Event: The company released its 2023 annual report. The company's revenue in 2023 was 8.65 billion yuan, up 30.6% year on year; achieved net profit of 2.05 billion yuan, up 73.3% year on year; realized deducted non-net profit of 1.83 billion yuan, an increase of 52.5% year on year. 2023Q4 achieved revenue of 2.97 billion yuan, an increase of 32.6% year on year; realized net profit of 690 million yuan, an increase of 110.3% year on year; realized deducted non-net profit of 570 million yuan, an increase of 68.6% year on year.
The share of domestic sales continues to increase, and overseas markets expand at an accelerated pace. In terms of overseas markets, benefiting from the rapid growth in overseas consumer demand and further recognition and improvement of the competitiveness and brand image of the company's products, the company achieved a relatively rapid growth in overseas revenue in 2023. At the same time, the company achieved a breakthrough in overseas offline channels in October, and North America has successfully entered the retail giant Target channel, which is of great significance for the company to increase its market share and profitability in North America in the future. In terms of the domestic market, according to data from Aowei Cloud Network, the company's online retail sales increased 16.8% year on year, with a retail sales share of 23.9%, +2.6 pct year over year. This year, it mainly benefited from the company's launch of new P series products at the 3,000 yuan price range this year in an environment of weak consumption, and successfully achieved price-for-volume exchange.
Gross margin increased substantially, and profitability improved markedly. In 2023, the company achieved a gross profit of 55.1%, +5.9pct year-on-year. It is expected to mainly benefit from the increase in the share of high-margin export revenue and the upgrading of the product structure. In 2023, the company's sales/management/ R&D/finance expenses ratio was +1.1/+0.3/-0.2/-0pct to 21.0%/2.4%/7.2%/-1.6%, respectively. Under the combined impact, net profit margin increased by 5.9pct to 23.7% in '23.
In the medium to long term, sweeper tracks still have high growth potential on a global scale, and Stone has the potential to continue to expand its share in the global market. Domestic sweepers have a global competitive advantage in terms of product strength, supply chain, and speed of iterative innovation. The global market share of leading domestic sweepers, represented by Stone Technology and Covos, increased markedly, from 1% and 11% in 2017 to 9% and 17% in 2020, respectively. As domestic brands further improve their channel development in overseas markets, brand influence is further expanded, and the overseas share is expected to continue to increase.
Investment advice: The company's net profit for 2024-2026 is estimated to be RMB 2.42, 28.0, and 3.33 billion yuan, respectively, +17.8%, +15.7%, and 19.3% year-on-year. The current stock price corresponds to PE19x, 16x, and 14X. We continue to be optimistic about the medium- to long-term growth of the sweeper market and the company's potential to continue to expand its share in the global market, and maintain a “recommended” rating.
Risk warning: Increased permeability falls short of expectations; downstream demand falls short of expectations; industry competition pattern deteriorates