Incident: In 2023, Stone Technology achieved operating revenue of 8.654 billion yuan, an increase of 30.55% over the previous year; net profit to mother was 2,051 billion yuan, an increase of 73.32% over the previous year. Among them, 2023Q4 revenue was 2,965 billion yuan, up 32.60% year on year; net profit to mother was 691 million yuan, up 110.33% year on year.
Domestic share grew rapidly, and overseas KA expanded steadily: domestic sales revenue in 2023 was 4.411 billion yuan, up 41.01% year on year; accounting for 51.05% of total revenue, up 3.87 percentage points from the same period last year.
Facing the current state of the industry with volume reduction and price increases, Stone Technology has consolidated its high-end brand image and laid out multi-price products; at the same time, it has continuously increased the promotion and promotion of its own brands to enhance brand awareness. The increase in product strength and brand power led to a contrarian increase in domestic sales revenue. Export revenue was 4.229 billion yuan, an increase of 21.41% year over year.
In recent years, Stone Technology has focused on developing the US, European and Asia-Pacific markets, gradually establishing a global distribution network.
The online channels are mainly Amazon, the official website, and the online platforms of KA retailers, and offline channels are continuously being expanded. It first entered Target's offline specialty store in the US in 2023, and has now expanded to more than 180 stores.
Cost control is excellent, and profit elasticity is obvious: gross profit margin in 2023 was 55.13%, up 5.87 percentage points year on year; net profit margin was 23.70%, up 5.85 percentage points year on year. Sales/management/R&D expenses were 21.00%/2.44%/7.15%, respectively, with a year-on-year change of +1.11/+0.31/-0.22 percentage points. Although domestic and foreign market expansion and talent pool expansion have led to an increase in sales and management expense ratios, benefiting from the maturity of the supply and marketing system, the effect of scale was evident, and gross margin and net interest rates increased year-on-year.
The dividend ratio has increased dramatically, demonstrating confidence in long-term growth: in 2023, it is planned to distribute 4.68 yuan (tax included) per share to all shareholders to increase 4 shares for every 10 shares of all shareholders. The total annual dividend amount (including repurchases) is estimated at 838 million yuan, accounting for 40.85% of net profit attributable to mother, an increase of 25.64 percentage points over the same period last year.
Navigation technology innovated again, and a new high-end series was released: At the Stone Technology global press conference on March 29, the company launched two new products, G20S and V20, and the P10S Pro was also unveiled. The G20S and P10S Pro are iterative new products of the G series and P series, respectively, and have been upgraded in terms of cleaning and intelligent functions. The V20 is a new series of products. The initial price of the basic model is 4,799 yuan. It is expected to become the main model in the middle and high-end price segment. This product is equipped with the world's first dual-light solid-state laser, uses 3D ToF photometry technology, and the obstacle avoidance navigation capability reaches millimeter-level accuracy. The fuselage design is lighter and thinner, and is only 8.2 cm thick, making it possible to thoroughly clean every corner.
Profit forecast: In 2023, with excellent product and brand strength, Shitou Technology's domestic market share steadily increased and revenue bucked the trend; overseas multi-channel construction continued to advance, and performance in many regions exceeded expectations. Looking ahead to 2024, the new V20 series will strengthen its competitiveness in the middle and high-end price segment, and the steady iteration of older products will strengthen the brand. The results of the overseas mainstream channel layout are expected to gradually show. The collaborative development of products, brands and channels will drive continued growth in performance. We expect net profit from 2024-2026 to be 2,433/29.58 billion yuan. The predicted PE corresponding to the current stock price is 19, 15, and 13 times, maintaining a “buy” rating.
Risk warning: Market competition increases risk, single risk of product structure, seasonal risk of sales, risk of product innovation falling short of expectations