Shulou(Shulou.com)06/03 Report--

Nearly a week after Science and Technology Innovation Board landed, Stone Science and Technology issued a very eye-catching "2019 performance KuaiBao announcement" on February 27th.

According to the announcement, the total operating income in 2019 was 4.2 billion yuan, up 37.81 percent from 3.05 billion yuan in 2018; in terms of operating profit, it reached 920 million yuan in 2019, up 142.16 percent from 380 million yuan in 2018; and in terms of non-net profit, it reached 760 million yuan in 2019, up 65.11 percent from 460 million yuan in 2018.

As the third listed Xiaomi ecological chain company, Stone Technology gives Xiaomi the most long face, not only the shortest time of establishment, but also the highest market capitalization.

In the view of most people, since it is in the millet ecological chain, stone technology must be carried by Xiaomi to "fly". Now the success of stone technology is at least half the credit of Xiaomi. After that, the development of stone technology will also be determined by the development of Xiaomi, especially the sales of ecological chain products.

In fact, this is not entirely accurate. Judging from the prospectus of Stone Technology and the strategic direction in recent years, Stone Technology, which relies on the "big tree" of Xiaomi, does not want to be branded by the outside world as a "millet ecological chain enterprise."

"Wings" harder and harder stone technology, has been thinking about how to get rid of the shackles of Xiaomi, in order to seek higher space for development, and prove their independent ability.

"Crazy Stone"

Irobot Household Robots, founded in 1990, now has a market capitalization of only 9.1 billion yuan (as of March 6). It was founded in Kovos, Suzhou in 1998, and did not enter the Shanghai Stock Exchange until 2018 and currently has a market capitalization of about 13 billion yuan.

In contrast, in less than six years, Stone Technology has created a growth myth that its predecessors never imagined. From the launch of the first product to the capital market, Stone Technology actually took less than four years. Moreover, the first-day offering price of Stone Technology rose from 271.12 yuan to 500.1 yuan, an increase of 84.46%, and set a record for the highest share price of Science and Technology Innovation Board.

Whether it is the growth rate or the price given by the capital market, stone technology is "crazy", crazy development, crazy rise, crazy eye-catching. Behind all this, it is supported by crazy financial data, and only through the financial statements of stone technology can we find the reason for madness.

1. Soaring revenue and profits

Over the past four years, the revenue and net profit of Stone Technology have skyrocketed.

According to the prospectus, the revenue in 2016, 2017, 2018 and the first half of 2019 was 183 million yuan, 1.119 billion yuan, 3.051 billion yuan and 4.205 billion yuan respectively. In less than four years, the revenue of Stone Technology has increased more than 20 times. Moreover, Stone Technology has also achieved a qualitative change in profits. In 2016, Stone Technology was still in a state of loss, and by 2019, Stone Technology had achieved a net profit of 756 million yuan.

The reason why Stone Technology has been reborn in terms of its ability to make money in just four years is that star products are very popular in the market. Although Stone Technology has only two major categories of products so far, namely, intelligent floor sweeping robots and hand-held wireless vacuum cleaners, it is these two types of explosives that have become the core engines of the stone technology harvest market and consumers.

In 2016, the first explosive products of Stone Technology sold more than 150000 units in less than half a year, and the market price at that time was 1699 yuan. In 2017, the sales volume of two products of Stone Science and Technology was close to 900000, and the average price further increased. The revenue of Stone Technology quickly increased by more than five times. In 2018, the combined sales of the three products of Stone Technology exceeded 2.1 million, and the revenue increased by nearly 172% over 2017 to more than 3 billion yuan. In the first half of 2019, the total sales of the four products of Stone Technology exceeded 1.47 million.

It can be said that stone science and technology all the way to rely on "explosives" superior, almost every year's new products can create very high sales, there is a very good market. At the same time, the gross margin of these explosives is also relatively high, so it makes Stone Technology ride on a rocket, with revenue and profits soaring all the way.

2. The increased market share of the speed of light

Explosives have not only brought Jinshan to stone technology, but also made young stone technology one of the leading enterprises in the industry.

According to data from Zhongyikang cited in the prospectus of Stone Science and Technology, in the first half of 2019, all products of Stone Science and Technology ranked second in the domestic market share, with 23%, and the domestic online market share ranked second with 26%.

Throughout the changes in the market position of stone technology in recent years, it can be found that stone technology has almost improved its market position by an order of magnitude a year to occupy intelligent cleaning robots. In the second year of the official launch of stone technology products, stone technology with "Mi Jia" explosives has become the third largest in the online field, accounting for 10.3%.

On the other hand, Stone Technology, which chooses to make intelligent cleaning robots, is getting faster and faster on the way to catch up with Big Brother Kovos, and the market share gap between it and Kovos is getting smaller and smaller.

In just a few years, Stone Technology has changed from an unknown entrepreneur to one of the leading companies in the field. As for the improvement of its market position, Stone Technology explained in its prospectus: "due to the excellent quality, reliable quality and reasonable price of products, the market share continues to increase."

In the view of Stone Technology, the fundamental reason for its standing in the first echelon is to impress consumers with good products. And according to the current trend, Stone Technology still has a great ambition to increase its market share, and it will speed up the layout of new projects, product technologies, channels and so on in the future, which means that in terms of market share, Stone Technology still has some room for improvement.

Become Xiaomi

Without millet, stone cannot be made. Today's stone technology is held up by Xiaomi. On the day of the launch of Stone Technology, Xiaomi founder Lei Jun congratulated him on several social platforms, saying that "the listing of Stone Technology once again confirms the success of Xiaomi's ecological chain model."

Millet line, millet ecological chain, millet products. Stone technology is branded with a lot of millet labels. In Stone Technology's prospectus, the word "Xiaomi" was mentioned 807 times.

Perhaps in the eyes of many people, stone technology, as Xiaomi's ecological chain, is like a subsidiary of Xiaomi, which is done by Xiaomi as a "mother" from gestation to feeding. Such a relationship is relatively special, it is closer than a close partner, and the two sides have a very close relationship in business, channels, and even equity.

Stone technology developed by Xiaomi has mainly obtained two powerful springboards from Xiaomi.

1. Capital blood transfusion

The capital related to Xiaomi almost runs through the whole development cycle of stone technology, providing it with necessary and timely capital transfusion.

When Stone Technology was founded in 2014, there were only four shareholders, namely Changjing, Ding Di, Mao Guohua and Wu Zhen, but soon when Stone Technology first increased its capital, Xiaomi's capital began to step in and become a shareholder in Stone Technology.

When the first capital increase was made in March 2015, Tianjin Jinmi, controlled by Xiaomi, appeared among the investors for the first time, accounting for 30% of the total investment. In September 2015, Stone Science and Technology again increased its capital and transferred its shares. Tianjin Jinmi accounted for 13.32%: in March 2016, Shunwei appeared on the list of transferees of equity transfer, accounting for 0.3% of the shares.

Subsequently, Tianjin Jinmi and Shunwei were involved in many capital increases and equity transfers initiated by Stone Science and Technology. According to calculations, Tianjin Jinmi Heshun has injected more than 6 million capital into stone science and technology for many years. Before listing, Shunwei and Tianjin Jinmi ranked second and third in the proportion of stone technology shares, with 12.85% and 11.85% respectively.

From the perspective of the whole equity relationship development process of Stone Technology, the capital entry time of Xiaomi system has been relatively early. Tianjin Jinmi and Shunwei both bought shares before Stone Technology had operating income. Although we have not made a textual research on the details of Xiaomi's investment in Stone Technology, the contribution of Xiaomi Capital to Stone Technology mainly comes from two aspects.

The first is the endorsement effect of capital; the second is the support of operation and development funds, mainly the pre-R & D expenses. Since the early capital supporting the operation of stone technology does not come entirely from Xiaomi capital, the fact that Xiaomi capital is really good for stone technology at the capital level comes from the endorsement of the first point.

After Tianjin Jinmi bought a stake in Stone Technology in March 2015, Banyong, Qiming, GIC and other capital were on the capital increase list the following year and officially became shareholders of Stone Technology. At this time, the first product of Stone Technology has not yet been put on the market, which is enough to show that Xiaomi Capital has the ability to "carry goods". With the addition of Banyan, Qiming and other capital parties, Stone Technology has gradually hardened up at the capital level.

In fact, it is not difficult to understand that in many investment cases, we can see the common appearance of Shunyu, Qiming and other capital. In the investment case of stone technology, it is not surprising that closely related capitalists follow millet capital into the market, but for stone science and technology, the more powerful capital is added, the stronger the endorsement effect will be. Stone science and technology, this kind of start-up enterprise, will benefit from this for a long time without serious development and survival problems.

2. Channel and supply chain

For intelligent hardware companies such as Stone Technology, the supply chain is extremely critical. Good suppliers and rich supplier choices mean that the hardware has more development space, can accurately locate market targets, and accurately control product costs.

Behind the appearance of Stone Technology's first product, Xiaomi has full support in the supply chain and channels. In terms of supply chain, Xiaomi has introduced strong and high-quality suppliers to Stone Technology, such as Xinwanda, Nidec, Sharp and so on.

At the 2016 autumn communication meeting of Xiaomi Ecological chain, Stone Technology CEO Chang King once said bluntly that Xiaomi had given support to the supply chain, ID design, product definition and so on, saying that "without the support of Xiaomi Ecological chain, we would not be where we are today."

Changjing is well aware that for startups such as Stone Technology, a mature and reliable supply chain means it is half successful and ahead of its peers who do not have any support or lack of support at the starting line.

In terms of channels, as the first product is mainly built for Mi, it can only be sold in official channels such as Xiaomi's Mi. It is worth noting that the first self-owned product of Stone Technology is still Xiaomi. In September 2017, Stone Intelligent floor-sweeping Robot launched crowdfunding at Mi's home, and Stone Technology sold more than 55000 units that year.

The huge flow and exposure effect of Xiaomi channel can be said to pave a good way for the brand power growth of stone technology. Stone technology is like standing on the shoulder of a giant overlooking, so it's not hard to jump high.

Until now, although Stone Technology has its own official website, flagship stores and other sales channels, Xiaomi still provides key channels for Stone Technology in some areas, such as online and offline channels in Taiwan.

Get stuck in Xiaomi

The gene of stone technology is a millet ecological chain enterprise, but this gene hinders the development of stone technology to some extent.

In Stone Technology's prospectus, the risk disclosure about Xiaomi accounts for more than half of all risks, focusing on equity, production, sales and other aspects.

For example, in the risk of related party transactions, the total revenue from related party transactions between Stone Technology and Xiaomi accounted for 100%, 90.26% and 50.17% of the total marketing of Stone Technology in 2016, 2017 and 2018, respectively. Among the common patent risks, the prospectus mentioned that by the end of the reporting period, Xiaomi and Stone Technology had a total of 59 domestic patents and 5 overseas patents, and in addition to stone technology, Xiaomi could also use them without the permission of stone technology.

The related risk is one of the important information that must be disclosed transparently when a company goes public. The purpose is to make investors aware of the company's shortcomings and invest cautiously. However, from the risks related to Xiaomi disclosed in the prospectus, stone technology in many core development and operation links, there is theoretically the influence of the uncertain factor Xiaomi.

Stone technology is indeed dependent on Xiaomi, although Xiaomi has become a springboard for the rapid development of stone technology in the past few years, but stone technology also has to face some breakthrough obstacles and hidden ceilings.

1. Ratio of performance to price

One of the core labels of Xiaomi brand is the ratio of performance to price. As an ecological chain enterprise of Xiaomi, Stone Technology has its own brand and products in recent years, but it has the imprint of performance-to-price ratio more or less.

It should be noted here that the price-to-performance ratio is not necessarily bad, but always making cost-effective products will affect the development prospects of enterprises, especially in terms of profit margins and market audience scale, it is difficult for companies that focus on cost-effective products to make further breakthroughs. Take Xiaomi itself, for example, has been trying to enter the high-end mobile phone market, the launch of the Xiaomi 10 series this year is an unprecedented determination, but there are still a lot of negative voices in the market.

Although Stone Technology has independent brands outside the Mi family-Stone and Xiaowa, these two brands still have very obvious millet traces.

The stone brand was launched in 2017, and the Xiaowa brand was launched in 2018. In terms of price, the stone brand's intelligent floor-sweeping robot is on average much higher than the Mijia intelligent floor-sweeping robot, while Xiaowa is lower than Mijia. Therefore, taking the rice family as the standard, stone technology distributes its own brands on both sides of the rice house.

But most of the series of products are actually similar to the 1699 yuan Mijia intelligent robot. Generally speaking, the own brand of stone technology has not broken through the middle and low-end market positioning, and even the highest-priced floor-sweeping robot has not exceeded 3000 yuan. Here you can compare the prices of peer products. For example, Corworth is currently selling products with the highest price of 3999 yuan, and there are a number of products with prices above 3000 yuan.

Of course, from another point of view, Stone Technology currently seems to be very difficult to lay out the high-end floor sweeping robot market. On the one hand, it is determined by the current market situation, that is, middle and low-end products are more popular with users and can better open the market; on the other hand, affected by the thinking of performance-to-price ratio, positioning, design and development are easier to use.

In addition, there is a key data for reference, which is the average selling price. According to the prospectus, in the first half of 2019, the average selling price of stone-branded products was 1926.8 yuan and that of Xiaowa-branded products was 1114.31 yuan. Therefore, the private brand of stone technology is still generally welcomed by consumers in the middle and low end of the market.

2. Profit margin

Xiaomi has promised that the "comprehensive hardware profit margin" will not exceed 5%, and this method of limiting profit margins also has some shadow in Stone Technology.

In the first half of 2019, the comprehensive gross profit margin of Stone Technology was 32.5%, slightly lower than Covos's 37.28%. Stone's comprehensive gross profit margin has been rising over the past four years, but it has not yet surpassed Covos.

Mijia brand is the biggest resistance to the improvement of stone science and technology profit margin. Because the Mijia brand works with Xiaomi, Stone Technology also mentioned in the prospectus that the relevant Mijia products are sold by Xiaomi at the end, that is, the pricing power is in Xiaomi's hands, so the profit margin is lower than the average. Take hand-held wireless vacuum cleaners as an example, the gross profit margin in the first half of 2019 was 13.58%, much lower than that of comparable companies in the same industry from 2016 to 2018.

It should be noted that the gross profit margin of Mi's intelligent floor sweeping robot is still declining. In 2016, the gross profit margin of the product was 18.99%. By June 2019, the gross profit margin of the product had dropped to 13.91%. It is speculated that the main reason is product price reduction and promotion, because the prospectus gives an average price of 1126.28 yuan for Mi's intelligent floor-sweeping robot in the first half of 2019, while the earliest market price of this product is 1699 yuan.

However, Xiaowa, the own brand of Stone Technology, has also pulled down the comprehensive profit margin to some extent. In 2018, the gross profit margin of Xiaowa brand was 23.96%, nearly 5 percentage points lower than the comprehensive gross profit margin. In the first half of 2019, the gross profit margin of Xiaowa brand was 28.03%, still 4.47 percentage points lower than the comprehensive gross profit margin.

"de-millet" is a long-term task.

Stone technology seems to be very clear, for future development, they can not only be located in a millet ecological chain enterprises, so stone technology has been "millet".

In 2016, the revenue of Mijia brand products (excluding accessories) was 181 million yuan, accounting for 98.58% of the total revenue. By the first half of 2019, the revenue of Mijia brand products (excluding accessories) was 863 million yuan, accounting for 40.59% of the total revenue. In terms of gross profit, the gross profit of Mijia brand products (excluding accessories) reached 34 million yuan in 2016, accounting for 97.43% of the total gross profit. By the first half of 2019, the gross profit of Mijia brand products (excluding accessories) was 120 million yuan, accounting for 17.31% of the total gross profit.

Judging from the changes in the proportion of revenue and gross profit, the achievement of "de-mileization" of stone science and technology has been considerable. Specifically, the efforts of Stone Science and Technology in "de-milifying" in the past four years are mainly summarized in three aspects.

First, the product and brand matrix are "de-milified". From only the Mijia brand to the three major brands of Mijia, Stone and Xiaowa, Stone Science and Technology has achieved a zero breakthrough in its own brand.

Second, profitability is "millet-free". As mentioned earlier, the gross profit margin of Mijia products is generally lower than that of stone's own brand. Over the past three years, the gross margin of Stone Technology's own brand has been steadily increasing, far exceeding the gross profit margin of the Mijia brand.

Third, the channel is "de-milified". At first, Stone Technology did not have its own sales channels, all relying on Xiaomi's official website and Xiaomi Home's online and offline channels. Now Stone Technology has online and offline sales channels covering both online and offline channels in most markets, which is completely independent of Xiaomi.

In the past few years, "de-mileization" has brought higher profits, larger transaction scale and higher market awareness for Stone Technology. This may be the core reason why Stone Science and Technology, a young enterprise, dares to "de-millet". After all, it is difficult to make a lot of money only by making rice products.

Stone Technology wants more room for growth, and now it has been listed on the market, it should operate and develop with a mentality of investing in the future, which means that Stone Technology still needs to "de-milify" for a period of time in the future. further improve profit margins and market position.

However, stone technology can not completely demilify, even in the long run, the probability is not high. On the one hand, stone science and technology needs the influence of Xiaomi, supply chain resources, and even the support of fund-raising in the later stage; on the other hand, stone science and technology has a huge task of building vertical category ecology related to rice. The construction of the ecological chain of the rice family also needs the support of stone science and technology.

So the key lies in the degree of "millet removal". Assuming that the millet removal of stone technology has completed about half of the process, then in fact, great progress has been made in profit and scale. Later, we need to further grasp this progress before stone science and technology can achieve a higher breakthrough.

Write at the end

In an interview at the end of 2019, Changjing defined the relationship between Stone Technology and Xiaomi as a "commercial strategic relationship", saying that the independent development of Stone Technology and cooperation with Xiaomi do not conflict, and will focus more on the development of their own brands in the future.

The listing of Stone Technology is actually a turning point in the change of its relationship with Xiaomi. Before listing, Xiaomi played an incubating role for Stone Technology. After listing, Stone Technology will become more and more independent and bold.

The pursuit of independence and independent brands is actually an essential difference between Stone Technology and many other Xiaomi ecological chain enterprises. Stone science and technology achieved such a success in a short time, also related to this strength, which is full of ambition and wolf nature. In the prospectus, Stone Technology reveals its strategy to expand massively overseas in the future, and has established related companies in Japan, Finland, the United States and other countries.

But Xiaomi may always need stone technology, especially the stronger and stronger stone technology, which may also keep stone technology bothered by "sweet annoyance", adjusting strategy and pace for Xiaomi, and "going through fire and water" for Xiaomi's ecological chain.

(official account of Liu Kuang / tr. by Phil Newell) ID:liukuang110

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.