Shitou Technology released its 2023 annual report. During the reporting period, the company achieved total operating revenue of 8.7 billion yuan, +30.6% year over year; realized net profit of 2.1 billion yuan, +73.3% year over year. Among them, Q4 achieved total revenue of 3 billion yuan, +32.6% year over year; realized net profit of 700 million yuan, +110.3% year over year. In addition, the company's profit distribution plan for 2023 is 46.8 yuan (tax included) for every 10 shares, with a total dividend+repurchase amount (tax included) of about 840 million yuan, accounting for 40.9% of net profit attributable to mother.
Domestic and foreign sales grew at a high rate, with domestic sales revenue +41.0% year over year, and export sales revenue +21.4% year over year. The company's domestic revenue in 2023 was 4.4 billion yuan (+41%), and foreign revenue was 4.2 billion yuan (+21.4%). By market: 1) In the domestic market, the company launched P10 and P10S series products to broaden the product price range while boosting the sales volume of the company's sweeper products. According to Aowei Cloud Network statistics, the retail sales share of the company's online sweeper robot reached 23.89% in 2023, an increase of 2.61 percentage points over the previous year; 2) The European market continued to grow rapidly; 4) In the North American market, In 2023, the company entered the US target channel and expanded 180+ stores. In 2024, offline stores are expected to experience rapid growth.
Gross margin increased sharply by +5.9 pcts year-on-year in 2023, and net margin increased by 5.85 pcts. The company's gross margin was +5.9 pcts to 55.1% year-on-year due to impressive overseas sales, product structure upgrades, and exchange rate factors. In terms of period expenses, the sales expense ratio was 21%, +1.1 pct year over year. The slight increase in sales expense ratio year over year was mainly due to increased domestic promotion expenses and overseas channel expansion; R&D and management expenses remained steady. The company's net profit margin reached 23.7% in 2023, +5.85 pcts year-on-year.
The pace of promotion of new products at home and abroad is fast. Domestically, in February 2024, the company released the new P10S and P10S Pro products, equipped with innovative dual robotic arms (side brush expanding+mop expansion), a self-maintaining double screw cleaning system, and an upgraded suction power of 11000 pa. The core parameters lead the industry. Overseas, the flagship S8 MaxV Ultra and S8 Max Ultra were released at the 2024 CES exhibition, with retail prices of 1,799 US dollars and 1,599 US dollars respectively. Product structure upgrades drive the average price increase. The new product market competitiveness is strong, and future volume can be expected.
Investment advice: We expect the company's 2024-2026 revenue to be 106/125/145 billion yuan, +22%/+18%/+16%, respectively, and is expected to achieve net profit of 24/28/3.2 billion yuan, +18%/+15%, respectively. The current stock price corresponds to PE valuations of 19/16/14 times, respectively, to maintain a “highly recommended” investment rating.
Risk warning: Overseas demand falls short of expectations, domestic price competition is fierce, raw material prices have risen sharply, exchange rates have appreciated rapidly, etc.