Incident: Recently, Fluorite Network released its 2024 three-quarter report. Revenue for the first three quarters of 2024 was about 3.963 billion yuan, an increase of 12.93% year on year; net profit to mother was about 0.375 billion yuan, a decrease of 6.69% year on year.

The company's strategic adjustments caused phased profit distortions, and the active layout of new products nurtured the company's new growth curve.

Specifically, in 2024Q3, the company achieved revenue of 1.379 billion yuan in a single quarter, up 12.7% year on year; realized net profit of about 0.093 billion yuan, a year-on-year decrease of 34.87%; mainly due to factors such as product restructuring and increased competition in 2024Q3, gross margin declined. At the same time, the company actively laid out new product markets such as household and commercial cleaning robots and expanded e-commerce and new retail channels, leading to an increase in various expenses. Facing various external business challenges, the company maintains reasonable investment to provide impetus for medium- and long-term growth and development, consolidates technology research and development, actively lays out new product markets such as smart locks, household and commercial cleaning robots, and actively develops e-commerce and new retail channels, and continuously builds the brand influence of the company's various core product lines at home and abroad:

1) In July 2024, the company released new products such as smart health watches and home AI all-in-one computers;? 2) In August 2024, the company released new products such as the video call camera S10;? 3) In September 2024, the company released new products such as TAMO mobile cameras, all-purpose sweeping robot RS20 ProUltra, and AI floor washing robot RX30 Max;

4) In October 2024, the company released new products such as the panoramic face video lock DL60FVX Pro.

2024Q3, Fluorite Network launched a large blue ocean model and HomePlay OS to help the full “people-home-business” scenario, which is expected to further open up the company's business value ceiling. 2024Q3, the company released a self-developed large-scale intelligent model for vertical IoT scenarios - the Fluorite Blue Ocean Big Model. This large model is a large model of embodied intelligence for IoT scenarios. It has three systematic AI capabilities to develop open, basic interaction and physical agents, covering the full link of devices from device perception to device execution. The connected devices are diverse, which can sense world space information, process multi-modal data, and perform accurate recognition and understanding, and ultimately plan and guide the device to respond; in addition, the company also released Fluorite HomePlay OS, which revolves around people, homes, and businesses to improve The goal is the user's life and work experience. By providing intelligent agents and vision-based AI capabilities, developers can develop their own intelligent scenarios or applications in a fast, flexible, and low-cost manner. It has five major features: AI core, proxy packaging, cloud-side collaboration, privacy protection, and full openness.

Investment proposal: Fluorite Network has unique advantages in technology, manufacturing capacity and channel construction. With a “1+4+N” ecosystem, it is expected to usher in a new growth curve with various new products and full-scenario coverage of “people-home-business”. We predict that the company's net profit for 24-26 will be 0.574, 0.718, and 0.96 billion yuan. The corresponding PE for the stock price on October 28, 2024 will be 43X, 34X, and 26X, maintaining the “recommended” rating.

Risk warning: Competition in the industry intensifies; technology implementation falls short of expectations.