AI-enabled global robot vacuum leader: The company was founded in July 2014 and listed on the Science and Technology Innovation Board in February 2020. The business focuses on sweepers and other cleaning equipment. In 2023, sweepers accounted for 94% of revenue, overseas sales of two-wheel drives, and overseas sales accounted for 49%. Profitability is leading the industry, with a gross margin of 55.1% and a net margin of 23.7% in 2023. According to Euromonitor data, the company's sweeper sales in the first three quarters of 2023 topped the world.
Mini autonomous driving, the core technology shapes the company's high-end brand image: The sweeper robot is essentially a mini autonomous driving system combining software and hardware. The all-purpose base station provides functions such as self-dust collection, self-cleaning, and automatic water sewerage, etc., making the sweeper move from “usable” to “easy to use”. AVC data shows that the sales share of all-purpose base station models in China reached 73.3% in 2023. The company has strong R&D capabilities, and has technical advantages in core algorithms, lidar, and cleaning modules. Jiuqian data shows that the company's average sales price in the US, Germany, France, and Amazon ranks 1st in the category, and Euromonitor ranks 1st in the world in terms of market share, successfully building a mid-range and high-end brand image.
Strong offshore wind, iRobot weak, stone sails: Overseas markets have huge potential, and Euromonitor expects the global market size of sweepers to reach US$9.97 billion by 2028. The company is positioned as a high-end overseas. The 4 products are listed in the top 15 Best Sellers for sweepers in the US and Asia, and are well recognized by Europe and the US. Former industry leader iRobot is in financial trouble. Revenue in 2023 fell by nearly 40% compared to 2021, and the decline in product strength led to a sharp decline in the company's profitability. Shitou's fine operation is on the rise. The North American market continues to seize iRobot's share online, and develops KA channels such as Target offline; the European and Japanese markets strengthen refined operation and localization strategies, develop highly targeted localized products, and gradually increase market share.
The effect of “price for volume” is remarkable, and domestic sales continue to grow: the size of the domestic market is rising steadily, mainly for all-purpose base station products to release user demand. The effect of “exchanging price for volume” in domestic sales is remarkable. According to AVC data, in 2023, the company used the advantages of middle and high-end brands to reduce prices moderately. The average sales price dropped by 1.2%, but domestic sales increased by 41%. The company excels at reducing technical costs, taking into account user experience and the company's gross profit margin. By lowering the threshold for all-purpose base station products, the company successfully built the explosive P10. At the same time, it also occupied 8 seats in the 2023 Top 20 models. It already has the comprehensive ability to create explosives in batches, which is expected to help the company's domestic sales continue to grow.
Investment advice: The company has a stable competitive position for global sweepers. Benefiting from the wave of technology going overseas, the performance is expected to continue to grow. We expect the company to achieve revenue of 11.065 billion yuan, 14.123 billion yuan, and 17.973 billion yuan in 2024-2026, and net profit to mother of 2,552 billion yuan, 3.295 billion yuan, and 4.285 billion yuan. The corresponding PE valuations are 22.74x, 17.61x, and 13.54x, respectively. This is the first coverage, and a “gain” rating is given.
Risk warning: risk of shareholder reduction; risk of RMB exchange rate fluctuation; risk of overseas business operation; risk of increased competition; risk of product price reduction.