Produced by Radar Finance Hongtu | Author: Xiao Sa | Editor: Shen Hai

After disclosing its first-half performance forecast, "Sweeping Mao" Stone Tech's share price fell for two consecutive days.

On July 16, Stone Tech opened lower and continued to decline, closing down 2.79%, with a total market value of approximately 43.8 billion yuan. Including the previous day's decline of over 9%, the company's share price fell by a cumulative 11.67% in the two trading days after announcing its first-half performance forecast, with a market value evaporation of 5.782 billion yuan.

Earlier, Stone Tech released a performance forecast, estimating that its net profit attributable to shareholders for the first half of this year would be 1 billion to 1.2 billion yuan, an increase of 35.24% to 62.29% year-on-year; and its non-recurring profit after tax would be 800 million to 950 million yuan, an increase of 21.17% to 43.89% year-on-year.

Although this "report card" of expected growth appears impressive on the surface, looking solely at the second quarter, the company expects to achieve a non-recurring net profit after tax of 460 million to 610 million yuan, an increase of -7.9% to 22.3% year-on-year, meaning the lower limit may be lower than that of the same period last year. Some institutions pointed out that if the impact of tax rebates is excluded, the company's non-recurring net profit after tax for the second quarter is in line with market expectations, in other words, it did not exceed expectations.

In addition, Stone Tech, which has a relatively high proportion of overseas revenue, also faces market concerns about the potential challenges of tax fluctuations on its future exports. On July 14, Hua'an Securities issued a research report analyzing that Stone Tech's share price has adjusted by about 15% since its June high, mainly reflecting expectations of export tariffs. Short-term valuation depends on policy changes, while long-term valuation still hinges on overseas demand profitability.

Moreover, Stone Tech's layout in the washing machine sector is currently facing fierce competition, as there are already many mature brands in the market. For Stone Tech, which aims to "grab a slice of the pie," it also faces various challenges.

It is worth noting that Hurun's Global Rich List shows that Stone Tech founder Chang Jing's personal wealth has shrunk from 18 billion yuan in 2021 to 9.5 billion yuan in 2024.

Share Price "Plunge" After Disclosure of Performance Forecast

It is not uncommon for cases where the company's share price suffers from investors' "vote with their feet" despite a substantial increase in performance forecasts, and this time it is Stone Tech.

On July 12, Stone Tech announced its first-half performance growth forecast, with preliminary financial department estimates indicating that the company expects to achieve a net profit attributable to the parent company's owners of 1 billion to 1.2 billion yuan in the first half of 2024, an increase of 261 million to 461 million yuan compared to the same period last year, representing a year-on-year growth of 35.24% to 62.29%.

The net profit attributable to the parent company's owners after deducting non-recurring gains and losses for the first half of 2024 is expected to be 800 million to 950 million yuan, an increase of 140 million to 290 million yuan compared to the same period last year, representing a year-on-year growth of 21.17% to 43.89%.

Regarding the reasons for the performance growth, the company stated that during the reporting period, it continued to implement its "going out" strategy. With outstanding product performance and technological advantages, and relying on a comprehensive product price range, the company further refined its channel layout, actively expanded and deeply explored global market share. At the same time, benefiting from the rapid growth of overseas consumer demand, overseas revenue achieved rapid growth.

Secondly, during the reporting period, the company's wholly-owned subsidiary was recognized as a key software enterprise encouraged by the state and obtained a preferential income tax rate, which had a positive impact on net profit.

However, investors seem dissatisfied with this "report card" of expected growth. On July 15, Stone Tech opened significantly lower, falling by over 15% within five minutes, and still ended the day down 9.13%. The following trading day, the company's share price fell another 2.79%.

Without any other obvious negative news, the sudden "plunge" in share price also seemed to exceed Stone Tech's expectations. The company's Secretary of the Board of Directors responded that no negative news related to the company had been identified, the company's current production and operation were normal, and its performance and profitability were also relatively good. They were not sure why the market reacted so strongly.

However, many investors believe that the company's performance did not exceed expectations and that it faces some uncertainties in the future.

Research reports from Guotai Junan Securities and Hua'an Securities both agree that excluding the impact of tax rebates, the company's overall performance is in line with market expectations. Specifically, Guotai Junan pointed out that Stone Tech achieved a non-recurring net profit after tax of 458 million to 608 million yuan in the second quarter, within the range of a year-on-year decrease of 7.9% and an increase of 22.3%.

The institution speculated that the company's non-recurring net profit after tax of 458 million to 608 million yuan for the second quarter did not include tax rebate income. In contrast, the non-recurring net profit after tax of 497 million yuan for the same period last year included tax rebate income (which can be inferred from the relevant sections in the 2023 interim report related to tax rebates for key software enterprises). To maintain the same basis, if the impact of 57.76 million yuan in tax rebates in the second quarter of last year is excluded, and 440 million yuan is used as the base for calculation, the company's non-recurring profit growth rate for the second quarter of this year is 4% to 38%, with the central value in line with previous market consensus expectations.

In other words, according to the industry, excluding the impact of tax rebates, Stone Tech's growth in the second quarter did not exceed expectations.

In addition, some market observers believe that Stone Tech, with a relatively high proportion of overseas sales, may face challenges from tariff fluctuations in its overseas business.

Data from iFinD shows that from 2021 to 2023, Stone Tech's overseas revenue accounted for 57.63%, 52.54%, and 48.87% respectively.

According to the company's investor relations activity record disclosed on June 17, Stone Tech focuses on developing the US, European, and Southeast Asian markets for its overseas business. Especially in the US market, the company's online sales have risen to the top of the industry, and offline expansion is also steady. To date, the company's products have entered more than 170 countries and regions worldwide, serving over 15 million households.

However, overseas business is not only affected by market conditions but also faces policy risks. On July 14, Deng Xin, an analyst at Hua'an Securities, stated that the company's share price has adjusted by about 15% since its June high, mainly reflecting expectations of export tariffs. Short-term valuation depends on policy changes, while long-term valuation still hinges on overseas demand profitability.

However, recently, relevant personnel from Stone Tech told the media that the current tariffs have no significant impact on the company's operations.

Betting on the New "Battlefield" of Washing Machines

Public information shows that Stone Tech was founded in 2014, initially starting with "Mijia" robot vacuum cleaners as its business. As an ODM (Original Design Manufacturer), it was responsible for the overall development, production, and supply of customized products for Xiaomi, while Xiaomi was responsible for product sales.

In 2017, Stone Tech launched its own-brand robot vacuum cleaner products, with its own-brand revenue exceeding 1 billion yuan that year, accounting for nearly 10%, and gradually reducing its reliance on Xiaomi in terms of customers and channels.

On February 21, 2020, Stone Tech successfully listed on the STAR Market of the Shanghai Stock Exchange, issuing 16.6667 million new shares and raising 4.519 billion yuan.

In 2021, the company's own-brand revenue accounted for 99%, completing its transformation from an OEM enterprise to an own-brand enterprise.

For a long time after going public, Stone Tech's main products focused on robot vacuum cleaners and floor washers. In the 2023 interim report, the company added washing machines to its main business.

In the same year, Stone Tech successively launched the wash-dry combo H1 and the molecular sieve mini wash-dry combo M1.

At the 2024 CES Consumer Electronics Show in the United States, the company also launched the Zeo one series of washing machines. According to the official website, the company currently has a total of five wash-dry combo products.

Why did Stone Tech enter the market of washing machines, a traditional home appliance giant "dominated" market? The investor relations activity record disclosed on June 17 mentioned earlier shows that Stone Tech has established an independent business unit and formed a dedicated team to manage the wash-dry combo business in its entirety.

The company's management stated that since its launch, the company's wash-dry combo has received good word-of-mouth, and its market performance has been noteworthy, effectively expanding the company's product line and demonstrating the company's strength in technological innovation and market development. The company will fully mobilize resources to create a second curve of business growth.

The logic behind the company's category expansion primarily considers whether new business categories have potential demand pain points or untapped segments that can be addressed, and it also considers developing new categories that are similar to the company's existing user base.

While the idea is appealing, can the washing machine category truly become the company's second growth curve? In the 2023 annual report, the company merely stated that during the reporting period, the company's floor washer and the new wash-dry combo performed well.

In the view of home appliance industry analyst Liu Buchen, the wash-dry combo market is filled with strong competitors, and Stone Tech does not have a significant advantage. He noted that wash-dry combos are typically products pushed by major home appliance enterprises, which have more technological and product advantages, and consumers are more likely to accept them. However, wash-dry combos, which both wash and dry, have not achieved ideal drying results due to persistent technical challenges.

Founder Chang Jing Enters the Automobile Industry

Currently, Chang Jing serves as both the chairman and general manager of Stone Tech, and he is also the founder of the company. However, Chang Jing's endeavors are not limited to Stone Tech; he has also ventured into the automobile industry by founding Gemstone Automotive.

According to public media reports, Chang Jing graduated from the Department of Computer Science at South China University of Technology in 2005 and later joined the startup Beijing Aoyoutianxia. More than a year later, this company rapidly grew into a browser giant with a 20% share of China's Internet access. With this impressive resume, Chang Jing smoothly joined Microsoft Research Asia and later Tencent.

In 2011, Chang Jing, who had left Tencent, embarked on his first entrepreneurial venture, creating the mobile photo processing and sharing software "Motu Jingling," which was acquired by Baidu for 12 million US dollars just one year later.

After more than two years at Baidu, Chang Jing embarked on his second entrepreneurial venture, giving birth to Stone Tech.

Around 2014 was also the time when new forces in the automobile industry such as NIO, Xpeng, and Li Auto were established, but Chang Jing's foray into automobile manufacturing had to wait until 2020. At the end of that year, Chang Jing and Yan Feng, CTO of WM Motor, hit it off when chatting, and the two almost immediately decided to partner up to build cars.

According to Tianyancha data, Shanghai Luoke Smart Technology Co., Ltd. (the main entity of Gemstone Automotive) was established in January 2021, with Chang Jing as chairman and Yan Feng as general manager. The sole shareholder is Stone Auto (Hong Kong) Limited.

Although it was established relatively late, Gemstone Automotive has still received capital pursuit. Tianyancha shows that Shanghai Luoke Smart Technology Co., Ltd. began financing in April 2021 and had completed seven rounds of financing by March of this year, attracting well-known venture capital institutions such as IDG Capital, Tencent, and Sequoia Capital.

Due to its late start, Gemstone Automotive only began delivering its first car, the Gemstone 01, at the end of 2023, about five years later than NIO, Xpeng, and Li Auto. With the new car on the market, sales volume is naturally a topic of interest to the outside world.

In March of this year, in response to claims that "Gemstone Automotive's sales volume in January was 0," Gemstone Automotive issued a statement denying the claim, stating that as of now, a total of 2,586 Gemstone 01 vehicles have been produced, with a cumulative sales volume of 2,357 vehicles, including 855 vehicles sold in January and 552 vehicles sold in February (affected by the Spring Festival holidays).

The statement also emphasized that as a new automotive brand, the company did not blindly pursue rapid expansion during its initial stage but focused on delivering high-quality products and enhancing customer satisfaction for steady development.

However, in May, media reported that to date, Gemstone Automotive only has more than 20 domestic outlets, with only a few hundred vehicles delivered each month.

Considering the current fierce competition in the new energy vehicle market, it is still uncertain whether Chang Jing can lead Gemstone Automotive to break through the "red ocean" and achieve the success of his third venture.

However, some opinions suggest that Chang Jing's entry into automobile manufacturing is not worth the effort and that he would be better off solidly managing Stone Tech. Recalling the glory days of Stone Tech's IPO, in 2020, the company set an A-share record with an issue price of 271.12 yuan per share, briefly becoming the second stock to surpass 1,000 yuan after Kweichow Moutai in the capital market and reaching a peak of over 1,490 yuan per share the following year.

But now, Stone Tech's share price has significantly shrunk from its peak. According to Hurun's Global Rich List, Chang Jing's personal wealth has shrunk from 18 billion yuan in 2021 to 9.5 billion yuan in 2024.