Company profile

The company is a leading visual smart home in China. The leading product SHC (smart home camera) ranks first in sales in the global and domestic markets. The company relies on Hikvision, the global AIoT leader, to enter the smart home circuit based on AI's multi-dimensional perception & cognitive capabilities.

Investment logic

Recommended logic 1: The smart home category continues to expand, and hardware revenue increases cloud profits. Currently, the company covers 5 core self-developed product lines of SHC/smart household/intelligent service robot/intelligent control/smart wearable. At the same time, it has introduced Class N ecological products such as smart pet feeders, and has built a 2+5+N business matrix based on the Class 2 capabilities of AI and IoT cloud platforms. On the one hand, smart home products provide a huge user base for the cloud platform and channel C-side value-added services; at the same time, the intelligent algorithms provided by the cloud platform shape the differentiated selling points of smart homes, forming a business model where hardware increases revenue and cloud profits.

Recommended logic 2: The leading product SHC ranks first in the global market, and its gross margin far exceeds that of its peers.

The company ranked first in the SHC domestic market with a sales share of 24.1% in 23 years (according to the statistical accounting of shipments from Lotu Technology, the company and Xiaomi), and also ranked first in the 24Q1 global sales share (IDC). The company is based on an intelligent algorithm based on ① the most SKU+ in the industry ② no one have/one has my advantage? Positioning the sales advantage in the medium to high price range; based on ① own production line+ ② the highest scale effect in global shipments? Cost advantage. Together, the dual advantages of sales and cost have shaped SHC's gross profit margin far exceeding that of its peers.

Recommended logic 3: Intelligent household entry shapes the second curve, and AI+ robot capabilities are deepened.

The low-penetration superimposed visual system of domestic smart door locks replaced the dual drive of fingerprint locks. The performance of the company's smart door locks matched the first camp level. In 23 years, smart home revenue increased by nearly 50%, and 1H24 continued to increase by 69%; creating a second growth curve for smart homes. In '24, the company launched the Blue Ocean Big Model to advance into physical intelligence. In '23, the company released two commercial and civilian cleaning robot iterative product capabilities, while deepening AI agent capabilities based on the RK3 assistant robot.

Profit forecasts, valuations, and ratings

The company's revenue for 24-26 is estimated to be 5.54/6.63/7.96 billion yuan, respectively, and net profit to mother of 0.68/0.85/1.15 billion yuan, respectively. The company was valued using the segmented valuation method, and the target price was 37.80 yuan/share for the 25-year smart hardware portion and 12 times the PS valuation for the IoT cloud platform portion. First coverage, giving a “buy” rating.

Risk warning

There is a risk that the slow domestic growth of SHC will slow down the revenue growth of cloud platforms; the risk that sales of cleaning robots will fall short of expectations; and the risk that the commercial transformation of the C-side cloud service of the IoT cloud platform falls short of expectations.