Divergent second-quarter performance among cleaning appliance leaders: Roborock improves market share and margins, while Ecovacs remains constrained by domestic competition

Overview

The report reviews Roborock’s and Ecovacs’ second-quarter 2026 results and attributes their divergent performance to their competitive positions in China’s floor washer market, the breadth of overseas growth, and their margin bases. Goldman Sachs believes industry demand remains resilient, but key issues to monitor in the third quarter include post-promotion demand, slowing overseas growth, memory-chip costs, and Dreame’s competitive strategy. At the company level, it continues to favor Roborock relative to Ecovacs and remains cautious on the latter.

Core views

Second-quarter demand was generally healthy for both leading cleaning appliance companies, but their results diverged significantly relative to market expectations. Both companies recorded overall year-on-year revenue growth of more than 10% and net profit growth of more than 50%. Roborock’s revenue growth accelerated and its margins expanded, resulting in a significant earnings beat, while Ecovacs’ revenue growth and operating profit fell below expectations and decelerated sequentially, with part of its higher net profit coming from fair-value gains. The report believes the divergence primarily reflects two factors. First, competitive positions in China’s floor washer market have shifted: Roborock achieved solid growth through market-share gains, while Ecovacs, the incumbent leader, posted a year-on-year decline. Second, their margin bases differ: Roborock benefited from improved marketing efficiency and operating leverage, while Ecovacs’ operating margin remained under pressure. Non-recurring items such as US tariff refunds and investment income also partly mitigated cost pressure from higher memory-chip prices and exchange-rate movements. Industry demand did not slow materially despite a high base. The two companies’ domestic robot vacuum cleaner businesses still achieved approximately 10% year-on-year growth in the second quarter, while overseas revenue increased by more than 40%. Roborock demonstrated broader resilience overseas, particularly driven by the US market. Domestic industry data indicate that the 618 promotion improved sales growth for robot vacuum cleaners and floor washers compared with the first quarter, but average selling prices for floor washers remained under pressure, especially in online channels, while online and offline price trends for robot vacuum cleaners diverged. In terms of market share, Roborock has surpassed Ecovacs in China’s online robot vacuum cleaner market in recent months and continued to gain share in floor washers. Ecovacs’ online robot vacuum cleaner share remained broadly stable at approximately 30%, Tineco lost share year on year, and Dreame’s share declined sequentially. Overseas high-frequency data further support the view that demand remains resilient. Downloads of major robot vacuum cleaner applications increased by more than 40% year on year in the second quarter of 2026, but slowed in July because Prime Day moved forward from July last year to June this year. US Amazon sales data likewise indicate generally strong demand, although monthly growth was affected by the timing of promotions; Roborock continued to gain share. The industry-wide average selling price of robot vacuum cleaners on US Amazon generally trended upward but declined in July, with divergent average selling price performance among Chinese brands. Looking ahead to the third quarter, Goldman Sachs expects domestic demand to remain broadly stable sequentially, supported by new product launches and rising penetration. Overseas revenue growth should remain faster than domestic growth, but market growth in the United States and Europe may decline sequentially because Prime Day was held earlier. On margins, memory-chip costs remain elevated, and cost pressure is expected to persist until new product launches at the end of the third quarter enable further product-mix adjustments that may partly offset it. Promotional discounts and marketing intensity are key variables: if Dreame reduces marketing and selling expenses, industry margins could have upside potential; if it adopts aggressive discounts to reduce inventory and improve liquidity, industry margins could face downside risk. The report also monitors financial media reports of Dreame’s overdue payments to suppliers, viewing them as an important indicator of potential competitive behavior and liquidity pressure. Based on the latest results, Goldman Sachs revised its 2026—2028 EPS forecasts for the companies under coverage by −1% to +7%. Overseas growth forecasts for both companies were raised, but their gross margin forecasts were lowered due to cost pressure. Roborock’s 2026—2028 EPS forecasts were each increased by 7% due to better returns on expense investment and US tariff refunds. Ecovacs’ revenue and profit forecasts excluding non-recurring items were broadly unchanged because its domestic floor washer business remains subject to pricing and competitive pressure. The companies’ 12-month target prices were adjusted by 0% to 12%, with Roborock’s target price set at Rmb190 and Ecovacs’ at Rmb56. Goldman Sachs maintains a “Buy” rating on Roborock. The report considers the company a global leader in robot vacuum cleaners, with growth drivers including continued overseas channel expansion, increased brand and marketing investment, and category expansion from its core robot vacuum cleaner business into floor washers and robotic lawn mowers. Since adopting a more proactive branding and marketing strategy in the second half of 2024, the company has accelerated its market-share gains in both domestic and overseas markets. Factors that previously weighed on margins—including excessive investment in new products, US tariffs, the transition of its European business model, and self-funded subsidies in the Chinese market—have largely subsided. Combined with a lower valuation and easier year-on-year comparisons, Goldman Sachs expects resilient revenue growth and a strong margin recovery to drive a relatively rapid rebound in profit growth. The Rmb190 12-month target price applies a 17 times exit P/E multiple to 2028 EPS and discounts it to 2027 using a 9.5% cost of equity. Goldman Sachs maintains a “Sell” rating on Ecovacs. The report recognizes the company’s comprehensive product portfolio, online and offline channel network, and dual-brand strategy comprising Ecovacs robot vacuum cleaners and Tineco floor washers and other small appliances, reflecting its position as a leading Chinese cleaning appliance company. It also sees long-term potential in cleaning appliances and scope for the company to increase its overseas market share. However, competitive pressure remains intense in the domestic market, particularly in floor washers, making it difficult for the company to defend market share without damaging margins; as a result, its risk-reward profile is weaker relative to peers. The Rmb56 12-month target price applies a 16 times exit P/E multiple to 2028 EPS and discounts it to 2027 using a 9.5% cost of equity.

Analysis framework

The report first compares the two companies’ second-quarter results with market expectations, then explains the differences in revenue and margins through domestic category market share, channel sales, average selling prices, overseas application downloads, and US Amazon data. It subsequently assesses third-quarter trends based on promotional timing, costs, product mix, and competitor behavior, and adjusts its 2026—2028 earnings forecasts accordingly. Finally, it estimates target values using 2028 EPS and exit P/E multiples and discounts them to 2027 at the cost of equity.

Methodology notes

• Valuation methodologyPE/PEG valuation

  Exit P/E valuation and discounting

  The report applies exit P/E multiples of 17 times and 16 times to Roborock’s and Ecovacs’ 2028 EPS, respectively, and then discounts the values to 2027 using a 9.5% cost of equity to derive the 12-month target prices.

• Industry/sector analysis frameworkVolume-price decomposition

  Decomposition of sales value, sales volume, and average selling price

  The report separately examines year-on-year changes in channel sales value, sales volume, and average selling prices to distinguish the effects of demand growth, pricing pressure, and brand market-share changes on revenue.

• Industry/sector analysis frameworkSupply-demand framework

  Demand, competitive spending, and costs jointly determine margins

  The report evaluates third-quarter growth and margin direction by considering post-promotion demand, new product supply, market penetration, competitor discounts and marketing expenditure, and memory-chip costs within a single framework.

• Event games and behavioral financeEvent-driven analysis

  Analysis of promotional timing and competitor liquidity events

  The report uses changes in the timing of the 618 promotion and Prime Day to explain quarterly and monthly data fluctuations and assesses potential changes in competitive intensity through Dreame’s supplier payment situation and possible inventory-reduction behavior.

• (Method outside the vocabulary)

  Cross-validation using application downloads and high-frequency e-commerce channel data

  The report uses downloads of major robot vacuum cleaner applications and US Amazon data on sales value, sales volume, pricing, and market share as high-frequency proxy indicators for overseas end demand and changes in brand market share.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Roborock (688169.SH)

  The report believes the company benefits from domestic and overseas market-share gains, channel expansion, product-category extension, and margin recovery, and maintains a “Buy” rating.

  Strengths

  Leading global position in robot vacuum cleaners; broad demand resilience in overseas markets such as the United States; rising share of China’s online robot vacuum cleaner and floor washer markets; improved marketing efficiency and operating leverage; potential expansion into floor washers and robotic lawn mowers.

  Weaknesses

  Memory-chip costs, exchange rates, and potential tariffs may continue to create cost pressure, while aggressive investment in new products and brand marketing may also affect profitability.

  Comparison

  Compared with Ecovacs, Roborock delivered faster second-quarter revenue growth and margin expansion, with stronger market-share performance in domestic floor washers and overseas markets.

  Risks

  Intensifying competition, slower-than-expected new product launches or category expansion, overly aggressive marketing investment, weaker macroeconomic conditions damaging consumer confidence, and higher US tariffs.

• Ecovacs (603486.SH)

  The report recognizes its long-term demand and overseas market-share potential but believes domestic floor washer competition and margin pressure weaken its relative risk-reward profile, and maintains a “Sell” rating.

  Strengths

  A leading Chinese cleaning appliance company with a comprehensive product portfolio, online and offline channel networks, and a dual-brand system comprising Ecovacs and Tineco.

  Weaknesses

  The domestic floor washer business faces pricing and competitive pressure, making it difficult to defend market share without damaging margins.

  Comparison

  Compared with Roborock, Ecovacs’ second-quarter revenue and operating profit fell below expectations, with more pronounced market-share and pricing pressure in domestic floor washers.

  Risks

  If the macroeconomic environment drives a faster demand recovery, product development or category expansion exceeds expectations, or industry competition eases, the report’s cautious view could face upside risk.

Key data

• Second-quarter year-on-year revenue growth10%+Both companies achieved double-digit overall revenue growth, but Roborock accelerated while Ecovacs fell below expectations and decelerated sequentially
• Second-quarter year-on-year net profit growth50%+Part of Ecovacs’ higher net profit came from fair-value gains
• Domestic robot vacuum cleaner revenue growthApproximately 10% year on yearDemand remained resilient despite a high base
• Overseas demand growth40%+ year on yearOverseas revenue and downloads of major applications remained strong in the second quarter but slowed in July due to the change in Prime Day timing
• Ecovacs’ share of China’s online robot vacuum cleaner marketApproximately 30%Broadly stable recently, although Roborock has surpassed Ecovacs in this market
• 2026—2028 EPS forecast revisions−1% to +7%Overall revision range for the companies under coverage; Roborock was raised by 7% in each of the three years
• Roborock 12-month target priceRmb190Based on a 17 times exit P/E multiple applied to 2028 EPS and discounted to 2027 using a 9.5% cost of equity
• Ecovacs 12-month target priceRmb56Based on a 16 times exit P/E multiple applied to 2028 EPS and discounted to 2027 using a 9.5% cost of equity
• Target price adjustment0% to 12%The two companies’ 12-month target prices were adjusted based on the latest results
• Pricing dateAugust 25, 2026Market pricing reference date used in the report

Impact & implications

The report believes industry demand remains resilient, but differences in market share and margins among companies are widening. Through domestic and overseas market-share gains, product expansion, and improved marketing efficiency, Roborock is more likely to convert revenue growth into a profit recovery. Although Ecovacs has a dual-brand strategy, a comprehensive product portfolio, and channel advantages, competition in China’s floor washer market creates a greater conflict between defending market share and preserving margins. The direction of industry margins in the third quarter will depend substantially on memory-chip costs, promotional intensity, and whether Dreame reduces marketing or adopts aggressive discounting.

Risks

• Roborock faces the risk of further intensifying competition in domestic and overseas markets.
• Roborock’s new product launches or expansion into new categories may proceed more slowly than expected.
• Roborock’s aggressive brand and marketing investment in new products may reduce profitability.
• A weaker macroeconomic environment could reduce disposable income and consumer confidence, potentially affecting demand for cleaning appliances.
• Further increases in US tariffs could weaken the profitability of Roborock’s US business.
• If the macroeconomic environment is better than expected and drives a faster demand recovery, Ecovacs’ “Sell” thesis faces upside risk.
• If Ecovacs’ product development or category expansion exceeds expectations, its operating performance may surpass the report’s forecasts.
• If competition in China’s cleaning appliance market eases, pressure on Ecovacs’ market share and margins may diminish.

What to watch

• Monitor whether domestic end demand remains stable after the conclusion of the 618 and other promotional events.
• Track the extent of the sequential slowdown in US and European growth during the third quarter due to the earlier timing of Prime Day.
• Monitor Dreame’s overdue supplier payments and its subsequent marketing, sales, and inventory-reduction strategies.
• Track industry promotional discounts and marketing intensity, as both will directly affect margins.
• Monitor whether elevated memory-chip costs and exchange-rate pressure continue to erode gross margins.
• Watch whether new product launches and product-mix adjustments at the end of the third quarter can offset part of the cost pressure.
• Track changes in Roborock’s market share in China’s robot vacuum cleaner and floor washer markets and in the US market.