Q1 new products were released intensively, and Roborock (688169.SH) drove value upgrading with scientific and technological innovation

In recent years, in the clean electrical appliance track, the performance of enterprises has been significantly differentiated, and Roborock (688169.SH), as a dark horse in the industry, achieved high growth against the trend last year, which is obvious to the market.

Entering 2024, Roborock released its latest quarterly financial report, which is still bringing surprises to the market. In terms of core data performance, revenue and profit continued to maintain high growth. According to the report, in Q1 2024, Roborock achieved operating income of 1.841 billion yuan, a year-on-year increase of 58.69%, and the net profit attributable to the parent company was 399 million yuan, a year-on-year increase of 95.23%.

With the help of this latest report card, we can sort out the underlying logic of Roborock's development, and at the same time look forward to the latest incremental highlights of Roborock in combination with the layout of new products.

Q1 performance continued to grow, and the sales of sweeping robots ranked first in the world

Under the momentum of the whole industry, Roborock's profitability index performance can continue to refresh the industry height, which is also the external logic of its "exclusive favor" by the capital market.

Judging from Roborock's Q1 financial report in 2024, the gross profit margin reached 59.49%, a further increase from 49.85% in the same period last year. Net profit margin also increased significantly, from 17.61% in the same period last year to 21.66%.

Looking back on the performance from 2017 to 2023, Roborock's profitability indicators did not disappoint the market, and both gross and net profit margins showed a steady improvement trend. In particular, the net profit margin has increased from 5.99% in 2017 to 23.70% in 2023, fully reflecting Roborock's strong growth and certainty in profitability.

As an enterprise with both global consumption attributes and technology attributes, in order to achieve the double improvement of profitability scale and efficiency, it is inseparable from the continuous growth of product sales, as well as the continuous iterative innovation of products through technological advantages to release profit space.

In the first quarter of this year, the net cash flow from operating activities was 233 million yuan, a year-on-year increase of 70.32%. In addition, according to the data of Aowei Cloud Network, by the end of February 2024, Roborock's domestic online sales market share has led other mainstream competitors.

Looking at the global market, Roborock has achieved far ahead of the curve last year. According to Euromonitor, a global market research company, in the first three quarters of 2023, Roborock ranked first in the global sweeping robot market in terms of sales.

The survey collected public information including public data, policy documents, authoritative reports, and media reports, and conducted in-depth interviews with industry leaders to confirm Roborock's ranking in sales of sweeping robots.

Therefore, it can be seen that Roborock continues to deliver high-quality performance by virtue of its product competitiveness in the global mid-to-high-end market. At the same time, users are willing to pay for such high-end quality sweeping robots, which also brings better profit space to Roborock, so that its performance has achieved high-quality growth.

However, on the basis of the above-mentioned high growth, the author must also explain that the role of Q1 in 2024 is mainly to launch new products. Often, the proportion of revenue and profit in Q1 is not high in the whole year, and it is the stage of accumulating orders for new products and initially increasing volume.

Not long ago, Roborock held a global new product launch conference, which also followed this rhythm. Through the latest press conference, Roborock has launched two new flagship products, Roborock V20 and Roborock G20S. As the G series and V series, which have been leading the industry upgrade, they can help Roborock further gain a foothold in the high-end market and raise the ceiling of future revenue.

This means that with Roborock's product iteration launch and gradual recognition of revenue and profits, it will be very certain that Q2 this year will create better performance. As a result, Roborock's high-quality performance in the first half of 2024 has become more predictable.

The globalization model of China's hard technology enterprises, the value of rock technology has been upgraded

In the past, the structure of best-selling products of overseas brands was biased towards the low-end, and technologies such as navigation and cleaning were relatively primitive. The Chinese brands represented by Roborock have brought higher quality products through scientific and technological innovation, promoted the upgrading of the global sweeping robot product structure, and made Chinese sweeping robot products favored by global users.

In this process, like new energy vehicles, power battery companies and e-commerce companies going overseas, Roborock has also become a model for China's hard-core technology enterprises to go overseas, and the enterprise value proposition has been upgraded.

Specifically, the underlying logic of Roborock development can be dismantled from the following three perspectives:

First of all, on the R&D side, Roborock's continuous high proportion of R&D investment has enabled Roborock to maintain strong momentum in technology and product innovation.

In the first quarter of this year, Roborock's R&D expenses reached 195 million yuan, a significant increase of 47.66% year-on-year. Further opening the annual report in recent years, the proportion of R&D expenses in revenue has always remained above 7% in the past three years, and the cumulative R&D expenses in the past five years have reached 2.005 billion yuan, which has become the most solid guarantee for product strength to continue to lead the industry.

In terms of patents, as of the end of 2023, Roborock has obtained a total of 2,435 intellectual property rights worldwide, including 218 invention patents, 615 utility model patents, and 711 design patents. In addition, Roborock has established three research institutes: AI Research Institute, Electromechanical Research Institute, and Optoelectronic Research Institute, forming a full-stack self-research system for core technologies.

Secondly, on the marketing side, Roborock has opened up the "online + offline" dual channels, and through mature social media promotion experience, it has established a wide understanding of mid-to-high-end products and all-round base stations for consumers.

Roborock has opened brand stores on online platforms such as Amazon, Home Depot, Target, Bestbuy, and WalMart. Last year, Roborock's products were also recognized by the American retail giant Target, and the products have now entered more than 180 Target stores in the United States.

The author understands that Target has nearly 2,000 stores in the United States, and its store network coverage is difficult for Amazon to achieve. Entering Target has always been regarded as a key measure for suppliers or brands to accurately explore the U.S. market, expand brand routes, and maximize brand revenue. Roborock expects to enter more than 1,000 Target stores in 2024.

As a result, Roborock has improved its brand awareness and high-end image through "online + offline" dual channels, further consolidating the trend of subsequent sales growth.

Finally, on the industry side, with the advent of the era of AI algorithms, Roborock can achieve a product experience that leads the industry and global consumers based on its accumulation in R&D.

Roborock has led the industry to the era of laser navigation in the past, and since then, it has continued to empower products through visual maps, binocular vision obstacle avoidance, integrated sweeping and mopping, and high-frequency vibration and floor mopping. It is worth mentioning that Roborock's self-developed RR mason algorithm has been updated more than 10 times, which greatly improves the intelligence level of sweeping robots and can flexibly solve complex problems in a variety of scenarios.

This also explains why, at the recent press conference, Roborock's new products were able to once again refresh the industry ceiling in terms of cleaning power, versatility and intelligence.

Therefore, looking back at the above three perspectives, the foundation of Roborock's development actually revolves around adhering to long-termism. No matter what aspect of investment, it is to achieve accumulation, and eventually burst out of huge development potential.

End

It is foreseeable that in the second half of intelligent cleaning, Roborock will bring a broad imagination space. In particular, the era of AI has arrived, and more new opportunities will emerge for Roborock. At present, the company has newly launched the categories of floor scrubbers and washers-dryers, and the explosive force is expected to be strong in the future when there is still huge room for improvement in the penetration rate.

Focusing on the present, with the arrival of high dividends, the leading effect of the clean electrical appliance industry is highlighted, the concept of stable profitability and continuous net inflow of operating cash flow is deeply rooted in the hearts of the people, and the confidence of the capital market in the financial improvement of enterprises has been greatly improved.

At present, Roborock, as a model of high-growth and high-dividend enterprises, undoubtedly meets the general expectations of the capital market for high-quality targets. Based on the above, Roborock may be worth paying attention to in the long term.