2023 results are in line with our expectations
The company announced its 2023 results: achieved revenue of 8.654 billion yuan, +30.55% year-on-year; net profit to mother was 2,051 billion yuan, +73.32% year-on-year. Corresponding to 4Q23, the company achieved revenue of 2,965 billion yuan, +32.60% year over year; net profit to mother was 691 million yuan, +110.33% year over year. The company's 2023 results are in line with previous performance reports and are also in line with our expectations.
The company announced a profit distribution plan: it plans to pay a cash dividend of 4.68 yuan (tax included) per share, with a total cash dividend of 615 million yuan, corresponding to a cash dividend rate of 29.96%.
Development trends
4Q23 Domestic and foreign sales continued their high growth trend. 1) Stone's excess of expectations since 2Q23 has benefited from the recovery in European market sentiment and the continued increase in market shares in China and the US. 2Q23/3Q23 The company's revenue was +42%/+58% YoY. Stone sold well during the “Black Five”, “Net One” and domestic “Double Eleven” periods in 2023, with 4Q23 revenue +33% year-on-year. 2) In overseas markets, stone prices have penetrated from the top down to seize iRobot's share, benefiting from overseas product structure upgrades, and entering the US offline channel Target for the first time.
3) In the domestic market, the price range of stones is lowered to form a complete product matrix, benefiting from technology cost reduction dividends. AVC data, online sales of stone sweepers: +17% YoY in 2023, +35% YoY in 4Q23. In 2023, the online sales share of stone sweepers reached 23.9% (+2.6ppt).
Profitability increased year-on-year in a single quarter during the big promotion season. 1) The company's gross margin changed +5.9/+5.9ppt to 55.1%/56.7% year-on-year in 2023/4Q23, mainly benefiting from the increase in the share of high-margin new products and the growth of overseas e-commerce. 2) Rate side: year-on-year change in sales/management/R&D/finance rates in 2023 +1.1/+0.3/-0.2/-0.01ppt, of which 4Q23 sales/management/R&D/finance rates changed -0.2/-0.5/-0.7/-0.4ppt year-on-year. 3) 4Q23 Cash investment and financial management, etc. generated non-recurring income of 58 million yuan. In 2023, the company received 57.76 million yuan in tax rebates from key software companies. 4) Net interest rate for the full year of 2023 was 23.7% (year-on-year +5.8ppt), 4Q23 net interest rate to mother 23.3% (year-on-year +8.6ppt, month-on-month -3.5ppt).
There are many highlights of the 2024 new products. 1) The company launched two new sweepers P10S and P10S Pro in China in 2024. Among them, the P10S Pro used a dual robotic arm configuration for the first time. The company uses the same high quality/same low price pricing method, which has a clear cost performance advantage compared to competing products. Previously, Stone exhibited four new sweepers at the CES exhibition in the US, and the promotion of new products was higher than that of its peers. Recently, Stone plans to launch new V20 and G20S flagship products to improve the domestic high-end price layout. 2) We expect the company may increase its investment in floor scrubbers and washing machine products, obtain more revenue growth, and create a second growth curve.
Profit forecasting and valuation
We remain unchanged in our 2024/2025 earnings forecast. The current share price corresponds to 17.9/14.9 times the 2024/2025 price-earnings ratio. Maintaining an industry rating and a target price of 394 yuan, corresponding to the 2024/2025 price-earnings ratio of 20.6/17.2 times, there is 15% room for an increase of 15% compared to the current stock price.
risks
Risk of high profit base; increased risk of market competition; risk of demand falling short of expectations.