Rongtai Health (603579): Export sales are gradually improving

Rongtai Health (603579): Export sales are gradually improving
Event: Rongtai Health announced the third quarter report of 2019.Company 2019 1?Revenue in September was 16.300 million, YoY-7.3%; achieve performance 2.100 million, a year-on-year increase of +13.7%.Converted to a single quarter of 2019Q3 income 5.30,000 yuan, +1 year on year.9%; achievement 0.700 million, a year-on-year increase of +69.5%.We believe that the consumption trend of massage chairs is still in the ascendant. After Rongtai’s management adjustments, Rongtai’s revenue and performance have promoted recovery. Q3 revenue improvement: Rongtai’s single-quarter revenue in Q3 2019 improved 苏州桑拿网 month-on-month and resumed positive growth. We believe that this is mainly due to: 1) Q3’s sales to Korean customers have achieved a recovery growth.2) New pioneers have achieved a certain sales performance in the US market.In the long run, with the rise of the benefit-sharing massage industry, consumers’ awareness of massage chairs will increase, and revenue is expected to resume rapid growth. Shared massage competition is fierce, Q3 gross profit margin has decreased: According to the announcement, Rongtai Q3 single-quarter gross profit margin was 29.5%, year -1.8 points.In our opinion, the main reasons are: 1) As the competition in the shared massage industry has intensified, venue rents have increased, and Q3 Momo ‘s gross profit margin has decreased.2) Momoda launched a new massaging chair that targets the masses. The 深圳spa会所 gross profit margin is lower than that of Rongtai brand products, which affects the overall gross profit margin of domestic sales. Q3 performance high growth: We analyze that the company’s Q3 single-quarter performance achieved nearly 70% growth, thanks to: 1) Q3 Rongtai disposed of fixed-asset massage equipment and achieved 1684.80,000 yuan in asset disposal income.If you deduct this part of the revenue, 2019Q3 Rongtai performance YoY + 31.6%.2) The number of bases for the third quarter of 2018. Q3’s operating cash flow improved significantly: Rongtai’s net operating cash flow for Q3 2019 was 6,751.60,000 yuan, an annual increase of 8332.40,000 yuan.The increase in the company’s cash flow was mainly due to an increase in cash inflow from operating activities and a decrease in cash repetition.Specifically: 1) The amount of advance receipts at the end of the third quarter increased by nearly 30 million yuan.2) Cash received from other operating activities increased by 3,567 per year.30,000 yuan.3) In the third quarter, advertising expenses decreased, and expenses related to other operating activities decreased by 2506.70,000 yuan. Investment suggestion: Rongtai Health actively builds domestic sales channels. At the same time, the company has close cooperation with BODY FRIEND, and its export business helps maintain growth.What do we expect the company 2019?The EPS in 2020 will be 2.04/2.25 yuan, maintain Buy-A investment rating, 6-month target price is 33.75 yuan, corresponding to 15 times the dynamic price-earnings ratio in 2020. Risk warning: sharp rise in raw material prices, risks in overseas trade policies