The company's revenue performance is in line with expectations. In 2024H1, Shitou Technology achieved operating income of 4.416 billion yuan, up 31% year on year; realized net profit of 1.121 billion yuan, up 52% year on year; realized deducted non-net profit from mother of 0.861 billion yuan, up 30% year on year. Among them, in the Q2 single quarter, the company achieved operating income of 2.575 billion yuan, a year-on-year increase of 16%; realized net profit to mother of 0.722 billion yuan, an increase of 35% over the previous year; and realized deducted non-net profit of 0.519 billion yuan, an increase of 4% over the previous year. In terms of non-recurring profit and loss, the 23Q2 subsidiary is expected to receive tax rebates for high-tech enterprises at 57 million and 0.15 billion for 24Q2. However, in the 23 semi-annual report, this amount was listed as recurring profit and loss, and in 24 years it was listed as non-recurring profit and loss, so there was a difference in caliber. In terms of gross margin: The North American region is relatively high. It is expected that the increase in the share of North America combined with the increase in the share of European Amazon will structurally drive the company's gross margin, driving the overall gross margin to increase by 2.74 pcts.

High-end new products from overseas continue to contribute to performance, and offline development in North America is smooth. On the revenue side, domestic and overseas revenue share is expected to be 3:7 in Q2. Europe is expected to achieve double-digit growth, with Asia Pacific maintaining a high growth rate of more than 50%; in terms of overseas market growth, sweepers are expected to maintain double-digit growth globally; in terms of model replacement, the overseas share of omnipotent base stations is still low; in terms of brand and share, overseas is in the blue ocean market, and iRobot's global share is still high. There is a big gap between product strength and domestic companies. From the company's perspective, markets such as Europe, North America, and Asia Pacific have all achieved rapid growth. The main reasons: first, the company's high-end brand image is stable, sales of high-end new products such as S8 are good, and market share in channels such as America, Asia and Asia is rapidly increasing; second, leading overseas companies have disadvantages in product strength and innovation ability at this stage, and the company faces a large market space. In addition, the company has broken through offline channels in North America, expanding to more than 180 Target stores in 23 years, and is expected to enter 1,400 Target stores in 24H1. The market share in North America is expected to increase further in the future.

Domestic sales continued to grow, expanding price band coverage. The overall domestic consumer environment is not very prosperous. The company is expected to achieve single-digit growth, mainly online, JD, and Tmall. Douyin accounts for a relatively low share but is growing rapidly, and offline stores are developing smoothly. According to Aowei Cloud Network data, the 24H1 online sales volume in the sweeper industry was +19.87%, and the company's year-on-year ratio was +12.47%, mainly due to the cost-effective P10S series and high-end G20S and V20 series dual-line layout. The cost-effective series lowered the price segment on the premise of maintaining gross margin levels, while the high-end series continued to seize share. The company's sales depended on accurate positioning+continuous promotion of news+increased marketing.

Profit forecasting and investment ratings. The company's export sales performance is strong, and domestic sales growth is mostly covered by price bands, but due to the sluggish domestic demand environment and increased competition, we lowered our 24-26 profit forecast to 2.56/3.052/3.783 billion yuan (previous value was 2.61/3.145/3.901 billion yuan), respectively, +24.8%/19.2%/24.0% year-on-year, corresponding to the current price-earnings ratio of 16/14/11 times, respectively. The company's domestic sales explosions continue to advance, and the pace of promoting new products is accelerating; at the same time, overseas demand is strong, and the company's new products are iterating Lead, be optimistic about the company's ability to innovate and lead, and maintain a “buy” investment rating.

Risk warning: Risk of fluctuation in raw material prices, risk of fluctuation in international shipping costs.