R&T(002790) Southwest Securities·2024-11-05 08:15Investment Rating - The investment rating for the company is "Buy" based on the expectation of continued growth in the smart bathroom industry and the company's brand development efforts [18]. Core Views - The company has increased its investment in its own brand, which has temporarily pressured profitability. Despite a revenue increase of 10.6% year-on-year to 1.71 billion yuan in the first three quarters of 2024, net profit attributable to shareholders decreased by 28.2% to 126.34 million yuan [1][2]. - The overall gross margin for the first three quarters of 2024 was 28.5%, with a decline in Q3 gross margin to 27.3% due to a decrease in product prices and an increase in the proportion of light smart toilet products [2]. - The company is focusing on product innovation in the light smart toilet segment, which is seen as a trend in industry demand, aiming to enhance gross margins and competitiveness through technological advancements [2][3]. Summary by Sections Financial Performance - In Q3 2024, the company achieved revenue of 570 million yuan, a slight decrease of 0.9% year-on-year, and a net profit of 35.37 million yuan, down 43.4% year-on-year. The net profit margin for Q3 was 6.2%, a decrease of 4.7 percentage points year-on-year [1][2]. - The total expense ratio for the first three quarters of 2024 was 21.3%, an increase of 5.6 percentage points year-on-year, primarily due to increased brand building and marketing expenses [2]. Market Trends and Strategy - The demand for bathroom products is currently weak, with online sales of smart toilets declining by 21.8% year-on-year in the first eight months of 2024. The company believes that light smart toilets will help improve industry penetration [2][3]. - The company is actively participating in national subsidy programs and expanding its presence in overseas markets while focusing on cost control and flexible market expense adjustments to enhance profitability [3]. Earnings Forecast - The company forecasts earnings per share (EPS) of 0.42 yuan, 0.50 yuan, and 0.58 yuan for 2024, 2025, and 2026, respectively, with corresponding price-to-earnings (PE) ratios of 18x, 15x, and 13x [3][4].