Event: The company released its 2024 semi-annual report. The company achieved revenue of 2.583 billion yuan (YoY +13.05%) in 2024H1: realized net profit of 0.282 billion yuan (YoY +8.88%); realized net profit of 0.277 billion yuan (YoY +9.89%) after deduction. In 2024Q2, the company achieved revenue of 1.347 billion yuan (YoY +11.64%); realized net profit due to mother 0.156 billion yuan (YoY -6.64%); realized net profit of 0.154 billion yuan (YoY -4.01%) after deduction.

The level of gross margin increased, and the second growth curve saw a high increase in intelligent household entry: in terms of segmented products, intelligent service robots achieved breakthroughs, and intelligent household entry increased year-on-year. The company's 2024H1 smart home camera, smart home entry, intelligent service robot, accessory products, other smart home products, and IoT cloud platform achieved revenue of 1.444 billion yuan (YoY -4.42%), 0.328 billion yuan (YoY +68.97%), 0.055 billion yuan (YoY +273.34%), 0.19 billion yuan (YoY +98.84%), 0.055 billion yuan (YoY -40.54%) 0.495 billion yuan (YoY +29.97%) The revenue growth of smart home entry and IoT cloud platforms is mainly due to: 1) The development of new technologies such as the Internet, big data, cloud computing, and artificial intelligence to provide technical support for products. 2) As digital transformation continues to advance, high standards of intelligence, convenience, and security have driven the growth in market demand for smart home entry products. The company's gross margin increased by 0.38 percentage points in the first half of 2024. The gross margin for smart home entry products was 41.46% (YOY+8.21pct). Thanks to the company's various new products, the net cloud platform gross margin was 76.13% (YOY+0.97pct). The company consolidated various factors such as technology research and development, sales and R&D, channel structure and product structure optimization, and promotion of refined management; IoT 100 million yuan, with cost rates of 14.60%/3.29%/16.34%, respectively, rising with the additional cost rate; the company's sales/management/R&D expenses for the first half of 2024 were 3.77/0.85/ 4.2218.71%/12.02%/14.88%, respectively.

Building a “2+5+N” ecosystem, the product went overseas to achieve growth: At the 2024 spring product launch, the company unveiled a variety of new products, including the S10 video call camera with screen, the super night outdoor gimbal H8x series, the TAMO pet care camera, the AI three-camera fully automatic face video lock DL60FVXPro equipped with a large cloud model, and the AI agent home assistant robot RK3. The product was empowered by AI technology to achieve deeper interaction with users and more intelligent scene applications. The fluorite network ecosystem officially evolved into “2+5+N”. Among them, the triple curve of hardware-side cameras, home entry, and robots made products grow overseas one after another, and the overseas business sector achieved high growth during the reporting period. Fluorite Network's product and innovation capabilities in the smart home field are constantly being strengthened, and it is committed to providing more personalized and intelligent home solutions through AI technology.

The continuous layout of domestic and foreign channels is beneficial to long-term growth: On the online side, the company uses e-commerce platforms to effectively promote e-commerce channel sales growth. The e-commerce shipment ratio has increased significantly, accounting for an important share of domestic sales. At the same time, in response to the characteristics of social e-commerce platforms such as Douyin, the company carried out refined operations and launched products in line with the characteristics of the platform to attract more consumers. On the offline side, Fluorite Network has strengthened the construction of domestic retail channels, especially offline hardware channels, and has become a new revenue growth point for the company. The company has also laid out multi-level and diversified physical terminals, including offline whole-house smart stores and smart home retail stores, further improving the fluorite sales and service system. Overseas, Fluorite Network has developed customized offline sales channels according to market needs in different regions, and adopted digital marketing strategies to expand its influence in the international market through e-commerce platforms. The multi-channel development strategy not only strengthened the touchpoint between the Fluorite Network and consumers, but also brought steady growth momentum to the company's smart home products and whole-house smart solutions, which was reflected in revenue growth in the first half of 2024.

Investment advice: We expect the company to achieve revenue of 5.679/6.683/7.925 billion yuan respectively in 2024-2026, up 17.35%, 17.67%, and 18.59% year-on-year; net profit to mother is 0.682/0.799/0.924 billion yuan, respectively, up 21.08%, 17.16%, and 15.69% year-on-year; EPS is 0.87/1.01/1.17 yuan respectively, and the current stock price is 33.37/ 28.48/24.62 times, maintaining the “recommended” rating.

Risk warning: Technology selection falls short of expectations; new product development falls short of expectations; industry competition intensifies; data security and privacy protection risks.