This report guide:

EZVIZ has created a dual main business model of smart home hardware products and cloud services. In the short term, the category expansion of smart home hardware products is sustainable, and the income is supported; In the long run, cloud services contribute to continuous cash flow. Overweight.

Investment Highlights:

First coverage, give an "overweight" evaluation: EZVIZ continues to extend its business boundaries by creating a dual main business model of smart home hardware products and cloud services. We expect the company's EPS in 2024-2026 to be 0.72/0.89/1.15 yuan respectively (+0.1%/+24.9%/+28.2% year-on-year), combining relative valuation and absolute valuation methods, giving the company a target price of 46.52 yuan in 2025 and an "overweight" rating.

Incubated in Haikang, with sufficient endowment and hard work: EZVIZ has a "2+5+N" strategy, "2" represents the dual drive of AI technology and EZVIZ cloud, "5" represents the five self-developed hardware of smart wear, smart home camera, intelligent service robot, intelligent control and smart home, and "N" is a symbol of product cooperation ecological connection, implying that EZVIZ will interconnect various smart devices at home to form a unified intelligent ecosystem. The company was born from Hikvision, a leading security company, and inherited Hikvision's excellent visual capabilities, but it is different from Hikvision.

Hikvision's mature B-end business experience gives EZVIZ the ability to respond to fragmented needs, and has a complete offline channel layout and after-sales service system, which is conducive to the development of B-end businesses such as commercial service robots and cloud attendance. At the same time, EZVIZ has worked hard to improve the internal skills of C-end operation, and the online platform has grown rapidly, and has also made initial progress in going overseas in Europe and Southeast Asia.

Short-term visual empowerment, the expansion of new hardware categories has network effects: smart home cameras are the company's current cash flow business, accounting for about 56% of the overall revenue, with a domestic market share of more than 10%, and obvious offline advantages. On this basis, the company has opened up the second growth curve of smart door locks, and the revenue proportion has been close to 13%. In addition, other categories of smart home hardware products are also being incubated one after another, and each expansion of a category will bring a lot of revenue growth, which is also the core reason why the company can give a valuation premium.

The long-term cloud model runs through, and the smart home ecology contributes to continuous cash flow: under the intelligent ecology based on various hardware products, the core long-term focus of EZVIZ is the cloud value-added services based on the ecology, and the current cloud revenue services account for 20% of the company's revenue. Compared with similar overseas smart home companies, Arlo cloud payment revenue accounts for as much as 40%, and the core lies in value-added services to hit the pain points, so in the long run, if EZVIZ continues to improve the functions of value-added applications, it is expected to continue to improve the contribution of cloud services and further build a complete smart home ecosystem.

Risk warning: the risk of raw material fluctuations and intensified competition in the industry.