Incident Overview
RRT released its 2024 quarterly report: 2024Q1 achieved revenue of 0.52 billion yuan, a year-on-year increase of 32.3%, net profit to mother of 0.06 billion yuan, a year-on-year increase of 47.2%, after deducting net profit of 0.05 billion yuan, a year-on-year increase of 54.5%; in terms of cash flow, net cash flow from the company's operating activities in 2023 was 3837.8 trillion yuan, +22.0% year over year, with steady cash flow performance.
Analytical judgment:
Q1 achieved a high increase in revenue. In 2024Q1, the company's revenue increased 32.3% year-on-year to 0.52 billion yuan due to the continuous growth of the company's own brands and the recovery of overseas orders. According to the “2022 China Smart Toilet Consumption Trend” statistics, the market penetration rate of smart toilets in China is about 5%, and the potential for future growth is still huge. The company will continue to increase the online and offline expansion of its own brand smart toilets, continue to build product strength and brand strength, and keep abreast of the trend of increasing industry penetration. At the same time, as overseas customers end inventory removal and downstream demand picks up, we expect the company's traditional water tank and accessories business to improve in 24 years.
In terms of independent brand expansion & traditional business recovery driving Q1 profits, 2024Q1's gross profit margin and net interest rate were 30.2% and 11.1%, respectively, +5.0 pct and +1.1 pct year over year; the increase in the company's overall gross margin is expected to contribute to product structure optimization. The increase in net interest rate is less affected by the year-on-year increase in the cost rate during the period. In terms of period expenses, the company's expense ratio for the 23-year period was 19.5%, +2.6 pct year on year, with sales/management/R&D/finance expenses ratio 11.7%/4.4%/4.3%/-0.8%, respectively, +5.8pct/-1.7pct/+0.1pct/-1.7pct, respectively; the increase in sales expenses is expected to be affected by the year-on-year increase in marketing and promotion expenses for independent brands.
Investment advice:
We continue to be optimistic about the rapid increase in the penetration rate of smart toilets, the rapid development of the company's own brand, and the profit side continues to increase as the scale effect develops. However, considering the scale effect of independent brands, we maintained our previous profit forecast. The 24-26 revenue was 2.743, 3.302, and 3.958 billion yuan, respectively, and the 24-26 EPS was 0.67, 0.80, and 0.96 yuan, respectively. According to the closing price of 11.99/share on April 26, 2024, the corresponding PE was 17/14/12 times, respectively. Maintain a “buy” rating.
Risk warning
The risk that the volume of new businesses such as smart toilets falls short of expectations; the impact of large fluctuations in raw material prices; increased risk from industry competition; and the impact of continued shipping tension.