• time;2024-09-03 15:07:39

01 Chinese manufacturing seizes the opportunity of OPE's "oil to electricity" conversion

How to get a share of the "singles champion" in 02?

03 Billion Market, Domestic OPE Stable at C-Position

At the 2024 Paris Olympics, Chinese Olympic athletes shone on the field with outstanding performances. They not only proved themselves with heavy medals, but also gained countless fans worldwide with their confident, composed, and friendly attitude.

Not only Olympic athletes, but also 'Made in China' have showcased the charm of China.

From inside to outside the competition venue, from competition equipment to Olympic surroundings... Faced with the ubiquitous "Made in China", some jokingly say, "This Olympics has been contracted by 'Made in China'. The word 'contracted' may be a bit big, but it cannot be denied that the charm of 'Made in China' is spreading all over the world.

Riding on the wind of international events, whether it's the concluded European Championship or the ongoing Olympic Games, Chinese manufacturing is embarking on a new story of sailing abroad.

In recent years, with the upgrading of quality and performance, the continuous improvement of brand image and influence, and the enhancement of the advantages of efficient supply chain and complete industrial chain in Chinese manufacturing, represented by Xiaomi, Haier, and BYD, Chinese manufacturing has continuously surpassed from a follower to a leader.

And such examples also exist in the OPE industry.

The so-called OPE refers to "outdoor power equipment", such as lawn mowers, lawn mowers, pruning machines, chainsaws, lawn mowers, etc. The main application scenarios are home gardening, public gardens, etc.

This niche track, based on Chinese manufacturing and aimed at the European and American markets, gradually entered the public eye with the listing of Greebo (301260. SZ), the first A-share new energy garden machinery stock, in February last year.

Currently, the OPE industry is in a critical period of accelerating the transition from old to new energy sources. A group of Chinese lithium battery OPE companies represented by Greebo are staging a legend of "latecomers rising" in Chinese manufacturing.

01

Chinese manufacturing seizes the opportunity of OPE's "oil to electricity" conversion

Historian Yuval Harari described the origin of courtyard lawns in "A Brief History of the Future" as follows: In the Middle Ages, poor farmers could never waste their precious land or time on lawns, so the perfect lawn at the entrance of a castle became a symbol of identity that no one could fake

This kind of lawn worship has been passed down to this day, whether in Europe or the United States, having a carefully maintained lawn in front of one's own home is not only related to face, but also involves the laws of various countries.

So, lawn maintenance and leveling have become an essential part of daily life for Europeans and Americans, and garden machinery has become a must-have.

But since the world's first grass lawn mower was introduced in 1830, it has been powered by internal combustion engines for over a hundred years in the history of garden machinery. The disadvantages of high pollution, high noise, and odor are also closely related.

Until recent years, with the rapid development of technologies such as lithium batteries, brushless motors, and intelligent electronic control, global warming and environmental pollution have intensified, and countries around the world have increasingly attached importance to environmental protection issues. Coupled with multiple factors such as the proposal and consensus of global "carbon peak" and "carbon neutrality", the landscaping machinery industry is undergoing a transformation from fuel powered to new energy powered.

In this context, all traditional garden machinery oil burning products are worth redoing.

Compared to traditional fuel powered garden machinery products, new energy garden machinery products are accelerating their penetration due to their excellent product characteristics of cleanliness, environmental friendliness, low noise, minimal vibration, simple maintenance, and low operating costs.

According to TraQline statistics, in the field of outdoor power equipment in North America, the market share of fuel powered garden machinery has declined from 57% in 2010 to 35% in 2021, while the market share of new energy garden machinery has rapidly increased from 13% to 36%.

On the contrary, according to GlobalMarketInsights, the average annual compound growth rate of the market size of electric landscaping machinery products will reach 8% by 2025.

Therefore, many Chinese companies have targeted the lawns behind the front doors of European and American households. Among them, Greebo has quietly become an undeniable force.

As one of the earliest companies in the world to engage in new energy garden machinery business, Greebo was the first to use lithium batteries as green energy in the field of garden machinery as early as 2007. Since 2009, Greebo has created its own brands such as "greenworks" and POWERWORKS, and has since shone brightly.

Nowadays, Greebo New Energy Landscape Machinery covers a full range of handheld, hand pushed, mounted, and intelligent products, including lawn mowers, lawn mowers, hair dryers, chainsaws, pruning machines, and many other products.

According to a research report by Minsheng Securities, domestic OPE leaders represented by Greebo have a forward-looking layout and formed a leading advantage.

02

How to get a share of the "singles champion"?

Unlike in China, due to the influence of the "lawn culture", the face saving projects of European and American families have given rise to a huge market.

Just take the category of lawn mowers as an example. According to conservative statistics, the total area of lawns in North America is about 190 million to 240 million acres. In order to take care of them, Americans alone need to buy nearly 8 million lawn mowers every year, and the project expenditure alone is up to 9 billion dollars.

It is obvious that under the wave of lithium electrification, for Chinese OPE companies born to go global, this is no different from a potential gold mine.

But there are also competitors in this industry. Chinese manufacturers are facing companies such as Toro from the United States and Echo from Japan, which have been dominating the global OPE field for many years.

How can we get a share of the OPE industry, which is dominated by giants? This is a reality test that all Chinese companies must face.

Taking Greebo as an example, it used to engage in OEM production for giants for a long time. However, against the backdrop of the rise of China's new energy industry, with 17 years of "meticulous cultivation", it gradually gained the confidence and strength to challenge foreign giants.

At present, Greebo has established highly collaborative specialized R&D centers in China, the United States, and Sweden, with over 1000 global R&D and technical personnel. They have accumulated a series of core technologies in motor control and system control, battery packs, battery chargers, intelligence, and IoT.

With the support of a strong talent team, Greebo continuously shapes its independent design and manufacturing capabilities in core components such as battery packs, brushless motors, intelligent controllers, and chargers; On the other hand, around the lithium battery pack as the core, an ecosystem similar to "Apple" iOS has been created.

It is worth mentioning that Greebo has innovatively developed multiple battery pack power platforms ranging from 24V to 82V. The battery packs can be used interchangeably among multiple devices on the same voltage platform. After purchasing multiple company products, consumers can achieve mutual use of battery packs between different products, significantly reducing usage costs and enhancing the brand's customer stickiness and repurchase rate.

As a leading player in the industry, Greebo has formed a development strategy of "C-end+B-end dual wheel drive" through years of deep cultivation overseas, and has constructed a relatively complete product matrix for household and commercial use.

Last year, Greebo's lithium e-commerce lawn mower OptimusZ officially achieved mass production and was launched in its US factory. With excellent performance and quality, the product gained recognition from a large number of professional customers as soon as it was launched. And this product, which symbolizes the "best" product, is expected to occupy a place in the $30 billion market and become an important growth point for the company's performance.

Moreover, the importance of channels is no less than that of products and services themselves. Channel construction is often an unavoidable hurdle for Chinese companies going global. On the other hand, Greebo has become one of the core barriers by creating advantageous customer resources through its omni channel coverage model.

For example, Greebo has established long-term and stable cooperative relationships with well-known supermarkets in North America and Europe such as Lowe's, Walmart, BestBuy, Costco, etc., providing them with company owned or supermarket brand products.

At the same time, Greebo actively engages in online channel cooperation and occupies a leading market share in major e-commerce platforms. This combination of online and offline sales model enables Greebo to fully cover potential target consumers, improve product sales efficiency and stability.

A set of data shows that in the US new energy landscaping machinery market, Greebo Greenworks brand products rank among the top three in terms of market share; On the US e-commerce platform Amazon, Greebo Greenworks' brand lawn mowers, hair dryers, and other products are consistently ranked among the "Best Sellers", with sales and user reputation remaining at the forefront of the market, demonstrating a clear competitive advantage.

In this comprehensive transformation towards "new", Greebo, which stands at the forefront, is a microcosm of China's manufacturing catching up with foreign giants. Overall, these singles champions actively seize the key opportunity period of OPE's "oil to electricity" transition and have already gained strong competitiveness in the industry.

03

Billion dollar market, domestic OPE firmly holds the C-position

In recent years, with the increasingly perfect domestic new energy industry chain, the price of lithium battery cells has significantly fallen. Lithium battery OPE continues to penetrate through the mature product strength of benchmark fuels and the continuous cost reduction economy, which has brought multiple opportunities for domestic OPE.

From an international market perspective, in North America or Europe, environmental protection concepts are increasingly deeply ingrained in people's hearts. Strict emission standards have been introduced at the government policy level, leading to an increase in the price of traditional fuel OPE products and a weakening of market competitiveness. The penetration rate of lithium-ion products is expected to exceed expectations.

Taking the United States as an example, as early as 2022, California announced that it would completely ban the sale of fuel vehicles after 2035, increasing the proportion of zero emission vehicle sales to 100%, becoming the first state in the United States to fully embrace new energy vehicles.

And a year before this news was released, California also signed a bill that would gradually ban the sale of small fuel engine products, including generators, lawnmowers, and high-pressure cleaning equipment, starting from January 1, 2024.

Taking the second-generation product "Optimus Z" commercial lawn mower launched by Greebo as an example, industry insiders revealed that the biggest competitive advantage of "Optimus Z" lies in its operating cost.

Compared to gasoline powered commercial lawn mowers, the Optimus Z lifecycle can save customers $13200; Compared with a certain lithium electric lawn mower from foreign competitors, it has obvious advantages in output power, mowing speed, and climbing ability, but its price of $27000 is $13000 lower than its competitors.

According to Frost&Sullivan's forecast, the market size of electric tools and OPE may reach $38.6 billion and $32.4 billion respectively by 2025, with CAGR of 5.9% and 5.3% from 2020 to 2025.

In other words, with the update and iteration of the overseas fuel OPE market, domestic OPE enterprises are expected to rise with their product strength advantages.

A more accurate signal is that after downstream retailers destocked in 2023, the demand for retailers to proactively replenish inventory in 2024 is gradually emerging.

Everbright Securities believes that compared to the continued negative growth in exports under the scenario of destocking in 2023, there is a high degree of certainty that shipments will maintain positive growth in 2024. If the US interest rate cut cycle starts, driven by demand in the real estate market, the OPE industry is expected to usher in a new round of replenishment cycle.

In addition, from the perspective of the domestic market, with the increasing emphasis on urban greening, trade in policies, and carbon emissions, the trend of converting garden tools from oil to electricity has arrived. Domestic OPE has also shown high growth potential.

Greebo keenly seized this opportunity and reorganized its domestic market, participating in multiple exhibitions such as the Shanghai Hardware Show; Multiple network layout actions were held under the names of "Sawing Wind Action" and "Spring Breeze Action", promoting multiple provinces and regions in a network like manner, creating benchmark stores for dealers and promoting brands. By 2023, a total of over 1000 network locations will be developed in China.

Through these measures, Greebo's momentum and influence both domestically and internationally continue to accumulate, opening up vast opportunities for future development.

At present, Gree Bo has sufficient orders on hand, with about 700 million yuan in orders on hand as of the end of June 2024, compared to about 300 million yuan in the same period last year, a year-on-year increase of over 100%.

From a longer-term perspective, the dividends of growth must be shared. In the future, domestic OPE manufacturers such as Greebo, Quanfeng, and Daye Co., Ltd. will continuously break through in market share and performance, creating a multi strong pattern.

For investors, they not only need to grasp β, but also search for α. In this new cycle, the answer to who can fully benefit is unclear.

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