Event: The company released its 2024 annual report, achieving operating income of 11.945 billion yuan, a year-on-year increase of 38.03%; the net profit attributable to the parent company was 1.977 billion yuan, a year-on-year decrease of 3.64%; The net profit deducted from non-attributable to the parent company was 1.620 billion yuan, a year-on-year decrease of 11.26%.

The national subsidy has driven the rapid growth of revenue in 4Q2024, and this trend is expected to continue in 2025. The operating income in 4Q2024 was 4.938 billion yuan, an increase of 66.54% year-on-year and 90.62% month-on-month, mainly due to the significant increase in domestic consumers' purchase willingness and the rapid growth of domestic sales revenue driven by the national subsidy in 4Q2024; The gross profit margin in 4Q2024 was 44.86%, a year-on-year decrease of 11.79pct and a month-on-month decrease of 11.63pct, mainly due to the increase in the proportion of domestic sales, resulting in a structural adjustment of the overall gross profit margin. 1Q2025 domestic sales continue to grow rapidly driven by national subsidies, according to Aowei cloud network data, 1Q2025 The company's domestic sweeping robot market share is 24.92%, an increase of 3.48pct year-on-year, and sales increase by 90.72% year-on-year. We believe that in the case of a relatively low base (Aowei cloud network data shows that 1-3Q2024 due to the lack of national subsidies, the company's online sales of sweeping robots increased by 18.4% year-on-year, and the growth rate is relatively peaceful), the company's domestic sales will continue to grow rapidly in the first quarter in 2025, becoming the main driving force for the company's performance growth.

R&D expenses and sales expenses have grown rapidly, and the leading position has been consolidated. In 2024, the company's R&D expenses will be 971 million yuan, a year-on-year increase of 56.93%, the R&D expense rate will be 24.8%, an increase of 3.84 pct year-on-year, the sales expense will be 2.967 billion yuan, a year-on-year increase of 73.23%, and the sales expense rate will be 8.13%, an increase of 0.98 pct year-on-year. The company adjusted its business ideas, held high to consolidate its leading position, and the company on the R&D side kept up with the market demand and launched a variety of new products, among which the G30 Space has a 5-axis bionic arm and maintains a 7.98cm fuselage, which achieves three-dimensional cleaning and demonstrates its strong innovation ability while ensuring an ultra-thin fuselage; IDC data shows that in 2024, Roborock will continue to be the leader in the global sweeping robot market sales for two consecutive years with a market share of 22.3%.

Investment suggestion: The company is the world's leading intelligent sweeping robot, and it is expected to continue to achieve rapid growth. It is estimated that the company will achieve revenue of 150.02/181.41/21.215 billion yuan from 2025 to 2027, net profit attributable to the parent company of 21.03/23.26/2.963 billion yuan, and corresponding PE of 16.52/14.94/11.73 times respectively, maintaining an "overweight" rating.

Risk warning: the risk of tariff intensification, raw material price fluctuations, the risk of intensified market competition, the risk that industry demand is less than expected, and the uncertainty of overseas market expansion.