Description of the event

The company released a three-quarter report: In the first three quarters of 2024, the company achieved operating income of 3.963 billion yuan, a year-on-year increase of 12.93%, achieved net profit due to mother of 0.375 billion yuan, a year-on-year decrease of 6.69%, and achieved attributable deducted non-net profit of 0.368 billion yuan, a year-on-year decrease of 5.45%. Among them, in the third quarter, the company achieved operating income of 1.379 billion yuan, a year-on-year increase of 12.70%, achieved net profit to mother of 0.093 billion yuan, a year-on-year decrease of 34.87%, and realized deducted non-net profit of 0.091 billion yuan, a year-on-year decrease of 33.53%.

Incident comments

Revenue continued to grow well, and performance was under pressure in the short term due to the decline in gross margin compounded by the increase in sales rates. 2024Q3 achieved revenue of 1.379 billion yuan, +12.70% year over year, and 2024Q1-Q3 +12.93% year over year, continuing a good growth trend.

On the cost side, the company's gross margin in 2024Q3 fell 2.29 pct year on year and 1.90 pct month on month. Short-term pressure is under pressure, or mainly because there is some pressure on the cost side compared to the same period. On the rate side, the company's 2024Q3 sales rate, management rate, R&D rate, and financial rate reached 17.05%/14.24%/-0.24%, respectively, +2.05/+0.47/ -0.46pct, respectively, and +2.67/+0.85/-1.71/+1.12pct month-on-month, respectively. The sales rate increased significantly year-over-year/month-on-month, reaching the highest level since listing, or mainly due to factors such as the company's increased investment efforts in new product promotion and other dimensions. Under the influence of gross margin pressure compounded by the increase in sales rates, the company's net profit margin for single Q3 reached 6.75%, -4.93/-4.87pct year-on-year, respectively. Corresponding to the company's 2024Q3 net profit was -34.87% YoY, and net profit without return to mother was -33.53% YoY, which was under pressure in the short term.

The basic market is steady, and new categories and overseas trips are being developed in an orderly manner. The company has a stable position in the smart home camera market in the basic market. According to IDC data, 2024H1 ranks first in the world in consumer camera shipments. By promoting “visualization,” “scenario-based,” and “intelligence,” the company's products are leading the smart home industry to accelerate evolution and continue to meet the diverse needs of users. On this basis, the intelligent household entry segment of the company's second growth curve broke through rapidly. The product matrix was continuously enriched, and product differentiation helped establish brand mentality. 2024H1 corresponded to +68.97% year-on-year revenue, and the incubation business intelligent service robot achieved small-scale product launch. In September 2024, the company released a new cleaning robot RS20 Pro Ultra, which has many functions such as floor sweeping, double-disc pressurized mopping, CutFree 2.0 internal cutting brush, AI obstacle avoidance+structural light fusion obstacle avoidance, AI intelligent inspection, etc. The price of the edition is 3,499/3999 yuan respectively, which is expected to further help the company grow. Furthermore, the company actively lays out overseas markets, and has now achieved online and offline multi-channel coverage in many countries and regions. In October 2024, the company appeared at the 44th GITEX GLOBAL exhibition at the Dubai World Trade Center, showcasing all categories of its smart home products to global exhibitors, which is expected to further expand the brand's overseas popularity.

Investment advice: Product and channel layout optimization, resonance with scale and efficiency. The company's current “positive business cycle” of the “smart home+cloud platform service” dual main business is gradually running through. As smart homes move towards the smart home stage, smart home vision products represented by home cameras may play a more important role. Fluorite is a well-deserved leader in this industry, on the one hand because of its excellent technology and R&D capabilities, and on the other hand because the parent company supports channels and user resources.

In the long run, Fluorite is expected to continue its leading position in the smart home industry based on smart hardware and cloud platform services. On this basis, the company actively promotes product and channel layout, revenue growth is accelerated, and profitability continues to increase. The company's net profit for 2024-2026 is 6.22, 7.67, and 945 million yuan, respectively, corresponding to the 2024-2026 PE of 44.7, 36.2, and 29.4 times, respectively, maintaining a “buy” rating.

Risk warning

1. The risk of falling market demand due to macroeconomic changes;

2. The risk of increased industry competition and increased market concentration.