Revenue continued to grow by 30% + in the fourth quarter, and profit increased markedly. In 2023, the company achieved revenue of 8.65 billion/+30.5%, net profit attributable to mother of 2.05 billion/+73.3%, and net profit after deducting non-return to mother of 1.83 billion/+52.5%.
Among them, Q4 revenue was 2.97 billion/+32.6%, net profit attributable to mother was 690 million/ +110.3%, and net profit not attributable to mother was 570 million/ +68.6%. The company plans to pay a cash dividend of 4.68 yuan per share and increase 4 shares for every 10 shares. The cash dividend rate is 30%. Combined with the company's 2023 repurchase and semi-annual dividends, the total dividend rate is 41%.
Against the backdrop of a recovery in demand for sweeping robots at home and abroad, the company achieved rapid revenue growth with outstanding product performance and accurate price positioning. At the same time, the company's product cost control ability was strong, and profitability was greatly improved through continuous optimization of the product structure and expansion of the multi-channel market.
Domestic sales of sweepers are picking up positively, and the company's new products are prominently boosting its share. According to data from Aowei Cloud Network, the sales volume of the sweeper industry increased 10% year on year to 13.7 billion yuan in 2022, and sales increased 4% year on year to 4.58 million units.
Against the backdrop of the continuous decline in the average price of high-performance products, the sweeper industry ushered in a sharp rise in volume. From January 1 to March 24, 2024, online and offline sales of the sweeper industry increased by 10.4%/11.2% respectively. With its cost-effective P series and high-end G series, Stone's domestic sales market share increased by 3pct to 24% in 2023, and the company's domestic sales revenue is expected to increase by about 30%. In February and February 2024, the company released new cost-effective P10S, high-end G20S and ultra-thin V10 series products, which are targeted at different consumer groups and are expected to further drive market share growth.
Overseas channels continue to expand, and high-end products perform well. The company continues to develop global online and offline channels. In 2023, the company first entered the US offline supermarket channel. By the end of 2023, the company had entered more than 180 Target stores in the US. The subsequent expansion of channel outlets and the increase in the number of SKUs is expected to continue to contribute to new revenue growth. The company's overseas S series high-end new products showed outstanding performance, driving the company's average price to achieve good growth. In 2023, the company's sweeper sales increased 15.5% to 2.6 million units, and the average price rose 10.3% to 3116 yuan.
Technical advantages have been demonstrated, and profitability has been greatly improved. The company's gross margin in 2023 was +5.9pct to 55.1% year-on-year, including direct operating gross margin +3.8pct to 58.4%, distribution gross margin +6.5% to 53.1%, and Q4 gross margin +5.9pct to 56.7%. With the advantages of technology research and development, the company achieved an increase in gross margin under the performance upgrade of new products. At the same time, the increase in direct management share, raw material costs, shipping costs and exchange rates are also expected to contribute positively to gross margin. The company's Q4 expense ratio declined. Sales/R&D/management/finance expenses rates were -0.2/-0.7/ -0.5/-0.4pct to 23.5%/5.8%/1.3%/-0.9%, respectively. The company's Q4 net profit margin reached 23.3%, an increase of 8.6pct over the same period last year.
Risk warning: Competition in the industry intensifies; overseas expansion falls short of expectations; new product sales fall short of expectations.
Investment advice: adjust profit forecasts and maintain a “buy” rating
The company is a leader in the global sweeper industry. Domestic and foreign products and channels continue to expand, and profit forecasts are adjusted. The company's net profit for 2024-2026 is 24.0/27.9/3.21 billion (previous value was 24.0/2.76 billion), with a growth rate of 17%/16%/15%, corresponding to PE = 18/16/14 times, maintaining a “buy” rating.