1Q24 results were higher than our expectations
The company announced 1Q24 results: 1Q24 revenue of 1,841 million yuan, +58.69% year over year; net profit to mother of 399 million yuan, +95.23% year over year; net profit after deduction of 342 million yuan, +110.03% year over year. The company's performance was higher than our expectations, mainly because the company's overseas sweeper sales exceeded expectations.
Development trends
In 2023, for the first time, stone sweeper revenue became the number one in the global sweeper industry. 1Q24 The company's revenue continues to grow rapidly, and its leading edge expands. 1) AVC data, 1Q24 sweeper omni-channel sales/value ratio +22%/+29%, 1Q24 sweeper price with online sales increased 7.7ppt compared to 2023; online sales of stone sweepers were +30% year-on-year, with a sales share of 21%, and the Stone P series contributed the main share. 2) On the export side, we estimate that the company's revenue in 1Q24 was +80% year-on-year, and that the decline in revenue in Asia Pacific and Europe in 1Q23 was lower than the base figure. The company has benefited from overseas product structure upgrades, and the share of all-purpose base stations in the industry continues to increase. Stone has made a breakthrough in offline channels in the US. We believe that the company is expected to increase its market share in the European French, Italian, and German markets on a lower share base, and that it is expected that the successful experience of the US and Asia will be replicated after Amazon takes over direct management. We expect that the above changes will all lead to an increase in revenue.
Profitability levels remain high. The company's 1Q24 gross margin changed +6.6ppt to 56.5% year-on-year, mainly benefiting from rapid growth in high-margin America and Asia, and continuous product cost reduction and structural optimization. Rate side:
1Q24 Sales/Management/R&D/Finance rate year-on-year change -0.2/-1.7/-0.8/+1.1ppt. Although 1Q is a pre-sale period for new domestic products, sales fees will be confirmed in advance. The 1Q24 company's net interest rate to mother was 21.7% (+4.1ppt year over year, -1.6ppt). The increase in revenue share in Europe and the Asia-Pacific region with high net interest rates led to an increase in overall net interest rates.
The layout of new products at home and abroad is perfect, and 2Q is gaining momentum. 1) The pre-sale of the P10S series released by Stone in February was good. In particular, the P10S Pro has accumulated a good reputation. According to AVC data, in the first two weeks of April (4.1-4.14), Stone's online sales share was 27.6%, ranking first in the industry. Among them, the P10S Pro's share was 17.1%, surpassing the Covos T30 Pro to rank first in the industry. The new V20 and G20S flagship products released by Stone in March complement the high-end price range and improve the layout of the full domestic price band. At the beginning of 2024, Stone exhibited four new sweepers at the CES exhibition in the US, and the promotion of new products was higher than that of its peers. 2) The domestic sweeper industry had a good 1Q24 sales trend, setting a positive tone for the 618 promotion. We estimate that the revenue of new stone products in 1Q24 was less confirmed, and that the new product delivery time was relatively late. We believe that the new product layout may fuel the company's domestic sales growth in 2Q24.
Profit forecasting and valuation
We are optimistic about the company's product layout and dividend delivery in the global sweeper market, increasing net profit by 6.8%/7.6% to 2,679 billion yuan/3.238 billion yuan in 2024/2025. The current stock price corresponds to 2024/2025 18.8 times/15.5 times P/E. Maintaining an outperforming industry rating, we raised our target price by 29% to 509.34 yuan due to an increase in profit forecasts and an upward trend in the valuation center of the sweeper industry, corresponding to 25.0 times/20.7 times P/E in 2024/2025, with 33% upside compared to the current stock price.
risks
Domestic and overseas market demand fell short of expectations; profitability declined.