Matters:

The company announced the 2024 annual report and the first quarter of 2025. In 2024, the company will achieve operating income of 5.442 billion yuan, a year-on-year increase of 12.41%; The net profit attributable to the parent company was 504 million yuan, a year-on-year decrease of 10.52%. In the first quarter of 2025, the company achieved operating income of 1.380 billion yuan, a year-on-year increase of 11.59%; The net profit attributable to the parent company was 138 million yuan, a year-on-year increase of 10.42%. The company issued a profit distribution plan: it intends to distribute a cash dividend of 0.35 yuan (tax included) per share to all shareholders, and a cash dividend of 275,625,000.00 yuan (tax included), accounting for 54.70% of the company's net profit attributable to shareholders of listed companies in the company's consolidated statements in 2024.

Ping An's view:

The company's revenue in the first quarter of 2024 and 2025 will achieve steady growth. In 2024, the company will actively expand the market for new products such as innovative product forms of smart home cameras, smart locks, household and commercial cleaning robots, smart wearables, etc., and actively lay out the domestic global new retail channel matrix and international e-commerce and offline retail channels, and continuously build the market influence of the company's various core product lines at home and abroad.

In 2024, the company will achieve operating income of 5.442 billion yuan, a year-on-year increase of 12.41%; The net profit attributable to the parent company was 504 million yuan, a year-on-year decrease of 10.52%. The company's revenue in 2024 will achieve steady growth.

In the first quarter of 2025, the company achieved operating income of 1.380 billion yuan, a year-on-year increase of 11.59%; The net profit attributable to the parent company was 138 million yuan, a year-on-year increase of 10.42%. The company's performance in the first quarter of 2025 is good. In terms of profitability, the company's gross profit margin in 2024 will be 42.08%, down 0.77 percentage points from the previous year, and the gross profit margin in the first quarter of 2025 will be 42.55%, down 0.17 percentage points from the same period last year.

In terms of expenses, in 2024, the company's expense ratio for the period will be 32.90%, an increase of 1.35 percentage points over the same period of the previous year, of which the sales/management/R&D expense ratios will be 15.77%/3.26%/14.95% respectively, a change of +1.37/-0.07/-0.15 percentage points from the previous year.

The company upgraded its business structure and released the EZVIZ blue ocean model to empower the company's development. In 2024, the EZVIZ ecosystem has been fully upgraded from "1+4+N" to "2+5+N", and from the single-core of the IoT cloud platform to the AI + EZVIZ IoT cloud dual-core driver. In terms of large models, the company's self-developed MoE1 embodied large model "Fluorite Blue Ocean Large Model" for vertical IoT scenarios and supporting device-cloud collaboration has been filed with the Cyberspace Administration of China in September 2024. The EZVIZ Blue Ocean model can realize the collaboration of edge computing and cloud computing, and has three systematic AI capabilities: development openness, intelligent interaction and embodied agent, covering the whole link from device spatial perception to device embodied execution. The Blue Ocean model has multi-dimensional perception capabilities such as audio and video, and combines self-developed and third-party multi-expert models to build Blue Ocean AI agents, which can empower multiple categories of intelligent IoT devices. At the same time, in order to meet the evolution of the overall architecture of AI + IoT cloud dual core, the company has built a new technical operating system, EZVIZHomePlayOS, for self-developed SaaS applications and third-party developer customers, helping internal and external developers to develop intelligent scenarios and applications quickly, flexibly and at low cost. With the company's continuous investment in AI technology, the company has officially entered the "+AI" stage, and the deep integration of AI technology with vision and hearing as the core and various intelligent devices, service robots, and Internet of Things cloud services has become an important development direction of the company.

The company's smart home product line continues to improve. 1) Smart home camera: In 2024, the company will promote the upgrade of smart home cameras to visual, scene-based, interactive and intelligent, and further innovate the product form of smart home cameras. At the same time, in 2024, the company will release its first sub-brand, Eye Bean Smart Home Camera, which accurately matches the young crowd and fully reflects the emotional value consumption of young people through youthful and personalized product design and APP interaction. 2) Smart home: In 2024, as the company's star business, the smart home business will further enhance the competitiveness of the industry, and the EZVIZ smart lock, which focuses on face recognition and visual capabilities, will begin to enter the forefront of the industry, and the Y3000 series will become a hot seller. The company has launched innovative products such as cost-effective face + palm vein, industry-leading three-camera smart lock, etc., to meet the all-round needs of users in the home scene. 3) Intelligent service robots: In the smart home scenario for consumer users, the company has deployed household cleaning robots and companion robots in response to diversified needs such as cleaning, companionship, and care; At the same time, in response to the growing demand for cleaning in commercial scenarios, the company also continues to polish commercial cleaning robot products to reduce costs and increase efficiency in building property management. 4) Smart wearables:

In 2024, the company will release the first self-developed smart health watch WA1S and corresponding external medical equipment, and conduct layout and trials in the field of health management and home care. 5) EZVIZ IoT cloud platform service: In 2024, the company will effectively shorten the distance between the site and the user terminal, reduce the request delay, and improve the service quality by adding the nearest site. By the end of 2024, the EZVIZ IoT cloud platform has more than 100 data sites around the world, and the number of IoT devices connected on the platform exceeds 300 million, including more than 250 million video devices.

Profit forecast: According to the company's 2024 annual report and the first quarter report of 2025, we adjust the performance forecast, and it is expected that the company's net profit attributable to the parent company from 2025 to 2027 will be 644 million yuan (the previous value is 721 million yuan), 777 million yuan (the previous value is 881 million yuan), and 942 million yuan (new); EPS is 0.82/0.99/1.20 yuan, and the PE corresponding to the closing price on April 11, 2025 is 44.5/36.9/30.4 times. The company is a leading smart home enterprise in China, based on the advantages of visual technology, the development of "smart home + Internet of things cloud platform" dual main business, to build core competitiveness. The company's smart home product matrix continues to expand and continuously consolidate its own advantages. We believe that in the future, the company will benefit from the continuous penetration of smart home and the comprehensive empowerment of AI technology based on its end-cloud collaborative smart home closed-loop ecological advantages, and further open up growth space. We are bullish on the company's future and maintain our "Recommended" rating on the company.

Risk warning: 1) The development of the company's smart home camera product line is less than expected. Smart home camera is the company's fist product and revenue pillar, currently leading in the domestic market share, if with the emergence of new technologies, new participants, the market is facing increased competition, the company's smart home camera product line development has the risk of not meeting expectations. 2) The development of the company's smart home business is less than expected. EZVIZ smart lock, smart cat's eye, doorbell, intercom and other types of smart home product lines after years of product polishing and technology iteration has a strong market competitiveness, smart home has gradually developed into the company's second growth curve, if the follow-up related products marketing or user acceptance is not as expected, the company's smart home product line development has the risk of not meeting expectations. 3) The company's cloud service business development is not as expected. The company's EZVIZ IoT cloud platform can access the company's and third-party IoT devices at the same time, if the expansion of registered users is less than expected, or the conversion of registered users to paid users is not as expected, the company's cloud service business development will not meet expectations.