Stone Technology Penetration Problem 丨 Little Lion Observation

Two sets of data put clean electrical circuit and its leading stone technology (688169. SH) pulled to the tip of the wave.

Since 2019, the net profit growth rate of Stone Technology has been slashed year by year. The financial report shows that from 2018 to 2021, the company's net profit growth rate was 359.11%, 154.52%, 74.92% and 2.40% respectively.

Last year, the price of the mainland sweeping robot industry rose and fell. Aowei data said that in 2021, the online sales of the mainland sweeper industry increased by 28% year-on-year, sales fell by 11% year-on-year, and the average price increased by 44% year-on-year.

What investors care about is, what happened to Stone Technology? Does the investment logic of increased penetration still work?

The high proportion of overseas income is dragging down the growth rate of performance in 2021

According to the latest performance report released by Stone Technology, the company achieved operating income of 5.837 billion yuan in 2021, an increase of 28.84% year-on-year; net profit of 1.402 billion yuan, an increase of 2.40% year-on-year; deduction of non-net profit of 1.190 billion yuan, down 1.52% year-on-year.

Stone Technology said that due to the shortage of global shipping capacity due to factors such as the epidemic, there have been more container delays, ship jumping, poor transportation cycles, etc., which have caused a certain negative impact on the company's revenue growth rate in 2021.

According to Tonglian data Datayes! In 2018, 2019 and 2020, the revenue of Stone Technology was 3.05 billion, 4.2 billion and 4.53 billion, respectively, of which the overseas revenue was 0.3 billion yuan, 580 million yuan and 1.868 billion yuan, accounting for 1%, 13.8% and 41.2% of the total revenue, respectively.

If you consider the export of domestic dealers, according to the calculation of Guojin Securities, the revenue from overseas of Stone Technology in 2020 will account for more than 70%, which can be seen that the overseas market is the key direction of Stone Technology in recent years.

In the early stage, The stone quickly entered the European market with the help of overseas channel levers such as Xiaomi and Muchen. According to the Research Report of Guojin Securities, the market share of Stone Technology in the EMEA region (the collective name of The Three Regions of Europe, the Middle East and Africa) has increased significantly in recent years, from less than 1% in 2018 to 9% in 2019 and 14% in 2020.

Although the company's overseas business in 2021 is mainly affected by the tight shipping capacity, Xie Liyuan, chief analyst of home appliances at Guojin Securities, pointed out in an interview that in the long run, the main challenge of Stone Technology overseas is channel construction. Taking the North American market as an example, offline channels are also important sales channels, but KA channels such as overseas offline Walmart have strict requirements for brand influence, supply stability, price control system, etc. At present, Stone mainly relies on Amazon online channels to sell in the North American market.

The speed of new development is slow, affecting the performance of the domestic market

In terms of the domestic market, the research and development capabilities of Stone Technology are at a high level in the industry, but the speed of new product development has not led.

Cloud Whale released the self-cleaning mop robot Cloud Whale J1 in 2020, and the market entered the era of self-cleaning product competition. However, compared with the competitors, Stone did not launch the G10 with self-cleaning function until September 2021, and the absence of self-cleaning in the early stage led to a decline in the company's market share in the first three quarters of 2021.

In this regard, a home appliance industry analyst said that the research and development of sweeping robots requires the combination of software and hardware, the most core is still software, because software is difficult to make up for in the short term, but companies with strong software development tend to ignore hardware manufacturing capabilities, the Internet background of stone technology in hardware manufacturing lack of experience, the company's product production all use entrusted processing methods, which to a certain extent affects the new speed.

Xie Liyuan also said that the relatively slow speed of new stones has a strong correlation with the company's genes. Stone pays more attention to the quality and experience of the product, which will affect the new cycle of the product to a certain extent, but the stability of the product will have certain advantages.

Since the launch of cleaning products, the performance of stone domestic sales has accelerated significantly. According to Aowei Cloud Network data, the sales of stone sweepers in 2021Q4 increased by about 106%, and the share of online sweeper stone brands as of the ninth week of 2022 was about 20% (+9pct year-on-year), and the sales growth rate was about 87%.

It is difficult to increase the penetration rate, and the investment logic of clean electrical appliances changes

The official price of stone technology self-cleaning sweeping robot G10 is 3999 yuan; the price of Coworth's new X1 all-round sweeping tractor is 4999 yuan; the price of cloud whale J2 small white whale sweeping robot is 4299 yuan.

Unlike most of the traditional home appliances that rely on the volume of price increases and falls, and the route of enterprises reducing costs and increasing efficiency, sweepers seem to be selling more and more expensive, and the penetration rate is difficult to increase, which also triggers the market's questions about the investment logic of the clean electrical appliance industry.

The above-mentioned home appliance industry analysts said in an interview that the current penetration rate of clean home appliances in the Chinese market is low, and in the medium and long term, clean home appliances take the logic of increasing penetration rate. However, in 2021, the industry sales did not grow, the overall sales were completely driven by average price growth, due to the fear that the logic of volume and price rise together does not work, from the perspective of investment, this will lead to more stock prices of clean electrical companies including Stone Technology, Coworth, etc.

Aowei data shows that in 2021, the online sales of the sweeper industry increased by 28% year-on-year, the sales volume fell by 11% year-on-year, and the average price increased by 44% year-on-year.

Coworth (603486. SH) board secretary Ma Jianjun also told First Finance and Economics a few days ago that the sweeping robot is the only home appliance category that has not only not entered the price war in the past 3 to 5 years, but has sold more and more expensive.

Although he stressed that the reason behind this is that the value delivery of sweeping robots contains huge software content and is driven by the technological upgrading of products, the pricing of luxury goods may lead to a lower penetration process of cleaning appliances than expected, which is a problem that manufacturers such as Stone Technology have to face at present.

Previously, Western Securities optimistically predicted that the penetration rate of domestic sweeping robots in urban households will reach 45% in 2030, the penetration rate in rural households will reach 5%, and the overall penetration rate will be about 33%. According to CICC' estimates, by the end of 2021, the penetration rate of household sweepers in Urban China will be about 9%.