Incident Overview
Mrs. Good released the 2024 quarterly report: 24Q1, the company achieved revenue of 290 million yuan, +5.7% year on year, net profit to mother of 60 million yuan, +15.1% year on year, net profit of 60 million yuan after deducting non-return to mother, and +15.8% year on year. In terms of cash flow, 2024Q1's net operating cash flow was -25.240 million yuan, -167.2% year-on-year.
Analytical judgment:
Q1 Revenue continued to grow, with a slight slowdown in the off-season
By product, 24Q1's revenue increased 5.7% year-on-year, and the growth rate declined markedly from Q4. Our analysis mainly showed that 23Q4 companies provided a series of support measures for offline channels, which led to a marked increase in Q4 sales, compounded the impact of the company's traditional off-season in the first quarter. In '23, the company accelerated channel sinking, deepened the layout of new channels such as hardware stores, new retail, and KA, and continuously improved the quality of terminal retail operations; online, the company continued to maintain the steady growth of leading e-commerce platforms such as Tmall and Jingdong, and accelerated the layout of new platforms such as Douyin, focusing on cultivating new categories. In 24, the company will actively develop new product launch plans based on demand. It is expected to promote new products on a regular basis and increase the launch of new products at key points to drive revenue scale growth.
The increase in gross margin clearly boosted profits. In terms of increased profitability, 2024Q1's gross profit margin and net interest rate were 52.0% and 19.0%, respectively, +6.2pct and +1.5pct, respectively; we expect the increase in the company's share of smart products to contribute to product structure optimization and an increase in the self-production and supply ratio of some core components. The net interest rate showed a slight increase due to the increase in gross margin and the increase in the period cost ratio. In terms of period expenses, the 2024Q1 company's cost rate for the period was 31.5%, +3.9 pct. Among them, the sales/management/ development/ finance expenses rates were 22.0%/7.2%/3.5%/-1.2%, respectively, and +3.1 pct/+0.4pct/+0.6pct/-0.2 pct, respectively; the increase in sales expenses is expected to affect the company's continued increase in offline channels and e-commerce platform marketing efforts.
Investment advice
The company's clothes drying rack products continue to be upgraded, and changes in retail channels have enhanced the company's ability to control terminals. E-commerce channels continue to develop rapidly, and large-scale engineering channels are actively expanding. In addition, other new categories such as smart door locks are poised to launch. We maintain our previous revenue forecast. The company's revenue for 24-26 was 2,058, 24.15, and 2,823 billion yuan, respectively; EPS for 24-26 was 0.98, 1.14, and 1.33 yuan, respectively. Corresponding to the closing price of 14.98 yuan/share on April 29, 2024, PE was 16/13/11 times, respectively. Considering the rapid development of the smart home circuit where the company is located and we are expected to fully benefit as a leader, we maintain a “buy” rating.
Risk warning
Risk of fluctuations in the real estate industry; risk of large fluctuations in prices of major raw materials; sales of smart door locks falling short of expectations; risk of the dealer model; in December 2019, Zhou Qiuying received a decision on administrative supervision measures from the Guangzhou Securities Regulatory Bureau due to the timely appointment of a company that violated credit disclosure regulations.