With the repeated waves of the smart home industry, fluorite can take the lead in the field of intelligent vision products in the high-intensity competition, which is enough to see its differentiated competitive strength, which is also the core of this article.

Relying on Haikangwei background resource endowment, the company has both software and hardware strength and outstanding visual technology. Fluorite Network, formerly known as Haikangwei Internet Business Center, was established in 2013 and has grown into a leading provider of smart home devices and cloud platform services. The company's operating income CAGR reached 33.6% from 2019 to 2021, maintaining rapid growth. Different from other smart home brands, the company does not take a single intelligent product sales as the core, but a rare enterprise in the industry with both software platform service capabilities and hardware equipment research and development capabilities, forming a differentiated core competitiveness.

Smart home + Internet of things has entered a period of high growth, and fluorite has mastered the core competitive elements. China's smart home industry is in a period of rapid development, the permeability of developed countries still has more than double the room to improve, the future industry scale to the trillion market. The high growth of the industry attracts many competitors, including the active layout of Internet companies and their industrial chains, as well as the transformation exploration of home appliance giants, each of which has its own competitive advantages and disadvantages. Looking to the future, the smart home is moving towards the autonomous intelligence stage of active service, and the ability of visual recognition and algorithm analysis has become the key competitive factor, which is also the core advantage of fluorite. At the input end, the core products of fluorite focus on the types that can give full play to the advantages of visual differentiation (such as smart cameras and smart door locks), and the development direction of the product line is also extended by video and visual technology (such as service robots). This benefits from the parent company Haikang's leading global technology foundation of visual things, and fluorite occupies a high starting point in the visual input of smart homes. On the output side, Fluorite uses cloud platform services as a moat to support big data to collect, identify, analyze and calculate, respond to feedback, generate revenue and help upgrade smart products. Therefore, fluorite takes vision as the fulcrum and has both software and hardware strength to ensure the long-term development of the company.

The growth power of the company is diversified: product technology leadership is the core, channel-end first-mover advantage and growth increment coexist, and the proportion of independent production increases the optimization cost. We analyze the competitive advantages of fluorite network from the product side, technology side, channel side and production side: 1) on the product side, the company has a rich matrix of intelligent devices, and the domestic shipment share of the core product camera ranks first; in terms of cloud platform, fluorite is the only public cloud platform under Haikangwei, which has the unique advantage of providing cloud services for Haikang hardware equipment, and the number of paying users is increasing year by year. 2) on the technical side, supported by Haikang technology background, the company leads the world in visual interaction capabilities. The recognition rates of many key AI algorithms are close to or higher than 90%, and some of the recognition technologies are original in the industry. (3) on the channel side, in the early stage, the company relied on Haikang's existing dealer resources at home and abroad to rapidly expand sales, and the offline channel network already had a first-mover advantage, while online and overseas markets led growth as a potential direction; Haikang customers supported stable demand and superimposed the proportion of independent customers to enhance the new increment of expanding business. 4) on the production side, the company has actively established production independence, and the proportion of independent production has increased from 62.2% in 2020 to 84.8% of 22H1, promoting the cost optimization of the company.

Investment suggestion: with the follow-up product technology and Internet of things technology optimization, the smart home track has high growth.

Fluorite is a rare enterprise in the industry with both software platform service capabilities and hardware equipment research and development capabilities, product technology has a dynamic leading advantage, the company's performance is expected to be better than the growth rate of the industry. We predict that the 22-24 homing net profit of the company will be RMB 490 million, with a growth rate of-25.9%, 45.4%, 29.7%, and the corresponding PE is 63-44-34 times. The company is in a period of high R & D and high capital investment, using the PS method to reference the valuation, the company's current PS is 5.1X, and the average value of the comparable company is 6.4X, giving a "recommended" rating for the first time.

Risk hint: the market competition is greatly intensified, the terminal demand is lower than expected, and the scale of related party transactions is more risky.