Text | Market capitalization list, author | Jia Lele, editor | Jiaxin
In the 1990s, a young man working in a foreign trade company, by chance, brokered a match to help China's first vacuum cleaner go to sea.
When foreign businessmen came to China again, this young man who coordinated with Chinese manufacturers saw the needs of Europe and the United States and had the idea of "why not do it yourself".
The young man's name was Qian Dongqi, and in 1998, he founded Tai Yi Kai Company, the predecessor of Coworth.
Two years later, Qian Dongqi saw foreign reports on robots playing football in the newspaper, and he thought that robots can also help people sweep the floor, so in addition to the main business, he began to raise funds to set up a small team in the company to develop robots.
Not long after, the first mass-produced sweeping robot developed by Qian Dongqi's team, the trilobite, was introduced to the market. However, this track has been tepid for more than a decade. Even since 2009, when Coworth launched the first intelligent sweeping robot in China, Coworth has sat on the cold bench for seven or eight years.
During the 2020 epidemic, sweeping robots began to gain popularity as a tool to replace part of the labor. Coworth's performance and valuation have improved significantly.
For Coworth, the outside world's evaluation of it is very polarizing: one view is that it is "sweeping the ground", from doing OEM vacuum cleaners for overseas companies to having its own brand, and then becoming an absolute leader in China. Another view is that it is "not very technical, pseudo-tech company" and is a company driven by sales smashing ads.
Does Cobos have a moat? Is it currently overrated? Is there any imagination in the future? This article will focus on these issues.
01 Yesterday: Why sit on the cold bench?
The sweeping robot has been tepid for more than a decade, and Coworth has sat on the cold bench for many years. The penetration rate of this track is extremely slow, why is it difficult for sweeping robots to enter ordinary people's homes?
First, in terms of products, sweeping robots have the attributes of tomorrow's products.
Tomorrow's product refers to the user once used, can never go back, can not be separated. More clearly, the needs for the product are widespread, and the performance of the product crosses the "easy to use" tipping point.
For example, washing machines, air conditioners, are the product attributes of tomorrow.
The degree of necessity of such products is positively correlated with the increase in revenue. When food and clothing cannot be solved, refrigerators are useless, and no one will be willing to spend money on washing machines. Sweeping robots are not the same as washing machines, air conditioners, and refrigerators, the former is more related to the living environment and the degree of urbanization, the penetration rate will increase more slowly, and the time for high-speed growth will be later.
Second, the technical breakthrough speed and price of sweeping robots.
Even in the United States, where revenues are higher and technology levels are higher, irobot has gone through eight full years since the launch of the first generation of sweepers in 2002, and shipments have exceeded 1 million units.
The biggest reason for this is that the product experience has never been able to reach the level of "easy use" that most people recognize.
When the demand is insufficient, the price of the production end is difficult to reduce, and the high price makes the scale of users that the sweeping robot can reach relatively limited.
Third, the services provided by sweeping robots and people's pain points do not exactly match.
Sweeping robots, to be precise, intelligent appliances for cleaning floors, have been in the country for two eras. The 1.0 era is the era of sweeping robots, although there are advances in navigation, obstacle avoidance and planning, but the cleaning function is still only a single cleaning function; the 2.0 era, it is a sweeping and dragging integrated robot; a sweeping robot that is recently being pre-sold, suction and sweeping and dragging three-in-one, known as the 3.0 era by the media.
In the middle of this, there is also the handheld scrubber of Coworth's brand "Tim ke".
Vacuuming, sweeping, mopping, washing mop, pouring water, taking out garbage, cleaning the floor there are many steps, any product can not completely free hands, can only partially meet the needs.
As a result, the penetration rate of sweeping robots has increased extremely slowly, and by 2018, the United States is still less than 10%.
It's a bright but winding track.
In this process, Coworth while OEM, while research and development, with the first-mover advantage to become a well-deserved boss, eat nearly 50% of the market share. Even so, in addition to the moment when the base is too low, with a growth rate of 30% as a high-speed growth, Cobos only has one year to satisfy in 2017, and in 2019, there has been a retrogression, where there are both overall factors in the industry and reasons for Cobos to actively abandon most of the low-gross margin foundry business.
The unexpected arrival of the epidemic has helped the sweeping robot to smooth the way.
02 Today: Performance cashed in after killing valuations
In 2020, the epidemic gave birth to the "home economy", and sweeping robots began to be welcomed as a tool to replace part of the labor. At 618 last year, sweeping robots became new sales stars.
With the 618 campaign alone, Coworth achieved 6% of its sales for the full year of 2019.
If you count from the second half of last year, Coworth has risen for a full year, an increase of nearly 8 times. The logic of the surge is also very clear: 1, the track is clear; 2, the performance explosion; 3, peer support and leading premium.
For example, Stone Technology is also strong, but the increase in the same time period is far less than That of Coworth. In terms of products, stone products are relatively single, mainly sweeping robots and accessories, and on the channel, they have been "de-milletization", coupled with the high proportion of overseas business, affected by transportation and foreign epidemic situations, the performance growth rate is not as good as Coworth.
According to the financial report, the overseas revenue of Stone Technology in 2020 accounted for 41.24%, and at the semi-annual report conference call this year, Stone Technology said that the company's actual overseas product revenue accounted for about 80%.
In the first half of this year, the two major brands under Coworth, Coworth and Tim Coco, accounted for 31.0% and 34.6% of overseas revenue, respectively.
The rise includes expectations for future performance, Cobos this year's 618 record is still eye-catching, the Coworth brand and Tim Coco brand omni-channel turnover exceeded 900 million yuan, an increase of 115% and 1132% respectively. A month later, Coworth's stock price began to fall, and it did not stand on the mountain of 100 billion market value.
Private equity tycoon Feng Liu divides the logic of decline into killing valuation, killing performance and killing logic.
Killing valuation, in layman's terms, is to rise more on the fall, return to rationality, mainly the problem of market sentiment; the performance is less than expected caused by the stock price correction is relatively serious; the most serious is to kill the logic, basically the foundation does not exist, such as the former bull stock Huiding Technology, the global fingerprint recognition chip leader, almost all well-known domestic mobile phone manufacturers suppliers, but because of many mobile phones to cancel fingerprint recognition and other reasons lost the market.
The most direct factor in the decline of Coworth is the liquidation of shareholder IDG and the financing of other companies in the same track before, which is actually the valuation after the performance is cashed.
A clear representation of market sentiment is actually a small rebound trend that began in late October, ending on November 2, and then began to fall, and on November 12, the double eleven record was released, Coworth Robot achieved sales of 1.6 billion yuan, an increase of 55% year-on-year, Timco 1.4 billion yuan sales, an increase of 241% year-on-year, and the stock price fell by 5.18%.
If according to the proportion of annual revenue in the fourth quarter of last year, Cobos can achieve revenue of about 14.3 billion yuan in 2021, an increase of nearly 100% year-on-year, and the gross profit margin growth rate may be higher due to the reduction of the proportion of foundry products and the increase in gross profit margin brought about by the launch of new products.
So, at least at present, the logic of the decline is only to kill the valuation, as to whether it will convert, it depends on whether the momentum of the industry growth continues, in this process, Can Coworth keep its first-mover advantage, in other words, other brands have no opportunity to overtake in the corners.
03 Tomorrow: Lack of staying power?
The market share of Coworth sweeping robots is between 40% and 50%, which is already an absolute leader, the market share of scrubbers is higher, and the expansion of scale relies more on the improvement of penetration.
First, from the perspective of the entire industry, the penetration rate has entered a stage of steady improvement.
Sweeping robots have made progress in avoiding obstacles and preventing entanglement, but there are still many unintelligent places in identifying whether garbage should be cleaned. The scrubber cannot work without people.
From sweeping robots to sweeping and dragging robots and floor washers, the ultimate goal of housework cleaning products is to completely free people's hands, and these products are intermediate forms.
Regarding their penetration path, it is generally considered that there are four stages of disruptive innovation, gradual innovation, platform period, and subversive innovation again:
Subversive innovation is a revolutionary technology that greatly improves the "easy use" degree of products, and the quantity and price are moving towards a new ladder;
Gradual innovation, slow iteration of technological development, supply chain cost reduction so that high-end technology can be spilled out in low-end products, the importance of marketing capabilities is gradually reflected, the industry also presents two rises, but the price growth comes more from the structural upgrading of low-end products;
In the platform period, technological development enters the short-term platform period, the differentiation between new products and the previous generation is small, the product penetration rate is improved into the platform period, and the volume and price growth enters the bottleneck period;
Another disruptive innovation phase is the beginning of the next cycle.
The research report of Everbright Securities believes that the sweeping robot has entered a gradual innovation stage, the demand has transitioned from product-driven to market-driven, and the penetration rate will enter a stage of steady improvement.
In the equity incentive plan released by Coworth in November this year, the performance assessment requirements include 2022-2026, revenue will increase by 35% per year, and net profit will increase by 25% per year.
Such doubling growth in 2021 is contingencious and less sustainable. The annual growth rate of 35% in revenue and 25% in net profit is certainly a very good result, but if according to the PEG estimation method, the profit growth rate of 25% is generally matched by a 25 times price-earnings ratio.
As of December 27, 2021, Coworth's dynamic price-to-earnings ratio is still nearly 47 times, and the resulting PEG is 1.87, which is generally considered to be more than 1, indicating that the stock value is overvalued, or that the market's performance growth requirements for this company are much higher than the annual compound profit growth rate of 25%.
Second, from the perspective of players in the industry, there are still opportunities for overtaking in curves.
In the direction of product form, intelligence and other directions of iterative upgrading, cleaning housework tools still have a long way to go, in this long-term process, even if the leader, its annual sales are only a few million, in the market that has not yet been developed, the brand power is far from enough to compete with the "product is better to use", that is to say, there are still opportunities for companies with innovative capabilities.
Whether Coworth's current leading position can be maintained depends on whether it can maintain innovation.
Coworth has been criticized for its investment in research and development is lower than its peers, and in terms of marketing it is much higher than its peers.
Last year, Coworth also partnered with irobot, the boss of the global sweeping robot, to sign a technology licensing agreement. The granted patent is the AeroForce dual adhesive brush system developed by iobot, which features a brushless design that avoids the brush head from becoming entangled with the hair during the cleaning process.
Anti-entanglement is the functional improvement of the sweeping robot, the cooperation between the two sides on the one hand is in the case of mature technology and low price, the way of authorization can reduce detours, on the other hand, Coworth's independent innovation ability has been questioned.
On the basis of the Internet of Everything, the cleaning instructions are directly issued through voice, or more intelligent, such as you can judge whether you need to clean and react accordingly, will Huawei, Xiaomi and other manufacturers have more advantages?
In the long journey ahead, will the first-mover advantage that Coworth has accumulated in history snowball bigger and bigger, or will it disappear?
It's a marathon, the finish line is still far away, Coworth is only temporarily ahead, and innovation is the only moat.
Resources:
[1] "Qian Dongqi: Coworth is to make the robot deep and thorough", People's Daily;
[2] "Qian Dongqi: The Crisis | Figure of the Robot King", Geek Finance and Economics;
[3] "Tomorrow's Product" sweeper, tomorrow has come, where is the opportunity? Everbright Securities;
[4] "Can the dark horse that stands out maintain a thousand yuan for a long time?" 》Hongta Securities;
[5] "Sweeping Machine Riding the Wind and Waves", Guosheng Securities