Ecovacs Robotics Co.Ltd(603486) (603486)
Event: the company announced on the evening of December 30 that Teding new energy, a secondary subsidiary, plans to invest about RMB 1.2 billion to build a 2gwh polymer lithium-ion battery project, focusing on consumer grade 3C batteries. It is expected to be completed and put into operation in 18 months.
Why does the company enter the lithium battery industry? Mainly to meet their own needs
We believe that the core reasons are: ① the performance of existing batteries is not enough; In terms of the existing battery performance, the industry mainly adopts cylindrical batteries (e.g. Ecovacs Robotics Co.Ltd(603486) X1 adopts bick 18650 cylindrical batteries), while the company plans to put into production polymer lithium-ion batteries (mobile phones, laptops, etc.), which are lighter and larger than cylindrical batteries, and can meet the requirements of the floor sweeper industry for battery lightness, safety, energy density, variable size, etc. ② There is no suitable supplier. As the current shipment volume of the sweeper industry is still in the initial stage of development, the volume is small, and the product shape changes rapidly, some large battery manufacturers are unwilling to customize products in order to subdivide the demand, so the company chooses to invest in the lithium battery industry.
How big is 2gwh? Compared with the industry scale, according to GGII, the scale of global consumer lithium-ion batteries in 2019 is about 75 GWH (including 10 GWH for notebook computers and 20 GWH for mobile phones), and it is estimated that from 2020 to 2025 cagr20 27%。
According to the corresponding products, Ecovacs Robotics Co.Ltd(603486) X1 is equipped with 5200mAh lithium battery, and Tianke generation 2 is equipped with 4000mAh lithium battery. Calculated according to 4000-5200mah battery, assuming the rated voltage of 15V, it is estimated that the output of floor sweeper + floor washer is about 20-30 million.
Based on the sales data of the first three quarters, we expect that in 2021, the output of Ecovacs Robotics Co.Ltd(603486) sweepers will be about 3-3.5 million, floor washers will be 1.5-2 million, and OEM cleaning small electricity will be about 3-4 million. It is expected that after the project is completed in 2023, with the continuous improvement of the output of the company’s own brand, it is expected to independently digest 50% – 80% of the capacity of 2gwh.
Can the company make lithium batteries?
In terms of performance: “good” is better than the standard of sweeper. Previously, the battery used by the company was mostly a third-party standard, which was not suitable for the specific working environment of the sweeper; After self-produced batteries, the company is expected to focus on optimizing the battery life, service life, volume and weight and other specific performance, and develop batteries more suitable for floor sweepers.
In terms of efficiency: the battery cell link is the core breakthrough of this time. In terms of production efficiency, it is expected that there is a gap compared with the third-party battery factory in the short term, and cost intensification may be realized after large-scale production.
To sum up, the company pays more attention to performance improvement in the short term than pursuing cost optimization.
In the long run, extending the industrial chain is an important link for home appliance enterprises to accumulate advantages
Review the development of white power: Gree Midea made M & A investment in the upstream of compressor in the early stage, laying a foundation for subsequent development.
In 1998, Midea acquired Toshiba Wanjiale and entered the compressor industry, with a revenue of 3.6 billion that year; In 2004, Gree acquired Lingda layout compressor, with a revenue of 13.8 billion that year. The early upstream layout of the two strong air conditioners laid a solid foundation for the later cost advantage.
Ecovacs Robotics Co.Ltd(603486) this year’s revenue is expected to exceed the threshold of 10 billion. At present, it is expanding its savings strength upstream. The company has previously arranged the lidar link in the upstream devices, and has basically realized all self-production at present; The battery is the next step in the upstream layout. Extending upstream is not only expected to strengthen the cost advantage, but also to promote the leading R & D: the technology iteration of the sweeper industry is fast, and the upstream parts are also required to adapt to the rapid iteration of industry changes. After the company builds its own upstream parts, it can also more flexibly meet specific needs in product development.
Business tracking: Q4 has a good domestic sales, and the middle-end new products are expected to be in large quantities next year.
Domestic Q4 still maintained high growth. The company’s double 11 war report announced that the overall growth rate was + 107%. Combined with the business staff’s monitoring of Amoy system, the overall growth rate of Q4 Amoy system was 66%, including Ecovacs Robotics Co.Ltd(603486) brand + 35% and Tianke + 144%.
New product outlook for next year: self dust collection / self-cleaning in the landing of non high-end models. This year, the innovative base stations such as self dust collection / self-cleaning are mainly configured in the industry’s high-end flagship models. It is expected that more price sweepers will land new base station functions next year. Take the overseas new products of shark as an example. It has been applied to dust collection products at the mid-range price of $400-500. It is expected that Chinese manufacturers such as Ecovacs Robotics Co.Ltd(603486) and stone will also follow up accordingly.
At the same time, the implementation of new functions such as self-cleaning at the mid-range price is also expected to promote the industry to further break the circle and increase the volume. We remain optimistic about the volume increase of the industry next year.
Investment suggestion: buy rating.
The company’s business is driven by two wheels. In the short term, the growth of revenue and profit is obvious, and in the long term, the double main line has good growth space. It is estimated that the profit in the year 21-22 will be 2.06 billion yuan and 2.79 billion yuan, with yoy + 221% and + 35%, corresponding to pe42 and 31x. Maintain buy rating.
Risk statement
Supply chain problems such as shipping / chips worsened, new product sales were lower than expected, and the efficiency of battery extension was lower than expected
