Key points of investment:
The company issued a 23-year results announcement: the company's revenue in '23 was 2.84 billion yuan, up 11.5% year on year, net profit to mother was up 3.6% year on year, after deducting non-net profit of 200 million yuan, up 3.8% year on year; in Q4, the company's revenue was 638 million yuan, up 11.3% year on year, and net profit to mother was 43 million yuan, down 24.8% year on year.
By category: Independent brands are rapidly gaining strength, and smart toilets contribute to the main growth engine. 1) Smart toilets and covers: In '23, the company's smart toilet and cover revenue was 1,266 billion yuan, an increase of 25.9% over the previous year. We think it was mainly driven by the growth of its own brands: after 2021, the company actively cultivated its own smart toilet brands, successfully broke through with manufacturing advantages (big brand OEM, self-produced core components), successfully broke through explosives strategies, and channel-side e-commerce successfully overtook cars. The asset-light model in offline stores quickly exhibited and sold independent brands quickly. 2) Water tanks and accessories: The company's revenue from water tanks and accessories in '23 was 620 million yuan, down 13.7% year on year, putting pressure on growth. 3) Same-level drainage system: The company's same-level drainage system revenue in '23 was 210 million yuan, an increase of 17.7% over the previous year, and continued to grow steadily.
Subregion: Domestic sales continued to grow steadily, and export sales growth was temporarily under pressure. 1) Domestic sales: The company's domestic sales revenue in '23 was 1,649 billion yuan, up 17.3% year-on-year, accounting for 75.5% of revenue. Benefiting from the rapid development of its own brands, the company's domestic sales business continued to grow steadily. 2) Export sales: The company's export revenue in '23 was 536 million yuan, down 3.2% year on year, accounting for 24.5% of revenue.
Due to high overseas inventory pressure in the early stages, the company's export business growth was under pressure in '23. It is expected that growth will recover along with inventory digestion and new customer development.
Looking ahead to 24 years: Independent brands will continue to grow rapidly, OEM growth is expected to accelerate, and we are optimistic about the company's growth. 1) Independent brands:
The company continues to strengthen its own brand building, innovate and iterate products to incubate explosive products, continue to sell rapidly online, rapidly display stores in an asset-light model in offline stores, and develop new home appliance channels to open up room for growth, and is optimistic that the company's own brands will quickly increase their share. 2) Smart toilet foundry business: Previously, the company's smart toilet foundry business was mainly domestic sales. Since 24, the company has accelerated the development of international markets, new customers and overseas markets. It is expected that the growth of the OEM business will accelerate.
Profit: Gross margin improved significantly, and Q4 net profit margin was pressured in the short term due to independent brand expenses. The company's gross margin in '23 was 29.5%, +4.7 pct year on year. The year-on-year increase in gross margin was related to the increase in the share of independent brands and the decline in raw material costs; the net interest rate to mother was 10.0%, -0.7 pct year on year. The decline in net interest rate to mother was mainly related to increased investment in independent brand building. The company's sales expenses rate in '23 was 10.9%, +4.6 pct year on year. In Q4, the company's gross margin for the single quarter was 32.0%, +9.4pct year on year, 6.7% year-on-year, and -3.2pct year on year. The pressure on Q4 net interest rate to mother was mainly related to independent brand expenses and year-end bonus accrual during the Double Eleven period. The Q4 sales expense ratio was 17.9%, +13.7 pct year over year.
Pay attention to the company's new home appliance channels, and rapid offline sales are expected to explain a new round of alpha markets. Considering the decoration process in the new housing era, the consumption scenario of smart toilets is closer to furniture and building materials, so traditional bathroom stores are mainly opened in stores, building materials stores, etc.; with the gradual advent of the era of stock housing, we believe that the standardized and functional properties of smart toilets are similar to household appliances, and the consumption scenarios are collaborative. Since '24, the company has deployed offline home appliance channels such as JD and Suning, and its advantages are difficult to be replicated by other domestic brands (conflicts with the original distribution system, heavy channel burden, etc.). I am optimistic that Rattle will continue to rapidly increase its share with its product and channel advantages.
Raitel Water Products started and extended to the entire toilet supply chain. After 2021, it actively cultivated independent smart toilet brands, considering increasing the penetration rate of smart toilets to hedge real estate beta, and successfully broke through with its manufacturing advantages (big brand OEM, self-produced core components), and successfully broke through with its manufacturing advantages (big-name OEM, self-produced core components), and successfully overtook the channel side of e-commerce. The asset-light model in offline stores quickly showcased stores, and the new home appliance channel opened up room for growth, so I'm optimistic about the company's growth! We maintained the company's net profit of 286 million yuan and 358 million yuan in 24-25, and added 429 million yuan in net profit to mother in '26. Net profit to mother increased by 30.8%, 25.1%, and 20.1% year-on-year respectively, corresponding to PE 17, 13, and 11 times, respectively.
Risk warning: Increased competition in the industry affects profits, and the company's channel expansion falls short of expectations