Event: on February 2, Bisheng sued Tian Ke for infringing his patent for floor washing machine and asked to launch 337 investigation and issue exclusion order and prohibition order.
Detailed explanation of the event: first of all, this patent war is only limited to the United States and has no impact on other regional markets. When foreign brands in the United States develop to a certain level, it is easy to cause patent war. As a normal business behavior, patent war is also relatively common in the United States. It does not necessarily lead to market retreat / patent invalidation and other consequences. It is even a means for some American enterprises to make peace at some time. For example, TCL electronics and Hisense have all experienced 337 investigations in the United States, and all ended in reconciliation.
Specifically, the impact of this event on Ecovacs Robotics Co.Ltd(603486) :
I. how much is the relevant revenue volume of Tianke American floor washing machine system
We expect that Tianke's overseas revenue will be at the level of 1.5 billion in 2021, of which the United States is the largest overseas market. We assume that the United States market accounts for 80-90% of the total revenue. In terms of product structure, referring to the monthly sales data of Meiya, we expect the vacuum cleaner / floor washer to be about 35:65. Based on this estimation, we estimate that the income of Tianke's US floor washer that may be affected by this event is about 700-900 million, accounting for about 16% of Tianke's total revenue (we expect about 5 billion in 2021) and 6% of Ecovacs Robotics Co.Ltd(603486) total revenue (we expect about 13 billion).
II. What are the specific patents involved?
The five patents sued by Bisheng cover a wide range, specifically:
① product design of using running water + roller brush to clean dry and wet garbage;
② optimize the product design of water use / residue;
③ design of internal circulation and transportation of water flow;
④ charging / power supply in the process of self-cleaning;
⑤ it involves the self-cleaning mode of the machine.
III. what is the possible future trend of this event?
According to our analysis, if we discuss the situation:
① win the lawsuit completely: Tim washable machine withdrew from the U.S. market, but kept vacuum cleaners and other categories. At the same time, pizza hut is expected to dominate the U.S. floor washer Market, blocking the entry of a large number of Chinese brands.
② Tianke wins the lawsuit: the patent of Bisheng is invalid, and Tianke / shark / Chinese brands have just joined the competition of floor washing machines in the U.S. market. Among them, the addition of shark may form greater competition for victory.
③ Tianke launched a patent war in China: Tianke's patent layout in China is relatively sufficient. Pizza hut also has the patent layout of floor washing machine in China, but considering the advantages of local patents, it is expected to be weaker than Tianke. According to this, Tianke may launch a patent war in China to check and balance. According to news reports, in 2021, the revenue of Bisheng China is about 800 million, and the global revenue is expected to be 9-10 billion. Losing the Chinese market also has about 8-10% revenue impact on pizza hut.
④ Bisheng & Tianke Alliance: looking back on the previous patent war in the floor sweeper industry, iRobot also launched 337 investigations to prevent Chinese small and medium-sized brands from entering the market through patents, but chose patent cross licensing for cooperation with big brands Ecovacs Robotics Co.Ltd(603486) . The outcome of this incident may also end with Tianke, Bisheng, reconciliation and cooperation. At present, Bisheng and Tianke are global floor washing machine CR2. If the two patents are cross licensed, it is also expected to jointly monopolize the floor washing machine market and raise the access threshold for other countries.
To sum up: we believe that after the baptism of history, Longtou has paid more attention to overseas patents, and the relevant patent team is expected to actively deal with relevant disputes. We generally predict that ① has a lower probability of occurrence and ②, ③ and ④ have a higher probability. We are firmly optimistic about the trend opportunity of China's leading global expansion.
Whether this event has an impact on the stone:
Stone's recent share price has also been greatly adjusted. We believe that the main reasons for this adjustment may be: ① according to the previous news of new stone products, dyad stone washing machine is expected to be listed in the United States in February. The market is worried that the stone floor washing machine will also be affected by this patent war and will not be able to enter the American market; ② The growth rate of short-term Meiya data decreased.
We believe that: ① at present, stone products are not involved in this patent lawsuit, and there has never been a patent related dispute in the history of the company. At the same time, if extreme pessimism is considered, the stone washing machine business is seriously damaged, but due to the low proportion of the company's washing machine business, there is still no significant impact. ② Stone's new products in 2022 will be listed successively from February, and with the gradual decline of the base in 2021 (the impact of shipping), the company's growth is expected to rise quarter by quarter.
Investment advice
The valuations of Ecovacs Robotics Co.Ltd(603486) and stone have returned to the safe range after the stock price adjustment. We estimate that the net profit attributable to the parent company in Ecovacs Robotics Co.Ltd(603486) 2022 will be 2.78 billion, yoy + 37%, corresponding to the current PE of 26x; In 2022, the net profit attributable to the parent company of stone was 2.16 billion, with yoy + 33%, corresponding to the current PE of 25X. Continue to recommend double star sweeper faucets.
Risk tip: the result of patent litigation is not conducive to Chinese companies, and the development of going to sea is limited
