Matters:
The company released its report for the first quarter of 2024. In 24Q1, the company achieved operating income of 1.84 billion yuan, an increase of 58.7%, and net profit to mother of 40 billion yuan, an increase of 95.2%. After deducting net profit of non-return to mother, it was 340 million yuan, an increase of 110.0%.
Commentary:
Revenue continues to rise high. The export sales performance was outstanding. The 24Q1 company achieved revenue of 1.84 billion yuan, +58.7% year-on-year, and the high revenue growth potential continues. Looking at the subregion, the domestic market has benefited from improved industry demand and the company's multi-price range product launch driven growth. According to Aowei Cloud Network data, Stone 24Q1 sales were +29.0% year-on-year, but considering that some new products were launched late, pre-sale performance will confirm revenue in the second quarter, so we judge that the domestic sales growth rate may be slightly lower than that of third party data. The overseas market share accelerated after iRobot, the global leader in the overseas market announced the restructuring plan. According to Jiuqian data, in the 24Q1, Shitou Meiya market share was +11.2pcts year-on-year to 23.3%, and in the context of a low base for the same period last year, the company's export sales growth rate is expected to be significantly higher than domestic sales.
Performance growth exceeded expectations, and profitability improved significantly. The 24Q1 net profit to mother was 40 million yuan, +95.2% year-on-year, and the performance exceeded market expectations. We believe that, on the one hand, due to the continuous improvement of the company's product structure, sales of high-priced products such as full base stations led to an increase in the company's gross profit, and on the other hand, the share of export business with higher profitability increased, compounded the continuous optimization of the company's ability to reduce costs, resulting in 24Q1 gross margin of +6.6pcts to 56.5% year-on-year. In terms of cost ratio, the company's sales/management/R&D/finance expenses ratio was 20.8%/2.8%/10.6%/-0.8%, respectively, -0.2/-1.7/-0.8/+1.1 pcts year-on-year, mainly due to the expansion of the company's revenue. Under the combined influence, the company's 24Q1 net margin was +4.1pct year-on-year to 21.7%, and profitability continued to increase.
The company's operations were better than expected, and flexibility is expected to continue throughout the year. The 24Q1 company's performance exceeded market expectations, and the bright start laid a good foundation for full-year operations. Despite current market concerns about the continuation of subsequent growth, we believe the company's resilience is expected to continue. First, after the third-party industry data level was revised, the company's domestic sales performance may be expected to be more optimistic; second, market investment contracted sharply after iRobot announced the restructuring plan. Stone's North American brand recognition is ahead of other national brands, and market share is expected to increase faster; third, the gradual increase in US offline channels and weak European markets has also brought about significant increases. As new products at home and abroad have been launched and sold one after another since the second quarter, operating inertia has ensured the sustainability of relatively rapid growth. Overall, the company's certainty is still strong during the year.
Investment advice: The company's performance is effectively implemented, and operating inertia ensures rapid growth and sustainability. We adjusted the EPS forecast for 24/25/26 to 19.49/23.51/27.75 yuan (previous value was 18.83/22.39/26.20 yuan), and the corresponding PE was 20/16/14 times. Referring to the DCF valuation method, we raised our target price to 450 yuan, corresponding to 23 times PE in 24 years, maintaining a “strong push” rating.
Risk warning: Demand for categories falls short of expectations, raw material prices fluctuate, and industry competition intensifies.