Event: The company released its 2024 quarterly report. The first quarter of 2024 achieved revenue of 1.84 billion yuan, YoY +58.7%; realized net profit of 40 billion yuan and YoY +95.2%. Stone leads industry innovation, product strength is recognized by domestic and overseas markets, and the company's Q1 revenue and performance grew rapidly. There is still a lot of room for improvement in the global sweeper penetration rate, and the industry is still in the product upgrade cycle. Stone is expected to give full play to its product advantages and continue to maintain a high growth trend.
Overseas business performance was outstanding, and Q1 revenue grew rapidly: Shitou Q1 revenue growth rate in a single quarter was +26.1pct compared to 2023q4. According to Aowei data, the Q1 stone sweeper has online sales YoY +26%, sales YoY +28%, and average price YoY -2%. Domestic sweeper products are constantly being upgraded, cost performance is gradually improving, and industry demand continues to grow. According to Aowei monitoring data, assuming that Stone Q1's domestic revenue growth rate is 20% to 30%, it is estimated that Stone Q1's overseas revenue growth rate is 75% to 80%. Q1 Overseas markets are growing at an impressive rate. The overseas sweeper industry remains booming. According to Google Trends data, the global search popularity of 2024Q1 sweepers is +9% YoY. Stone has built local teams in overseas markets, deepened local marketing, improved local user operations, and continuously strengthened its competitiveness. In terms of channels, the company first entered the US offline physical retail chain Target in 2023, and the growth rate in the US market increased.
The Q1 company's gross margin increased significantly year-on-year: Stone's Q1 gross margin was 56.5%, +6.6pct year-on-year. We believe that the increase in the company's gross margin is mainly due to the increase in the share of all-purpose base station products and the upgrading of overseas product structures. Q1 gross margin compared to 2023q4-0.2pct. The side shows that at present, competition for overseas all-purpose base station products is not intense, and the company's price system remains stable.
Q1 Stone's profitability continued to improve year over year: Stone's Q1 net interest rate was 21.7%, +4.1pct year over year. We believe that the increase in the company's profitability is mainly due to the improved product structure. Stone's Q1 gross sales margin was +6.8pct year-on-year. As the size of the company's revenue grew, expenses were diluted. Stone Q1 sales/management/R&D expense ratio was -0.2pct/-1.7pct/-0.8pct year-on-year. In terms of price, the new features drive the price of flagship models to continue to expand upward. In January 2024, Stone exhibited new overseas products at the CES exhibition. The high-end flagship model S8 MaxV Ultra sold for 1799.99 US dollars, which is still an increase from the S8 Pro Ultra (selling price of 1599.99 US dollars) released by Stone in the same period last year. Driven by all-round base station products, overseas markets are still in the product upgrade cycle, and we expect the company's overseas business profitability to maintain a high level.
The company has sufficient cash, and the cash flow from operating activities in Q1 continued to grow: Shitou Q1's net cash flow from operating activities was 230 million yuan, +100 million yuan year-on-year, mainly due to rapid growth in the company's revenue and net profit to mother. The company has sufficient cash on its books. The balance of the company's monetary capital+transactional financial assets at the end of Q1 was 5.77 billion yuan, +410 million yuan year-on-year. In addition, the company's other non-current liabilities at the end of Q1 were 4.09 billion yuan, +1.45 billion yuan year-on-year, mainly long-term bank deposits. The scale of the company's interest income is expected to expand.
Investment advice: Stone's leading product strength is the foundation for future revenue growth. Streamlining SKUs and excellent management capabilities will maintain industry-leading profitability. Stone's 2024-2026 EPS is expected to be 18.69/21.56/23.85 yuan respectively, with a 6-month target price of 467.25 yuan, corresponding to the 2024 PE valuation of 25x, maintaining a buy-A investment rating.
Risk warning: Overseas economic environment deteriorates, industry competition intensifies