The Zhitong Finance App learned that Guotai Junan released a research report saying that domestic sales of sweepers and floor washers were marginally improving in March. Looking ahead, Q2 is a key point in the domestic sales competition for various players. The bank determined that with the further improvement of the cost-effective product layout, industry volume is expected to be further released, and the industry is expected to achieve steady growth compared to the same period in 2023. The bank said that domestic demand in the clean appliance industry is picking up momentum, and it is optimistic that domestic sales will rise steadily throughout the year. This trend of going overseas will continue, and it is optimistic that domestic brands will improve their global competitiveness. Leading companies have a stable position, and there is room to boost domestic and foreign sales.

Investment suggestions: The sweeper industry is recovering as a whole, the market for floor scrubbers continues to flourish in exchange for volume, the competitiveness of leading domestic sales products is outstanding, and overseas expansion is accelerating. We recommend Stone Technology (688169.SH), which has competitive new products and continues to expand domestic and foreign sales; Covos (603486.SH), which is expected to improve operations; Midea Group (000333.SZ), a comprehensive leader in additional cleaning appliances; and Lake Electric (603355.SH), which has a stable foundry base and a broad layout of its own brands.

Guotai Junan's views are as follows:

Domestic demand is picking up momentum in the cleaning appliance industry, and we are optimistic that domestic sales will rise steadily throughout the year.

According to data from Aowei Cloud Network, domestic sales of sweepers and floor washers are improving marginally. Sweeper sales picked up; online sales/sales/average price in March were +53%/+60%/+5%, respectively; January-March online sales/sales/average price were +33%/+36%/+2%, respectively; floor washers continued to exchange price, and online sales/sales/average price in March were +94%/+50%/-23%, respectively; online sales/sales/average price in January-March were +74%/+35%/-22%, respectively. In addition to statistical caliber or adjustments, the bank's estimated high data increase is mainly due to: 1) players in the industry are launching new products earlier in 2024, leading to a slight gap between the March pre-sale and 2023 data; 2) In 2024, players are more active in promoting new 3k+ sweepers, and cost-effective products drive the increase in industry demand. Looking ahead, Q2 is a key point in the domestic sales competition among players. The bank determined that with the further improvement of the cost-effective product layout, industry volume is expected to be further released, and the industry is expected to achieve steady growth compared to the same period in 2023.

The trend of cleaning appliances going overseas continues, and we are optimistic that domestic brands will improve their global competitiveness.

Looking at short-term performance, according to Jiuqian data, Stone's sales volume in March was +24%/+41% year-on-year, respectively, and continued the trend of sharp rise in volume and price. On a year-round basis, since CES in January 2024, Stone/Covos/ Pursuit has been launched in overseas markets. Various brands have launched more SKUs suited to the needs of local consumers in overseas markets. Compared with products from overseas local brands such as iRobot, the competitiveness of products from overseas brands such as iRobot has been further highlighted. In addition, brands such as Cloud Whale are also stepping up their overseas efforts. Domestic brands are expected to further increase their efforts in overseas products, channels, and brand building, and they are optimistic about the general trend of domestic brands increasing their global market share.

Leading companies have a stable position, and there is room to boost domestic and foreign sales.

1) Stone Technology: Judging from the new products released by the company in Q1, the company's competitive advantage is still quite obvious. The bank expects the company's domestic sales market share to remain at a good level in 2023; in addition, the overseas European market still has room to increase in new countries and regions, and the US market still has opportunities to seize more share of iRobot, and offline channels such as Target will also bring more growth; 2) Covos: The company has made more targeted cost cuts for various price segments. The bank expects profit margins to pick up in 2024, and the more profitable export market. Growth will also boost the company's profits, and 2024 is expected to usher in a marked recovery on the performance side.

Risk warning: raw material price fluctuation risk, exchange rate fluctuation risk