The rapid rise of Stone Technology's own brand, product diversification layout has released great potential

According to the "China Home Appliance Market Report for the First Half of 2021", in the first half of the year, China's home appliance consumer market recovered steadily with the overall economy, and the retail sales of the home appliance market were 429.3 billion yuan. Among them, the clean home appliance track is surging, according to the relevant total data of Aowei Cloud Network (AVC) statistics, the retail scale of clean electrical appliances in the first half of 2021 reached 13.6 billion yuan, an increase of 40.2% year-on-year, the growth momentum is strong, with the future consumption upgrade, penetration rate increase, clean home appliances market hundreds of billions of scale becomes possible.

As the world's leading brand of intelligent sweeping robots, Beijing Stone Century Technology Co., Ltd. (roborock, referred to as Stone Technology; stock code: 688169. SH) showed strong momentum. Previous financial reports show that from 2018 to 2020, the operating income of Stone Technology was 3.051 billion yuan, 4.2045 billion yuan and 4.530 billion yuan, respectively, maintaining a steady growth trend. According to the forecast of revenue of 2.348 billion yuan in the first half of 2021, its revenue for the whole year of 2021 is likely to maintain a growth rate.

According to the financial report, the reason for the large growth rate of Stone Technology in the first half of 2021 is that the company gradually expanded its own brand sales channels, increased brand promotion and promotion, and the proportion of sales of private label products with high gross profit increased from 86.25% to 98.23%. The rapid increase in the proportion of private brand business marks the great success of Stone Technology's transformation from ODM business to its own brand strategy.

Behind the appearance of private brand independence, the ultimate secret weapon for Stone Technology to achieve rapid improvement in overall profitability is the "asset-light operation model". In this mode, enterprises can invest more energy and capital in front-end R & D and innovation, and at the production end, they all adopt the mode of entrusted processing, which has the advantage of improving the utilization rate of funds, and can also reduce inventory and improve turnover rate by selling fixed production.

At the same time, the transformation and application of research and development results also allows stone technology products to enjoy a high premium right, and profitability can be rapidly improved. According to the financial report, the gross profit margin of Stone Technology climbed from 19.21% in 2016 to 50.7% in the first half of 2021, significantly higher than other competitors such as Coworth and Lake.

Excellent profitability and high turnover brought by light assets make the OVERALL ROE of Stone Technology at a high level in the industry. Stone Technology has been actively expanding its own brand business since 2017, and compared with the two major competitors in the global market scope - Coworth and iRobot, the company relies on excellent profitability and turnover efficiency, and ROE is at the leading level in the industry.

Specific to business operations, in the first half of the year, Stone Technology sold more than 1.23 million sweeping robots, achieving sales revenue of 2.261 billion yuan. Among them, Stone's own brand sweeping robot sales of about 1.2 million units, to achieve sales revenue of 2.226 billion yuan, the proportion of revenue increased to 94.80%; according to the market division, Stone Technology's overseas business continued to expand, profitability was improved, in the first half of the year to achieve overseas revenue of 1.255 billion yuan, an increase of 124.14%.

Through active R & D investment, Stone Technology has achieved good sales performance and user reputation, which has promoted the overall technological upgrading of the industry and the further improvement of penetration rate.

In 2021, Stone Technology supplemented the product line and successively launched flagship new products such as the T7S series of intelligent sweeping and dragging robots, the H7 handheld vacuum cleaner, the intelligent double brushing machine U10, the self-cleaning sweeping robot G10, and a new generation of commercial cleaning robots. In particular, the recently launched wipe self-cleaning products and floor washing products not only consolidate the product layout, but also announce that they are in the competition for the intelligent cleaning track.

On the other hand, it is understood that the commercial robot project of Stone Technology has completed a small batch trial production and has been tested at a number of cooperative customer sites, and the products will be mainly used in shopping malls, large supermarkets, office buildings, etc. At the same time, it has independently developed a commercial cleaning robot background management system and a stone commercial mobile phone APP, which can realize the user's information access and data statistics on the whole operation process of the cleaning robot. Pacific Securities affirmed this in its research report: "We are optimistic about the performance of the company's commercial robot products." In a sense, commercial cleaning robots are expected to become another major engine for the future growth of Stone Technology's business.

As a positioning of the world's high-end intelligent hardware enterprises, sweeping robot industry upstart, stone technology relying on intelligent algorithms as the core of the software and hardware technology advantages continue to innovate, the global market competitiveness has gradually emerged, with the brand advancement and diversified product layout brought about by the differentiation advantages, stone technology profitability is expected to quickly rise to the industry-leading level in the future. Stone Technology also said that it will actively expand its product range in the future, launch household intelligent sweeping robot products with multiple additional functions and intelligent cleaning robot products for the commercial market, continuously enrich the types of product lines, and further enhance market share.

This article originated from the Financial Circle Network