2021-12-28 Xie Liyuan of Guojin Securities Co., Ltd. conducted a research on Stone Technology and released a research report entitled "Global Competitiveness of Stone Technology in three Dimensions". This report gives a buying rating to Stone Technology and believes that its target price is 1217.90 yuan. the current share price is 776.8 yuan, with an expected increase of 56.78%.

Stone Technology (688169)
Investment logic
With regard to the deep layout of the European market with outstanding dividends at sea, the European market has achieved remarkable results: technological innovation has driven the scale growth of the floor sweeper industry, and Chinese brands have achieved technological catch-up and surpass of overseas leaders, which is expected to lead a new round of industry growth. The company has opened overseas markets with cost-effective products and achieved remarkable results in the layout of the European region. The increase in the penetration rate of floor sweepers is highly deterministic. According to our estimates, the market penetration rates in the United States and Europe are expected to increase to 24% and 10% respectively in 2025, corresponding to about 17% CAGR in 2020-2025. The competition pattern in Europe is good, which is the main battlefield for Chinese floor sweepers to compete at sea in the future. we are optimistic about the sustained performance growth of the company under the first-mover advantage in Europe.
Products rely on algorithmic advantages to build high core barriers, diversified layout and thickening performance: the company has strong R & D genes, adhered to high R & D investment for many years to maintain technological leadership, and achieved industry-level technological breakthroughs several times. The advanced nature of algorithm is the core technical barrier of the company. The absence of early self-cleaning led to a decline in market share, self-cleaning new product G10 is expected to pull the company's market share to pick up. Diversified floor washers and commercial cleaning robots. The floor washer has a broad market space and is expected to become the second growth curve of the company's performance.
ODM transformed its own brand, rapidly improved its profitability, and accelerated to make up for its marketing shortcomings: the company started for XIAOMI, gradually completed the establishment of its own brand and category expansion, and maintained rapid revenue and profit growth. In 2020, the total revenue was 4.53 billion yuan and the net profit was 1.37 billion yuan. From 2016 to 2020, the CAGR of income and net profit were 123.0% and 173.4%, respectively. High gross profit margin superimposed low sales expense rate, the company's net profit rate and ROE are significantly higher than comparable companies. The completion of the marketing deficiency will help to give full play to the company's product advantages and drive revenue growth.
Investment advice and valuation
The company's revenue from 2021 to 2023 is expected to be 58.4,76.6 and 9.78 billion yuan respectively, an increase of 29.0%, 31.0% and 27.7% over the same period last year. It is estimated that the company's net profit from 2021 to 2023 is 15.6,20.3 and 2.56 billion yuan, an increase of 14.0%, 30.3% and 25.9% over the same period last year. The current stock price corresponds to PE34x, 26x and 20x. Considering the clear room for long-term penetration improvement of floor sweepers, the company has a deep accumulation of technology and is expected to continue to take the lead in a high-quality track driven by supply and demand, fully benefiting from the fast-growing dividends of the industry. Give 2022 40 times valuation, target price 1217.9 yuan, cover for the first time, give "buy" rating.
Risk
The increase in penetration is not as expected; R & D innovation and product performance are not as expected; overseas market expansion is not as expected, and the shortage of shipping capacity affects the company's overseas sales; exchange rate fluctuation risk; the risk of lifting the ban on restricted shares; the risk of stock price changes caused by shareholder reduction.

A total of 25 agencies have rated the stock in the last 90 days, including 21 buy ratings and 4 overweight ratings; the average institutional target price in the past 90 days is 1227.18; according to the Securities Star valuation analysis tool, Stone Technology (688169) has a good company rating of 4.5 stars, a good price rating of 3 stars and a comprehensive valuation rating of 4 stars. (rating range: 1-5 stars, up to 5 stars)