromotor market size is about 230.5 billion yuan in 2022, and is expected to reach 278.4 billion yuan in 2029, with a CAGR compound annual growth rate of 2.7% for the 2023-2029 period. DC brushless motors, one of the company's main products, have significant advantages. Under the downstream electrification/cordless trend, the penetration rate of DC brushless motors is expected to increase. One of the company's IPO fund-raising projects, the annual output of 30 million brushless motors and control systems, and the 5 million battery pack capacity expansion project helped the company increase the production capacity and supporting capacity of DC brushless motors, and is expected to achieve accelerated growth.

There are a wide range of downstream applications, and the company is expected to continue to benefit. The company's products are currently widely used in various household appliances such as vacuum cleaners, electric tools, garden tools, high-speed hair dryers, etc., and continues to expand downstream application fields. 1) Vacuum cleaner market: The global vacuum cleaner market sales will reach 15.259 billion US dollars in 2027, with a compound annual growth rate of 6.19%. Currently, the number of vacuum cleaners owned in China is far less than that of developed countries. It is in the early stages of popularity, and there is still a lot of room for growth. 2) Electric tools: The market size of the global power tool industry is growing steadily. The market size reached 38.6 billion US dollars in 2025, and the compound growth rate reached 5.8% in 2020-2025. 3) Garden tools: According to Frost & Sullivan, the global garden tools market is expected to reach 32.4 billion US dollars in 2025, with a compound growth rate of 5.1% between 2022 and 2025. 4) Hair dryers: The trend of high-speed hair dryers is beginning to show, and the market share of high-speed hair dryers will continue to increase.

The company has a significant competitive advantage, and the IPO fundraising has accelerated growth. 1) Perfect product system and leading technical advantages. The company has developed unique product and technical advantages in various aspects such as product performance, structural design, and function implementation. According to estimates in the company's prospectus (registration draft), the company's main suction motor products reached 27.01% of the global market share in 2022. 2) Large-scale production helps further reduce costs and increase efficiency. The company currently has an annual production capacity of more than 60 million units of micro motors, which has reached the forefront of its peers. The efficiency of scale makes the company have a great advantage in production costs. 3) The company has low customer concentration, rich customer resources and high stickiness. The company's products are widely used in well-known cleaning appliance terminal brands including Bisheng, Shark, TTI, Electrolux, iRobot, etc., and have strong customer stickiness.

Profit forecast and valuation suggestions: We expect the company's 2024/2025/2026 revenue to be 2.408/2.833/3.375 billion yuan, respectively; net profit to mother will be 0.206/0.251/0.313 billion yuan, EPS will be 1.06/1.29/1.61 yuan/share, respectively; corresponding PE will be 23.65/22.41/18.39 times, respectively. Considering that the company is a leading micromotor company in the field of clean appliances, new products and fields will continue to expand, and it is expected to open up There is some room for growth, and with reference to comparable company valuations, we gave the company a PE valuation of 25-28 times in 2024, with a reasonable value range of 26.47-29.65 yuan/share (the company's EPS is expected to be 1.06 yuan in 2024), and a reasonable market value range of 5.153-5.772 billion yuan, maintaining a “superior to the market” rating.

Risk warning: the risk that downstream demand falls short of expectations, customer expansion falls short of expectations, competition intensifies, and performance falls short of expectations.