100 billion market, innovation driven development
Outdoor power equipment (OPE) is mainly used for lawn, garden or courtyard maintenance. The global market scale is US $25.1 billion in 2020 and is expected to reach US $32.4 billion in 2025. According to the power source, gasoline powered equipment will be the main equipment, and cordless equipment will develop rapidly. According to the type of equipment, lawn mower will be the main equipment. Reviewing the product development process, the update iteration mainly focuses on three elements: Beijing Dynamic Power Co.Ltd(600405) , mobile mode and operation mode. Each major change of the three elements will promote the outbreak of demand and the rapid development of the industry. Today’s lithium electrification and intelligence will promote the industry to enter a new era.
Demand side: there is a strong demand for garden maintenance in Europe and America, and there is huge room for lithium battery penetration
Europe and the United States account for more than 80% of the global ope market. The attention of families to courtyard maintenance, the shortage and high cost of professional workers promote the activity of the European and American market, and 73% of the equipment is used for residential and household purposes. At present, the opee market is still dominated by gasoline powered equipment, and the superior performance and continuous breakthrough of lithium battery equipment products, the catalysis of environmental protection policies and the supply side guidance of core enterprises will promote its penetration rate to increase rapidly. We believe that the growth of opemarket in the next three years mainly lies in the structural growth of lithium battery opes, and the market space lies in: 1) the renewal and iteration demand of existing equipment from gasoline to lithium battery equipment; 2) Supporting the new demand for new personal housing.
China is the core of production capacity, and technology + channel determines competitiveness
China is the main production base of ope. The number and amount of exported lawn mowers are increasing year by year. It has benefited significantly from the epidemic. The trend in the post epidemic era remains unchanged. The export boom continues to be high in 2022. At present, the overall opee (gasoline + electric) market is still dominated by European and American enterprises, but the electric opee market is dominated by Chinese suppliers and brands. We believe that Chinese enterprises are expected to gradually expand their share in the overall opee market under the trend of increasing the penetration of lithium battery products in the opee industry. In terms of enterprise core competitiveness, 1) technology: high energy density battery, efficient motor and complex electronic control can provide longer operation time for operation; 2) Product and brand: product competitiveness lies in running time, power, safety and ease of use, brand competitiveness lies in product matrix, system compatibility, warranty support services, etc., and enterprise competitiveness lies in diversified brand matrix; 3) Channel: the home depot and Lowe’s are the two major home improvement retail channels in North America. Amazon is the core online channel, binding the core channel or bringing stable and continuous performance contribution to ope company.
Future highlights: the profit margin is expected to improve, and intellectualization may bring a new round of change
In the short term, the reduction of lithium battery cell cost, transportation cost, improvement of trade relations & reduction of tax cost and optimization of product structure are expected to promote the improvement of enterprise profit margin. In the long run, smart Siasun Robot&Automation Co.Ltd(300024) may become the next breaking point.
Investment advice
Quanfeng holdings is recommended. It is recommended to pay attention to Chuangke industry, Ningbo Daye Garden Machinery Co.Ltd(300879) , Sumec Corporation Limited(600710) , greebo.
Risk tips
The risk of intensified industry competition, the risk of changing channel preference, the risk of rising prices and delivery of raw materials and parts, the lower than expected easing of Sino US trade friction, and the risk of exchange rate fluctuation
