Incident: The company achieved revenue of 2.583 billion yuan in 2024, +13.05% year on year, net profit of 0.282 billion yuan, +8.88% year on year; of these, 2024Q2 achieved operating income of 1.347 billion yuan, +11.64% year on year, and net profit to mother 0.156 billion yuan, or -6.64% year on year.

Smart door locks and service robots performed well. Export sales showed relatively rapid growth by category. The 24H1 core camera revenue growth rate was -4.4%, a slight decline from the previous year. As the fluorite smart home entry product matrix continues to be enriched, product differentiation helps establish brand mentality. The smart home entry product line, which is the company's second growth curve, achieved a year-on-year revenue growth rate of +68.97%, further increasing its share of the company's main business revenue to 12.78%. As the company's incubation business, intelligent service robots also achieved initial breakthroughs in small-scale listings in the first half of the year, with revenue +273.34% year-on-year. The revenue of the IoT cloud platform was +30% year-on-year, maintaining rapid growth, and its share of revenue increased further to 19.27%.

By channel, the core dealer channel revenue, which accounts for 70% of 24H1 revenue, showed a steady increase of +15.7%; online B2C channel revenue, which accounts for 16% of revenue, grew faster, +40.2% year-on-year; and the revenue performance of professional customers, which accounted for 8% of revenue, was weak year-on-year, at -35.9%. Looking at domestic and foreign sales, 24H1's domestic and foreign sales revenue was +6%/+29.9% year-on-year. Export sales grew rapidly, and the share of export sales increased from 29% of 23H1 to 33% of 24H1.

The gross margin of the new business increased significantly. The company continued to increase overseas expenses. The gross margin of the H1 company in 2024 was 43.34%, +0.38pct year on year, and the net interest rate was 10.9%, or -0.41pct year on year; of these, 2024Q2 gross margin was 43.91%, -0.69pct year on year, and net interest rate was 11.62%, -2.27pct year on year. By category, the gross margin of 24H1 cameras remained stable year over year. The gross margin of smart entry and service robots was +8.2/+6.2 pct year over year, respectively, and the profit level increased significantly; the gross margin of the company's IoT cloud platform, which has a high gross margin, was +1 pct year over year, and the gross margin increased further.

The company's 2024 H1 sales, management, R&D and financial expense rates were 14.61%, 3.3%, 16.35%, and -2.45%, respectively, +0.69, -0.01, +0.26, and -0.49pct; of these, the 24Q2 quarterly sales, management, R&D, and finance expenses rates were 14.38%, 3.2%, 15.95%, and -1.36%, respectively, -0.49, -0.19, +1.33pct. The 24H1 sales expense ratio increased year-on-year, mainly due to the company's continued increase in domestic and foreign market expansion, and the increase in business promotion expenses and sales and service fees; the fluctuation in the financial expense ratio was mainly due to the increase in the company's interest income but a decrease in exchange differences.

Investment advice: The company is a leading enterprise in the smart home field. The product side continues to expand categories and application scenarios through software and hardware integration, and gradually builds core barriers. On the revenue side, after years of cultivation, smart door locks have now entered the product harvest period, becoming the second curve driving the company's revenue growth in addition to cameras; on the profit side, cost reduction and efficiency brought about by changes in channel structure, product structure improvements, and supply chain reforms drive an increase in profit margins. According to the company's interim report, we appropriately lowered the camera revenue growth rate, giving 24-26 net profit of 0.69/0.83/0.95 billion yuan (previous value of 0.72/0.87/1.02 billion yuan), and the corresponding dynamic PE was 33.1x/27.4x/23.9x, maintaining the “gain” rating.

Risk warning: smart home penetration falls short of expected risk; new product expansion falls short of expected risk; overseas market expansion falls short of expected risk; risk of raw material price fluctuation; technical risk.