Key points of investment
Rattle announces 23A and 24Q1 results
Revenue of 2.84 billion yuan (YoY +11.5%) was achieved in '23, net profit of 219 million yuan (YoY +3.6%), of which 23Q4 achieved revenue of 638 million yuan (+11.3% YoY), of which 23Q4 achieved revenue of 638 million yuan (+11.3% YoY), net profit attributable to mother was 43 million yuan (-24.7% YoY), after deducting $37 million (-23.1% YoY). 24Q1 achieved revenue of $523 million (+32.3% year over year), net profit to mother of 59 million yuan (+47.2% year over year), after deduction of 53 million yuan (+54.5% year over year).
23Q4 and 24Q1 revenue maintained high double-digit growth, and independent brands continued to grow rapidly. Overseas OEM smart toilets and covers generated 23 billion yuan in revenue of 1,266 billion yuan (+25.90% year over year). 1) Industry level: China's smart toilet industry is still in a stage of low penetration and high growth. According to Aowei Cloud Network, the 2023 smart toilet all-in-one online sales volume was +8.3%, with volume +23% and price ratio -12%. According to our estimates, the penetration rate of smart toilets in 2023 is about 12% in terms of ownership, compared with the 90%/60%/60% penetration rate of mature overseas countries. According to the press conference of the Municipal Supervision Bureau in April 2024, it was decided to carry out mandatory CCC certification management for electronic toilet products. Starting from July 1, 2025, only products that have passed CCC certification and labeling can be shipped, sold, imported or other business activities, which is expected to drive the clarification of OEM and brand patterns; 2) At the company level: we expect high revenue growth for independent brands 23A and 24Q1, and continuous verification. The company continues to push e-commerce platforms to maintain high growth, offline stores expand rapidly, and new home appliance channels are expected to be released; 23A and 24Q1 remained steady, and OEM exports are expected to increase.
Revenue from the same floor drainage system is +17.72% year-on-year, and is expected to continue to grow in 24Q1, mainly due to excellent growth in downstream demand for this category; revenue for water tank accessories was -13.65% YoY, mainly affected by overseas storage and weak demand. Overall overseas business was -3.23% YoY in '23. It is expected that 24Q1 will end storage and demand in the European and American real estate chains will improve year on year.
Gross margin continues to be optimized, and investment in independent brands has increased, and the gross margin for 23 years with manageable cost investment is 29.5% (+4.7pct), of which the gross profit margin of smart toilets and covers is 30.12% (+6.5pct year over year), the gross profit margin of the same level drainage system is 34.87% (+1.75pct year), and the gross profit margin of water tanks and accessories is 25.80% (+1.38pct year). The increase in gross margin benefits from the increase in the share of high-margin independent brands and a decrease in raw material costs.
The gross margin of 23Q4/24Q1 was 32.02%/30.24% respectively, +9.37/5.01pct. It is expected that gross margin will continue to benefit from product structure optimization.
The net profit margin for 23 was 10.0% (-0.76pct year on year), mainly due to the increase in independent brand investment. The sales, management, R&D and financial expense ratios in 23 were 10.88%/4.61%/4.17%/-0.97%, respectively, and +4.6/-0.2/-0.1/+1.3 pct. The net interest rate for 23Q4 was 6.69%, and the sales expense ratio increased to 17.9%. We expect the main reason for the increase in independent brand investment, as well as the effects of centralized expense accrual and delays in revenue recognition. We think 23A's overall net return rate is more indicative. The net interest rate returned to mother in 24Q1 to 11.2%, and overall expenses were manageable.
Profit forecasting and valuation
We continue to be optimistic about the high growth of the company's own brands, the recovery in overseas orders, the export volume of smart toilet foundries, the refinement of the company's expenses, and a steady net interest rate. We expect revenue of 27.91/34.02/4.124 billion yuan for 24/25/26, +27.8%/+21.9%/21.2% year over year, net profit of 2.76/3.39/419 million yuan, +26.1%/+22.9%/+23.5% year over year, current market value corresponding to PE 18.2/14.8/12.0x, maintaining a “buy” rating.
Risk warning
Industry competition intensified; independent brand expansion fell short of expectations; fluctuating overseas orders; fluctuating orders from major customers; impact of real estate fluctuations, etc.