Starting from the semi-annual report of Beijing Roborock Technology (688169.SH), we explore how the "floor-sweeping Siasun Robot & Automation leader" can release long-term value.

On August 29, Beijing Roborock Technology (688169.SH), one of the leaders in the sweeping Siasun Robot&Automation industry, released its performance report for the first half of 2024, attracting attention with its consistent growth and development capabilities. In the first half of 2024, Beijing Roborock Technology achieved revenue of 4.416 billion yuan, a year-on-year increase of 30.90%, and net profit attributable to shareholders of 1.121 billion yuan, a year-on-year increase of 51.57%. During the period, the net cash flow generated from operating activities increased to 1.031 billion yuan, and the net assets attributable to shareholders further expanded to 11.925 billion yuan, showing stable growth in overall core financial indicators. Looking at the financial report, the company's performance continues to show steady growth for two main reasons: first, the company's "going global" strategy is significantly effective, with outstanding product performance and technological advantages leading to further expansion of global market share and rapid growth in overseas income, driving a significant increase in revenue compared to the previous year; second, the company's wholly-owned subsidiary achieved a beneficial tax rate through the recognition as a key software enterprise encouraged by the government, positively impacting net profit. The above reasons for growth may seem simple and straightforward, but from a deeper perspective, it clearly indicates that Beijing Roborock Technology, as a leading company in the industry, is taking strides towards farther, deeper, and higher goals. 2024 marks the tenth anniversary of Beijing Roborock Technology. Looking back on these ten years, from using technological strength as a breakthrough point to becoming a leading enterprise in the industry, to continuously expanding product categories and constructing a second growth curve with handheld cordless vacuum cleaners, floor scrubbers, and washer-dryers, as well as the dual-drive of domestic and international sales and the increasingly prominent global layout... the strategic layout of Beijing Roborock Technology has not been a wasted step. Guided by its innovative spirit and forward-looking strategic vision, the company has been walking further along the path of long-term development. Now, let's further explore where Beijing Roborock Technology's consistent growth over the past decade comes from, through the analysis of its half-year report. Deepening the leading effect of innovation and achieving breakthroughs in growth engines from "1 to N" As a technology-driven science and technology company, technological innovation is the foundation and vitality of the company, clearly evident throughout Beijing Roborock Technology's growth over the past decade. Vertically, Beijing Roborock Technology's innovation is mainly reflected in the technological innovations of sweeping Siasun Robot&Automation, such as overcoming the technical barriers of LDS technology early on, promoting the popularity of sweepers, and pioneering the world's first dual-source solid-state laser navigation obstacle avoidance system, once again revolutionizing the navigation obstacle avoidance experience of sweepers. Horizontally, its innovation is mainly reflected in breakthroughs in product categories, such as revolutionary innovation in washer-dryers using leading molecular sieve technology to create the world's third drying technology. With outstanding product quality and innovative technology, Beijing Roborock Technology has developed into a leading brand in the sweeping Siasun Robot&Automation market. According to Euromonitor International data, Beijing Roborock Technology ranked first in global sweeping Siasun Robot&Automation market sales in 2023, further highlighting the company's leading position in the industry. Of course, strong innovation not only consolidates Beijing Roborock Technology's leading effect but also brings positive effects that are fully reflected in the company's product vitality. Beijing Roborock Technology's main business is the design, research and development, production, and sales of intelligent cleaning Siasun Robot&Automation and other smart hardware products, including intelligent sweepers, handheld vacuum cleaners, commercial cleaning Siasun Robot&Automation, and floor scrubbers. In the first half of the year, intelligent sweepers as the company's main business, with outstanding product quality and innovative technology, still firmly occupy consumers' minds, bringing strong vitality to the company's performance - during the period, the company's main business revenue was 4.408 billion yuan, a year-on-year increase of 31.5%. Furthermore, the new products launched during the reporting period, such as the intelligent sweeper G20 series, the P20 series, and the floor scrubber A20 series, have received good reviews, further enhancing user awareness of the company's brand and continuously increasing the company's market share. According to AVC Cloud data, in 2023, the company's online market retail sales share of sweeping Siasun Robot&Automation reached 23.89%, an increase of 2.61 percentage points year-on-year. At the same time, the washer products launched by Beijing Roborock Technology are gradually becoming the company's second growth curve. As a new and distinct product of the company, relying on Beijing Roborock Technology's leading technological brand image, the sales performance during the 618 period this year was impressive, with a year-on-year increase of 168.38% in total channel sales and a 434.88% increase in sales volume. Among them, the underwear washer m1pure ranked at the top in the category during the 618 period.Cat washing machine ranked top 1 in the new product list, Tmall washing and drying integrated machine ranked top 1, washing and drying integrated machine h1air, ranked second in the Tmall washing machine new product list, and ranked second in the washing and drying integrated machine new product list.In this regard, Chang Jing, CEO of Beijing Roborock Technology, admitted that "the stone washing and drying machine is indeed relatively new to users, and it requires a certain amount of time and resources to educate the market. However, relying on Beijing Roborock Technology's leading technology brand image, as well as the unique advantages of molecular sieve drying technology, the stone molecular sieve washing and drying machine will definitely occupy a place in the washing machine market and become another major category to support the company's long-term growth." Of course, Beijing Roborock Technology's revitalization through strong innovation to drive diverse growth engines is not achieved overnight, but rather the result of positive feedback obtained through a large amount of investment and careful research. According to financial report data, the accumulated R&D investment from 2019 to 2023 exceeded 2 billion yuan, with R&D expenses accounting for 4.59%, 5.80%, 7.55%, 7.37%, and 7.15% of total revenue respectively. As of the first half of 2024, the company's R&D investment was 410 million yuan, a year-on-year increase of 42.92%; during the period, there were 786 R&D personnel, a year-on-year increase of 57.52%, and 267 new authorized patents. From the above, it can be seen that, through technological innovation to build a technological moat, Beijing Roborock Technology not only strengthens the company's leading advantages, but also achieves breakthroughs from "1" to "N", building multiple growth curves. As these growth curves continue to invigorate growth, Beijing Roborock Technology is expected to drive the "flywheel" of growth and lead overall performance to the next level. Product strength solidifies high-quality image, global layout fruitful Looking at the growth trajectory of Beijing Roborock Technology, "going abroad" is undoubtedly one of the ways for the company to gain more incremental space. It is reported that since 2019, as the company's own brand scale has continued to expand, Beijing Roborock Technology has gradually expanded its overseas business, focusing on the development of the US, European, and Southeast Asian markets. It has not only gradually increased its market share in overseas markets through localized operations, strengthened brand promotion, and improved after-sales service measures, but also further enhanced brand awareness and user reputation by participating in international well-known exhibitions and strengthening channel construction with Wuxi Online Offline Communication Information Technology Co., Ltd. As of now, Beijing Roborock Technology products are available in more than 170 countries and regions worldwide, with over 15 million households using stone floor sweeping Siasun Robot&Automation. Its market share ranks among the top three in over 14 countries and regions worldwide, including Germany, South Korea, and Turkey. However, it should be noted that the path to overseas growth is not entirely smooth sailing. Opportunities and challenges often coexist. From a global perspective, the small market size and low industry penetration rate globally undoubtedly mean that the global floor sweeping Siasun Robot&Automation market is still a vast "ocean of stars" waiting to be explored: according to Euromonitor data, by 2023, the global floor sweeping Siasun Robot&Automation market will reach 7.022 billion US dollars, which is not a huge market size overall. At the same time, in 2023, the country with the highest penetration rate for sweeping machines is Norway, with a penetration rate of only 23.4%. In the long run, floor sweeping Siasun Robot&Automation machines are expected to catch up with washing machines and dishwashers in terms of penetration rates in some countries, with considerable growth potential. Although there is considerable room for industry growth, it does not mean that Beijing Roborock Technology's path to overseas expansion is smooth sailingin particular, the company needs to break free from the suppression of the overseas old-brand behemoth iRobot on one hand, and on the other hand, with Chinese leading brands such as Ecovacs Robotics and roborock Robotics increasing their expansion into overseas markets, Beijing Roborock Technology also faces pressure from these brands to grab a share of the overseas market. Fortunately, through continuously enhancing product strength and channel strength, for Beijing Roborock Technology, the overseas market is clearly more of an opportunity than a challenge. According to observations by GMTEight, in the layout of overseas markets, Beijing Roborock Technology has taken potential market size and high-quality image as entry points, and has gained wide consumer recognition through continuous brand investment and R&D investment. At the same time, by focusing on overseas offline distributors and cross-border e-commerce, they quickly break through channel barriers and build a complete and comprehensive global sales network. Numbers are the best touchstone. Currently, Beijing Roborock Technology has entered 20 Wuxi Online Offline Communication Information Technology Co., Ltd. channels in the United States, and has successfully entered 189 offline stores in the largest commercial supermarket Target in the USA this year, and will gradually enter over 1000 Target offline stores in 2024. In the Australian region, they have broken through 6 major offline channels and reached 200 offline stores. In Turkey, they have entered 180 offline stores. In the Nordic region, they have successfully developed 140 stores to set up a dedicated area for the stone brand. Meanwhile, during the PrimeDay promotion in 2024, Beijing Roborock TechnologThe Y product has achieved good sales performance in both the North American and European markets, with multiple series products ranking at the top of the sales charts. Specifically, the Q5Pro series product has become the best-selling robotic vacuum cleaner in the Sweeping category on Amazon in the United States; the QrevoPro series product ranks first in sales in the Sweeping category on Amazon in Germany.Thanks to the positive effects brought by the above-mentioned product and channel strengths, the globalization layout of Beijing Roborock Technology has obviously entered a period of harvest, helping the company achieve significant growth in the first half of the year. According to financial data, in the first half of 2024, the company's domestic and overseas revenues contributed evenly, with a balanced layout, jointly promoting the sustainable development of the company - during the period, the company recorded domestic revenue of 21.22 billion yuan and overseas revenue of 22.94 billion yuan. Clearly, we can see that under the company's forward-looking strategic layout and efficient execution, the overseas market is gradually becoming a significant growth driver that Beijing Roborock Technology cannot afford to ignore. Conclusion How long is a decade? In economics, we often see a decade as a cycle, referring to a period of significant achievements or prosperity as a "golden decade." Regardless of how long it has been, the "golden decade" has always been acclaimed, enduring time and historical scrutiny. Established in 2014, Beijing Roborock Technology, from its initial technological breakthrough of "0 to 1," to its current sustainable growth of "1 to N," has clearly reaped its own "golden decade," with inherent growth potential and long-term value. However, the market does not seem to recognize the investment value brought by Beijing Roborock Technology's solid upward trajectory and continuous breakthroughs over the past decade. Earlier, Beijing Roborock Technology disclosed its mid-term performance forecast, and the market did not show the expected positive sentiment due to concerns over fluctuations in export tariffs. But looking at the latest financial report, the market may have been overly concerned. In the first half of the year, benefiting from rapid growth in overseas consumer demand, Beijing Roborock Technology achieved fast growth in overseas revenue, driving the overall performance of the company steadily upward. The resilience and growth highlighted in this aspect undoubtedly transcend the impact of overseas tariff issues, demonstrating the underlying growth color that a leading company should possess. Therefore, looking at the growth potential reflected in this mid-term performance report, we may consider having more confidence and patience in Beijing Roborock Technology, quietly waiting for its long-term value to be realized.