Smart home entry and cloud platforms continue to grow at a high rate

Fluorite Network released its semi-annual report, with 1H24 revenue of 2.58 billion yuan (yoy +13.1%) and net profit of 0.28 billion yuan (yoy +8.9%) to mother. Among them, 2Q24 achieved revenue of 1.35 billion yuan (yoy +11.6%) and net profit of 0.16 billion yuan (yoy -6.6%). The decline was mainly affected by income tax and financial expenses. 2Q24 EBIT (net profit+income tax+financial expenses) also increased by 18.4%. In 2Q24, the company's gross profit margin was 43.9%, down 0.7 pp from the same period, and increased by 1.2 pp. It remained at the company's high level. We expect net profit to mother of 0.63/0.8/1.04 billion for 24-26. Based on SOTP estimates, the net profit of 24E smart home hardware is estimated to be 0.3 billion yuan, giving 21.0x 24E PE, which is comparable to the company's average 19.3x premium mainly due to the perfect layout and leading market share of smart home hardware and leading smart vision technology; the net profit of the 24E cloud platform business is estimated to be 0.34 billion yuan, giving 67.0x 24E PE, a discount compared to the leading AI model in China, iFLY98.5x, mainly due to iFLYTEK's large base for GM The model is continuously invested in research and development. The target price was 36.86 yuan (the previous value was 55.1 yuan, corresponding to 39.357 yuan after the share capital was increased), corresponding to 45.8x 24E PE, and the “purchase” was maintained.

The growth rate of intelligent household entry is impressive. Intelligent service robots have gradually contributed 1H24 in revenue. The fluorite ecosystem has been fully upgraded to “2+5+N”, driven by AI and fluorite cloud dual-core, including five core self-developed product lines of smart home cameras, smart home entry, intelligent service robots, smart wearable and intelligent control, and N-class ecological product lines. Second growth curve The intelligent household entry business is impressive. Intelligent service robots are expected to build a third growth curve: 1) smart camera revenue of 1.44 billion yuan (accounting for 55.9%), down 4.4% year on year, mainly due to the decline in revenue from professional customers; 2) Smart household revenue of 0.33 billion yuan (accounting for 12.7%), up 69.0%, and the growth rate continues to rise from 67.8% of 2H23; 3) The company first disclosed the revenue of intelligent service robots, 1H24 revenue of 54.8 million yuan, same Increased by 273.5%; 4) Cloud platform service revenue was 0.49 billion yuan (accounting for 19.1%), an increase of 30.0%.

Domestic channel construction continues to improve, and the international business layout continues to optimize domestic channels: 1) The company has increased its regular e-commerce sales efforts and refined the share of 1H24 online business (online B2C+ e-commerce self-operated platform) increased to 21.0% (1H23:19.0%), and the e-commerce business shipment share of mainstream domestic sales products has further increased to more than 40% (excluding professional customer channels); 2) In terms of offline channels, the newly expanded channel hardware has become a new revenue growth point in line with smart home product sales. Overseas: 1H24's overseas revenue also increased by 29.9% to 0.847 billion yuan, and the share of revenue increased to 32.9%. It has gradually expanded from a single category to multiple categories.

A target price of 36.86 yuan was given, maintaining the “buy” rating

We are optimistic that the company's smart home entry, intelligent service robots, cloud services and other businesses will continue to grow at a high rate, but considering the slowdown in the growth rate of the smart camera business and the reduction in net profit from 24-26, the net profit to mother for 24/25/26 is expected to be 0.63/0.8/1.04 billion yuan (previous value: 0.68/0.86/1.09 billion yuan). According to the SOTP valuation method, a target price of 36.86 yuan (the previous value was 55.1 yuan, corresponding to 39.357 yuan after the share capital was increased) was given, corresponding to 45.8x 24E PE, to maintain the “purchase”.

Risk warning: new product development risks, increased industry competition risks, information protection and data security risks.