The Zhitong Finance App learned that Everbright Securities released a research report saying that looking ahead to 2024, the climatic conditions are more favorable, and the OPE summer storage effect is expected to exceed expectations. At the same time, 2024 is also the year California officially bans the fuel OPE policy. More regions are expected to join in the future, and the increase in the penetration rate of lithium-ion products is expected to exceed expectations. Compared with the continued negative growth in exports in the case of leaving the warehouse in 2023, there is a high degree of certainty that shipments will maintain positive growth in 2024. If the US interest rate cut cycle starts, driven by demand in the real estate market, the OPE industry is expected to usher in a new inventory replenishment cycle. Recommended attention: Grubbo (301260.SZ), Quanfeng Holdings (02285).

The main views of Everbright Securities are as follows:

OPE is broadly defined as a power-driven tool or device mainly used for lawn, garden or garden maintenance. It can be divided into handheld, stepper, ride-on, and intelligent according to the mode of use. Among them, lawn mowers account for about 35% of sales in 2023, which is the most popular category. Lawnmowers and chain saws each account for about 10%. According to Frost & Sullivan, from 2016 to 2020, the OPE market grew from US$201 billion to US$25 billion in 2020, with a CAGR of 5.6%.

Lithium electrification and e-commerce: According to TraqLine statistics, the sales market share of fuel-powered garden machinery fell to 32.8% in 2022 from 55.4% in 2012, while the sales market share of new energy garden machinery grew rapidly from 13.4% to 44.9%. As of June 2023, OPE's sales share of offline purchases has dropped to 66%. Supermarkets such as Home Depot and Lowe's, online platforms such as Amazon, and the manufacturer's official website can all be sold online.

Channel and brand: At the channel level, Home Depot and Lowe's are in the top two, with a combined market share of more than 50%; at the brand level: the market is scattered, but the leading brand effect is strong. Ryobi, Craftsman, Toro, Stihl, EGO, etc. are leading market shares.

US OPE cycle: focus on summer storage. In 2023, the OPE industry will enter deep warehousing. The export growth rate maintained negative growth throughout the year, and imports maintained negative growth. High retail sales remained +0.5% year-on-year, completing deep storage in summer. Similarly, the effect of removing storage in winter is also remarkable.

Looking forward to the future, Everbright Securities believes that it is necessary to pay attention to the following aspects:

Short-term: Look at climatic and seasonal factors. Looking at the whole year, OPE's monthly sales fluctuated greatly. Due to climatic factors, March-August is the peak sales season for building materials and horticultural products in the US. The inventory removal situation during the peak season will directly determine the intensity of off-season inventory replenishment, thereby affecting manufacturer shipments. We have now entered the peak sales season for OPE products. The climatic conditions are favorable, and the effects of product removal are expected to exceed expectations.

Mid-term: The increase in lithium electrification rate exceeds expectations. Compared to power tools, OPE products are becoming lithium electrified later. Starting in 2024, California will officially ban the sale of fuel OPE. The increase in the penetration rate of lithium electric products is expected to exceed expectations, thereby boosting the growth rate of the industry.

Long term: A look at the recovery of US real estate. Demand for OPE products is less relevant to real estate construction and maintenance activities than power tools, but in the long run it is affected by housing ownership rates. 80% of OPE buyers own their own homes.

Risk analysis: Policy support falls short of expectations; competition increases risk; progress in core technology falls short of expectations.