Key points of investment
Fluorite Network Announces 2023A & 2024Q1 Results:
2023A revenue of 4.840 billion yuan (YoY +12.39%, same below), net profit of 563 million yuan (+68.8%) after deducting net profit of 553 million yuan (+86.9%); of these, 2023Q4 single quarter revenue of 1,332 million (+13.87%), net profit attributable to mother of 161 million (+41.11%), net profit of non-return to mother was 164 million (+97.98%), maintained rapid growth.
2024Q1's revenue was $1,237 million (+14.61%), net profit attributable to mother was $125 million (+37.38%), net profit after deducting non-return net profit of $122 million (+34.94%), and high profit growth continued.
By business: The growth rate of the new smart home entry business was impressive, and the gross margin of the most popular product camera increased dramatically 1) Smart cameras: 23A revenue of 2,990 billion yuan (+2.99%, H1/H2 growth rates were 5%/1%, respectively), accounting for 61.77% of revenue, and a gross profit ratio of 38.59% (+7.62 pct year on year), showing impressive performance. In 2023, many new products such as lampstand gimbal cameras, pet nursing cameras, panoramic cameras, etc. will be launched. The track continues to prosper. According to IDC forecasts, China's smart home camera market is expected to ship 21.55 million units in 2023 (up 7.5% year on year), and the company's leading position is stable.
2) Smart home entry: 23A revenue of 506 million yuan (+49.48%; H1/H2 growth rates were 27%/68%, respectively), accounting for 10.45% of revenue (+2.6pct). New smart door locks and smart doorbells with face recognition+face video functions are popular.
3) Other smart home products: 23A's revenue of 198 million yuan (+52.19%, H1/H2 growth rates were 70%/39% respectively), accounting for 4.09% of revenue. Smart sweepers were popular. Intelligent control products such as TV Studio smart boxes, smart screens, and smart light sockets were launched in the first half of '23. The smart home map slowly unfolded.
4) Cloud platform: 23A revenue of 856 million yuan (+27.79%, H1/H2 growth rates were 23%/32%, respectively), revenue accounting for 17.69% (+2.13pct), gross profit margin 76.09% (+3.66pct), and TOC value-added services and TOBPaaS platform business growth rates were impressive.
5) Accessories: 23A revenue of 267 million yuan (+18.04%; H1/H2 growth rates were -17%/+54%, respectively), H2 improved significantly month-on-month, accounting for 5.52% revenue and 18.98% gross profit margin.
Overseas business is growing rapidly, and domestic business remains steady
23A Domestic and Overseas Revenue of RMB 33.04 RMB1,512 billion respectively, +8.14%/+24.79% YoY, gross margin was 42.07%/45.09%, respectively. The gross margin of overseas business was slightly higher than domestic. Overseas revenue growth exceeded expectations, and we are optimistic about the company's subsequent overseas business development.
Smart home product sub-channel: rapid growth online, offline repair
The offline/online revenue of 23A smart home products was 31.74 billion yuan, +6.78%/+25.86%, and the share of online revenue increased by 4.5 pct to 21.85%. Among them, online B2C/e-commerce self-operated revenue was +31.0%/15.8%, and the revenue of offline dealers/professional customers/direct stores was +12.1%/-16.7%/+183.0%, respectively.
Significant increase in gross margin and increase in sales & R&D investment
Gross profit margin: 23A gross margin of 42.85% (+6.43pct), 24Q1 was 42.72% (+1.6pct), mainly due to: 1) Product structure optimization: 23A's share of cloud platform business with a gross margin of 76.09% increased by 3.66 pcts year-on-year; 2) Channel structure optimization: 23A's share of online channels with a gross margin of 57.9% increased 4.48 pcts; 3) Declining raw material costs, increased self-production rate and reduced supply chain costs, leading to a year-on-year increase in gross margin of all major businesses.
Net interest rate & expense ratio: 23A net interest rate of 11.63% (+3.9pct), 24Q1 net interest rate of 10.1% (+1.7pct), 23A sales, management+R&D and R&D expenses rates were 14.40%/18.42%, respectively, +1.80%/+1% year-on-year, of which 24Q1 sales, management+R&D expenses were 14.86%/20.19%, respectively, and R&D investment continued to increase.
Profit forecasting and valuation
The company is expected to generate revenue of 5.834 billion (+20.54%), 7.019 billion (+20.32%), 8.239 billion (+17.38%), net profit to mother of 701 million (+24.53%), 842 million (+20.06%), 975 million (+15.89%), corresponding PE is 37.79X, 31.47X, 27.16X. As a scarce target for the smart home+cloud platform, the company's main business smart cameras are steadily leading the industry. Smart home entry, cloud platforms, smart home products, etc. are growing rapidly, supporting the second and third growth curve, and promoting a steady improvement in profitability under continuous optimization of products, channels and supply chains, and maintaining a “buy” rating.
Risk warning: smart home business development falls short of expectations, industry price competition intensifies