Event: On March 28, 2024, Stone Technology released its 2023 annual report. In 2023, the company achieved revenue of 86.54/20.51/1,826 billion yuan, respectively, of +30.55/+73.32/ +52.46% year-on-year, respectively. Of these, 2023Q4 was 29.65/691/572 billion yuan, +32.60/+110.33/ +68.62% year-on-year respectively, and net profit to mother continued to rise in the single quarter.
Thanks to concerted efforts at home and abroad, the volume and price of sweepers have increased by double digits. 2023/2023Q4 revenue was +30.55/ +32.60% year over year, respectively. 2023Q4 continued to grow rapidly against the backdrop of a high 2022/Q4 base. By product, the revenue of smart sweepers and accessories/other smart appliances in 2023 was 80.85/554 million yuan, respectively, +27.41/ +109.40% year on year, sales volume and price of sweepers rose sharply, and the average price is also expected to increase by double digits; overall sales of floor washers and all-in-one washers have doubled, and the product line expansion effect is remarkable. By region, domestic and overseas revenue in 2023 was 44.1/23 billion yuan respectively, +41.01/ +21.42% year-on-year respectively. The high domestic increase was mainly due to further improvement in product price segments and increased product competitiveness, especially the P10 series launched in 2023Q2; the rapid increase in overseas revenue was mainly due to the company's product competitiveness and brand image being recognized by dealers and consumers, increasing share and optimizing the product structure. It is expected that Europe, America and Asia will go hand in hand. Looking ahead to 2024, the company's sweeper products launched at home and abroad in 2023 all have a good reputation and continue to promote and expand overseas channels. Domestic and foreign sweeper revenue is expected to maintain rapid growth. At the same time, floor washers and all-in-one washers and dryers have been gradually expanded, and it is expected to build a second growth curve with the continuous enrichment of the product matrix and channels.
2023Q4 gross margin has risen sharply, and continued product structure upgrades are expected to further drive profitability improvements. Gross profit margin: 2023A/2023Q4 was 55.13/ 56.65%, respectively, +5.87/+5.93pct, of which 2023 smart sweepers and accessories/other smart electrical products/domestic/ overseas were 56.15/43.31/49.26/ 61.65% respectively, +6.63/-1.17/+4.16/+8.55pct, respectively. The increase in gross margin of sweepers was due to product structure optimization. The increase was greater than that of domestic products, mainly due to the increase in the share of high-end overseas products . Expense side: Sales/management/ R&D/ finance cost rates in 2023 were 21.00/2.44/7.15/ -1.6%, respectively, +1.11/+0.31/-0.22/+0pct, respectively. The increase in domestic and foreign market expansion investment led to a significant increase in sales expenses in 2023, but the input and output was relatively high; 2023Q4 was 23.52/1.34/5.77/ -0.94%, respectively, -0.18/-0.48/ -0.38pct, 2023Q4 All cost rates have been optimized, and are expected to be diluted mainly due to revenue scale effects. Net profit margin: 23.70/ 23.30% for 2023A/2023Q4 respectively, +5.85/+8.61pct year-on-year, respectively.
Investment suggestion: With its technical advantages and product performance, the competitiveness and brand image of sweeper products are gradually improving. With the continuous expansion of the product price range and further improvement of the channel layout, domestic and foreign shares are expected to continue to rise. At the same time, the new categories of floor washers and all-in-one washers are expected to build a second growth curve, and are optimistic about the continuation of the company's revenue performance growth. We expect net profit to be 24.24/28.23/3.244 billion yuan in 2024-2026, with corresponding EPS of 18.44/21.47/24.75 yuan, respectively, and current stock price corresponding PE of 18.58/15.96/13.84 times, respectively. Maintain a “Recommended” rating.
Risk warning: Increased market competition, single product structure, new product performance falling short of expectations, overseas channel expansion falling short of expectations, loss of core technical personnel, exchange rate fluctuations, etc.