The company announced its 24/25Q1 results. In 24 years, the revenue was 5.442 billion yuan (yoy +12.41%), the net profit attributable to the parent company was 504 million yuan (yoy -10.52%), and the gross profit margin was 42.08%, a year-on-year increase of -0.39pct. In Q1 2025, the revenue will be 1.380 billion yuan (yoy +11.59% / qoq -6.69%), the net profit attributable to the parent company will be 138 million yuan (yoy +10.42% / qoq +6.90%), and the gross profit margin will be 42.55% (yoy -0.04pct / qoq +2.59pct).

The company's annual report performance is slightly lower than our expectation (24E net profit attributable to the parent company of 555 million yuan), mainly due to the increase in sales expenses caused by the expansion of new products, and the fluctuation of gross profit margin due to intensified competition. The service robot is expected to grow into the third growth curve, superimposed through the company's active through expense rate control, channel optimization, revenue structure optimization to maintain a stable gross profit margin, optimistic about the follow-up company's revenue, profit release, maintain the "buy" rating.

Review: Smart home and cloud platforms maintain high growth, and service robots expand the third growth curve Smart home: 1) Camera: 24-year revenue increased by -1.38% year-on-year, and new growth points were injected through the introduction of companion attributes through S10 and TAMO. 2) Household entry: Sitting on the second growth curve, the income increased by 47.87% year-on-year in 24 years. 3) Service robots: 24-year revenue of 166 million, a year-on-year increase of 265%, is expected to become the third growth curve. Commercial cleaning robots have been put into commercial scenarios. The escort robot RK3 is connected to DeepSeek to enhance the interaction attributes. 4) Wearable: The first self-developed watch WA1S was released, becoming the entrance to portable intelligent control. In terms of cloud platform, the revenue in 24 years increased by 22.87% year-on-year. 1) C-side: Focusing on value-added services such as elderly care, security guarding, and store cloud attendance to ensure user stickiness. 2) B-side: Build an AI middle platform based on self-developed large models, focusing on scenario-based implementation.

Outlook: The new brand is expected to bring revenue acceleration, and overseas market expansion is still the focus 1) The introduction of sub-brands, revenue realization is expected to accelerate: The introduction of "Eye Bean" and "Aiketu" sub-brands is expected to open up revenue growth space in 25 years. 2) Actively embrace AI to attract more users: Or add large model services such as DeepSeek to conventional cameras to improve intelligence. 3) Create a differentiated ecosystem of cloud-edge-end: In 24, the smart home AI host "Tianji" was launched, and its computing power was subsequently upgraded to realize the localization of some AI computing and improve the cloud-edge-end ecosystem. 4) Continue to pay attention to overseas markets: the growth rate of overseas revenue in 24 years was 26.42%, much higher than the domestic 5.54%. In the past 25 years, overseas is still a market worth paying attention to, and we will continue to expand our smart home business, strengthen our cross-border/local e-commerce layout, and establish multi-level channels.

Profit forecast and valuation

Taking into account the sub-brand marketing and intensified competition, the company's net profit attributable to the parent company in 25-26 years (-8.60%, -9.78%) was lowered to 6.48/793 million yuan, and the net profit attributable to the parent company in 27 years is expected to be 947 million yuan (three-year CAGR of 23.40%), corresponding to EPS of 0.82/1.01/1.20 yuan. SOTP valuation, 25E smart home hardware net profit of 340 million yuan, given 25E 26.0x PE, premium due to the perfect layout of smart home hardware and leading market share; The net profit of the 25E cloud platform business was 310 million yuan, and the 25E 80.0x PE was given, and the discount was higher because of the self-developed domestic leading AI model of iFLYTEK. The target price is 42.61 yuan (previous value 41.30 yuan), corresponding to 25E 52.0x PE, maintain "buy".

Risk warning: new product research and development risks, industry competition intensification risks, information protection and data security risks.