Financial News Agency, November 10 (Reporter Zhao Zixiang)Despite the increase in revenue scale, the two sharp declines in net profit data in this year's three-quarter report still made the once “top sweep” Covos (603486.SH) unable to evade questions from investors. At the performance briefing held today, Covos successively answered questions about sales expense rates, overseas markets, and the progress of polymer lithium-ion battery projects, etc., but it still bore the brunt of it, “Why not make money?” This soul tortures.

“(A colleague) even less than half of your turnover is less than half of your net profit, yet it has reached a record high. The more you buy, the more you lose. Is it useful for your penetration rate to increase? You don't make any money.” Some investors asked this question at the performance briefing.

Covos responded, “The company has the most complete product matrix in the industry, and continues to invest in new businesses, including commercial cleaning robots, lawnmower robots, and foodstuffs, etc., and new categories of innovation, iteration, and popularization require corresponding expenses. Furthermore, the company mainly adopts a direct management model on the sales side, which focuses more directly on product promotion and delivery to consumers, accounting for a relatively low share of shipments to channels and intermediaries, and differences in channel structure also have a certain impact on the cost investment structure of the sales side. In the future, the company will rationally allocate various expenses according to the market environment and product sales situation, and strive to improve profitability on the basis of stabilizing the scale of operations.”

As the saying goes, “don't be afraid of brothers' suffering, be afraid of brothers starting a rover,” the reason why Covos has been questioned by investors is largely due to the fact that it has become a “background board for friends and business” — Shitou Technology achieved revenue of 2,315 million yuan, an increase of 57.56% over the previous year, net profit of 621 million yuan, an increase of 160.38%; at the same time, revenue for the first three quarters increased 29.51% year on year; net profit increased 59.1% year over year.

Meanwhile, Covos Q3 Covos achieved revenue of 3.387 billion yuan, an increase of 2.58% over the previous year, and net profit of only 19612,300 yuan, a decrease of 92% over the previous year. Furthermore, the first three quarters achieved total revenue of 10.532 billion yuan, an increase of 4.02% over the previous year, and net profit of 604 million yuan, a decrease of 46.21% over the previous year.

Covos's peers are not limited to Stone Technology. Currently, in addition to previous competitors, listed companies such as Fluorite Network and Ophite are entering the sweeper robot industry, and the market environment is getting worse. Sales promotion in overseas markets has become another focus of attention for investors. Covos said at the performance briefing that in the third quarter of 2023, overseas revenue for Covos and Tamco brands grew rapidly, increasing 47% and 53% year-on-year respectively, driving overall revenue growth.

In response to the investor's question, “Are there any relevant measures to control the sales expense ratio and increase the conversion rate of operating income/sales expenses in the future?” In response, Covos said that at present, there is still room for improvement in the scale and penetration rate of the robot and floor scrubber industries. In addition to investing in product innovation and iteration, it also requires continuous market education from relevant companies, including Covos.

“In the future, while increasing the scale of product sales, the company will carefully control various expenses, actively adjust sales strategies, improve sales expenditure efficiency, and guarantee a certain level of profit.” Mr. Zhuang Jianhua, general manager of Covos, said at the performance briefing.

In addition, at the end of 2021, the company disclosed a 2GWH polymer lithium-ion battery project with an annual output of 2 GWH, and new progress has also been made. The company said the project is currently in the completion and acceptance stage. Covos further stated that the project (completed and put into operation) will satisfy the company's autonomous control over core component technology and help achieve its strategic intentions of stabilizing production, securing supply, and controlling prices in the supply chain supporting business.