中国未来消费行业-中国机器人真空吸尘器之启动覆盖范围：清理

Disclosures & Disclaimer: This report must be read with the disclosures and the analyst certifications inthe Disclosure appendix, and with the Disclaimer, which forms part of it.By: Li Quan (S1700520030002), Katharine Song (S1700517120001)China Robotic VacuumsInitiate coverage: Cleaning up We argue the outlook for robotic vacuum cleaners is positive despite the sales volume slowdown that has shaken the marketLeading Chinese makers well-positioned at home and abroad on their local supply chain, backed by strong R&D and online experienceInitiate coverage of leaders Roborock and Ecovacs with Buy ratings; prefer RoborockFuture ConsumerEquity Research Reportwww.research.hsbc.comMarch 2022ChinaThematic research 1 Future Consumer ● Equities March 2022 Executive Summary 2 A good entry point for robot vacuum cleaner makers 2 Chinese makers are leading the product upgrades 3 Healthy growth for the robotic vacuum market 4 Initiate coverage 5 Robots to take over cleaning 7 Technology advancements are driving industry growth 7 A mostly localised supply chain 10 Online is the key battlefield 11 Competition is intensifying 12 Wet dry vacuum: a new driver 14 Demand estimates and ESG 17 More demand to be met 17 Environmental, social, and governance 20 Company section 23 Ecovacs (603486 CH) 24 Roborock (688169 CH) 38 Disclosure appendix 51 Disclaimer 54 Contents Future Consumer ● Equities March 2022 2 A good entry point for robot vacuum cleaner makers The markets are concerned that after two years of rapid growth, demand for robot vacuum cleaners is slowing. The share prices of the leaders in China - Ecovacs and Roborock - have more than halved from their peaks in mid-2021. They are also battling rising material and shipping costs and the overhang from potential major shareholder sales. Our view is very different. We believe the correction is overdone. In this report, we challenge the prevailing narrative and detail why now could be a good time to build up positions in robot vacuum cleaner makers. In a nutshell, we see four reasons to be optimistic: (i) domestic sales are set to pick up gradually driven by the introduction of a new generation of products; (ii) increasing penetration of Chinese products in the overseas markets; (iii) marginal improvement in cost pressures within the next 12 months; and (iv) Roborock and Ecovacs are trading at 19x and 23x 12-month forward PEs, respectively, lower than their historical average levels. We don’t think we are at peak sales Let’s start with the big concern. Recent research from All View Cloud (AVC) finds that sales volumes of robotic vacuum cleaners in China fell by 11% y-o-y in 2021. However, that’s because the average selling price rose by over 40% y-o-y. This made up for sales volume losses and drove up the overall sales value. Plus, we still expect volumes to rise again for the following reasons: (1) Our “3S” investment framework. We believe robotic vacuum cleaners stand to benefit from our demographic framew