Incidents:
Stone Technology disclosed its 2023 annual report: 2023 revenue of 8.65 billion yuan, +30.6% year over year, performance of 2.05 billion yuan, +73.3% year on year, net of 1.83 billion yuan of non-performance, +52.5% year on year; fourth quarter revenue of 2.97 billion yuan, +32.6% year on year, performance of 690 million yuan, +110.3% year on year, minus 570 million yuan year on year. The company plans to distribute a cash dividend of 610 million yuan, accounting for 30.0% of the annual performance. Combined with semi-annual cash dividends and cumulative repurchases, the total amount of dividends during the year was 840 million yuan, accounting for 40.9% of the performance.
The basic market resonates with the new business. Q1 is expected to continue its excellent growth in 2023. The company's sweeper business revenue is +27.4% to 8.09 billion, and the volume/price ratio is +15.5%/+10.3%. Overseas product structure optimization is expected to be clearly driven by average price. Revenue from other smart home appliances is +109.4% to 550 million, and the volume/price ratio is +109.8%/-0.2%. Excluding sales of all-in-one washing machines, the annual sales volume of floor washers is expected to nearly double; by region, domestic and foreign sales are expected to grow close to double. Based on the company's product strength advantages, we believe that Shitou's domestic and overseas shipments will continue to grow rapidly in 2024Q1.
Product structure optimization & cost dilution, significant improvement in profitability Q4's gross margin of +5.9pct to 56.7% year on year, and is expected to be above 50% in all domestic and overseas regions, mainly driven by new products; sweepers and other smart home appliances are +6.6/-1.2pct year on year; the company's sales/management/R&D/finance expense ratio for the fourth quarter is -0.2/-0.5/-0.7/-0.4pct, which is expected to be mainly due to rapid revenue growth and scale-out effects; compounded foreign exchange future dilution costs will no longer drag down current performance. The company's return to mother/deducted non-net interest rates were +8.6/+4.1pct, respectively.
Ultra-thin products show R&D strength. The market share at home and abroad may continue to increase, and Stone will release two new products on March 29. Judging from promotional materials, the V20 has an 8.2cm ultra-thin body and can be shuttled under furniture. It is expected that structural optimization of the whole machine and laser will contribute to reducing height; the G20S is not much different from the previous overseas S8 MaxV Ultra, which is expected to complement the performance of the company's high-end products in terms of suction power and edge cleaning. Currently, iRobot's business continues to be under pressure. Stone is one of the few domestic brands in North America. We believe that the company can continue to reshape the global sweeper pattern with excellent product capabilities.
Profit Forecasts, Valuations, and Ratings
The company's revenue for 24-26 is estimated to be $106, 129, and 15.7 billion yuan, respectively, with year-on-year growth rates of +22%/+22%, respectively, and performance of 2.4 billion yuan, 2.8 billion yuan, and 3.4 billion yuan respectively. The year-on-year growth rates are +18%/+16%/+19%, EPS is 18.5, 21.5, and 25.5 yuan respectively, and the CAGR for 23-26 is +18%.
In view of the company's leading technology, proper multi-price layout at home and abroad, continuous increase in share, and strengthened shareholder returns, we gave the company 22 times PE for 24 years, with a target price of 405.94 yuan, maintaining a “buy” rating.
Risk warning: 1) Domestic and foreign demand falls short of expectations; 2) Raw material prices and exchange rates fluctuate greatly.