Financial Services Association, May 2 (Reporter Ren Chaoyu) If an A-share investor is interested in a cleaning appliance circuit represented by sweepers and floor scrubbers, then the investment targets are likely to land on Covos (603486.SH) and Stone Technology (688169.SH).

On the road to recovering its performance in the past year, Covos seems to have stopped, and the stock prices and performance of the two companies are very different.

According to Wind data, Stone Technology achieved revenue of 8.654 billion yuan in 2023; Covos achieved revenue of 15.502 billion yuan. The year-on-year growth rate of Shitou Technology's net profit reached the highest level in three years, with revenue growth of 30.55% and net profit growth rate of 73.32%. Among them, the growth rate of net profit to mother got rid of single-digit growth in 2021 and negative growth in 2022; during the same reporting period, Covos's revenue growth rate was only 1.16% year on year, and net profit to mother fell 63.96% year on year. The revenue growth rate fell to its lowest value in nearly three years, and the growth rate of net profit to mother grew negatively for two consecutive years and increased significantly.

This trend continued in the first quarter of this year. 2024Q1, the net profit growth rate of Stone Technology was 58.69% and 95.23%, respectively. The absolute value of the single quarter's performance reached a record high; during the same reporting period, Covos's revenue increased 7.35% year-on-year, and the absolute value reached a record high. Net profit had a negative year-on-year increase of 8.71%, the lowest absolute value in three years.

Whether it's a sweeper robot or a floor washer, increasing penetration rate is a core logic that has been mentioned over and over again by various parties. Essentially, the focus of overseas appliance investors is still on growth. Currently, the overseas market is an important market supporting the growth of the two companies.

Stone Technology and Covos' Overseas Revenue (2023

(Yearly) both achieved double-digit growth of 21.42% and 25.76%, respectively.

According to Wind data, Stone Technology accounted for 48.87% of overseas revenue in 2023. Overseas gross margin increased 8.55 percent year over year, while domestic gross margin increased 4.16 percent year over year. The company's overall gross margin increased to 55%.

Covos's share of overseas revenue in 2023 was 42.07%. However, while overseas gross margin increased 7.16 percentage points year over year, domestic gross margin decreased 10.81 percentage points year over year. The company's overall gross margin decreased by 4.11 percentage points to 47.50%.

The reporter also learned from a leading manufacturer of cleaning appliances that going overseas has become an important source of increase and is being actively deployed, and the number of employees in relevant departments has increased dramatically in recent years. Meanwhile, Stone Technology told reporters that in 2024, on the one hand, it will further cultivate markets in North America, Europe, Asia Pacific and other regions, where Stone already has a good foundation, and increase the construction of self-operated channels. On the other hand, replicate Stone's proven experience in operating overseas markets to more emerging markets.

Regarding the 2023 performance situation, Covos made three points of reflection in the performance forecast.

Covos mentioned that in the context of declining average product prices in the domestic industry, the company lacks a cost reduction product layout in the middle and low price segment; due to the impact of the domestic consumption environment, etc., market investment conversion efficiency has declined, and the company's sales expenses have increased as a share of revenue; new categories such as commercial cleaning robots, lawn mowing robots, and Shikwan smart cooking machines are in the net investment period, with a net investment of 300 million yuan during the reporting period.

Regarding the above situation, the Financial Services Association reporter recently sent a letter to Covos to inquire about the latest developments. As of press release, no response has been received. Regarding the new category, the company once mentioned in the performance forecast: “The lawnmower robot exceeded the established operating goals in the first year of its launch in the European market.”

However, in the 2023 annual report and 2024 quarterly report, Covos did not further share the sales progress of the three new categories of commercial cleaning robots, lawn mowers, and Shikwan smart cooking machines.

The different performance results caused the two companies in the same industry to perform very differently in the capital market. According to Wind data, Covos shares have fallen 27.78% in the past year, while Stone Technology's stock price has risen 97.63%.

If the time was shortened to the date of disclosure of the quarterly results of the two companies (April 27) to the last trading day before the holiday season (April 30), Covos's stock price rose 19.31%, and Stone Technology's stock price rose 11.17%.

According to some analysts, the recent rise in Covos's stock price is mainly due to a month-on-month increase of 3449.73% from the perspective of net profit returned to the mother in the first quarter of 2024. An inflection point or emergence of the company's operations.

It is worth noting that the controlling shareholders of the two companies have mixed actions to increase or decrease their holdings.

In November 2023, the controlling shareholder of Covos Chuangled Investment announced a plan to increase its holdings. The proposed increase in holdings was not less than RMB 100 million. On May 1, Covos announced that the plan to increase its holdings was completed, costing more than 100 million yuan. Meanwhile, in the first half of 2023, Chang Jing, the shareholder and actual controller of Shitou Technology Holdings, and major shareholders Shunwei and Jinmi all announced plans to reduce their holdings, and then reduced their holdings.

However, in terms of institutional investors, the number of shares held by the fund in Covos has dropped a lot compared to the previous two years. Meanwhile, the number of shares held by Stone Technology has risen markedly.

(Covos institutional investor situation source: Wind)

(Stone Technology Institutional Investor Status Source: Wind)