Event: the company's 2022 revenue-32.3%, return to the mother net profit-35.9% X 2023Q1 revenue-29.2%, return to the mother net profit-21.5%. In 2022, the company achieved operating income of 670 million yuan (year-on-year-32.3%) and net profit of 140 million yuan (year-on-year); fourth-quarter revenue was-17.1% year-on-year, and net profit was-65.5%. In 2022, the gross profit margin of sales was 31.5%; the net profit margin was 21.1%, which decreased 1.2pcts compared with the same period last year. 2023Q1 realized operating income of 130 million yuan (year-on-year-29.2%), net profit of 40 million yuan (year-on-year-21.5%), gross profit margin of 37.6% (year-on-year + 4.5pcts) and net profit rate of 29.2% (year-on-year + 2.9pcts).

The company's performance is under pressure in 2022, and the cosmetics business is expected to continue to develop. In terms of business, 1) the wipes business realized business income of 590 million yuan, accounting for 88.3% of the total, accounting for 88.3% of the total. 2) the mask business realized operating income of 60 million yuan, or-19.7% of the same year, accounting for 8.6% of the total. 3) washing and care business realized business income of 2 million yuan, which was a new business for the same year, accounting for 0.3%. 4) for other businesses, the operating income reached 20 million yuan, 28.4% over the same period last year, accounting for 2.7%. With the change of the external environment in 2022, the demand for disinfection wipes in the superimposed market decreased significantly, and the income of traditional Chinese medicine and antibacterial disinfection wipes decreased by 69.1% compared with the same period last year. From a regional point of view, 1) the operating income of foreign business is 390 million yuan, which is-46.4% of the same period last year, accounting for 58.5%. 2) the operating income of domestic business is 280 million yuan, an increase of 8% over the same period last year, accounting for an increase in 15pcts compared with 2021.

In 2023, the Q1 epidemic eased while consumption was still recovering, the demand for disinfection wipes declined, which was a drag on the company's performance. In the future, with the recovery of tourism and catering consumption, the company's performance is expected to improve.

The traditional business is steady and steady, and the customer capacity of R & D expansion continues to expand. 1) extension products: in 2022, cosmetics business expanded from a single facial mask to washing and care products. 2) expand customers: open e-commerce channels, cooperate with new brands, add 2 or 3 potential customers in 2022, consolidate existing customers and deepen cooperation with well-known enterprises such as babycare and L'Or é al. 3) capacity expansion: in 2022, the capacity utilization rate of the company's wipes and mask business was 71% and 89% respectively. The project with an annual output of 3000 tons of care products will be put into production in 2022, and the company has another production line with an annual output of 4.5 billion pieces of wet wipes under construction, which is expected to be put into production in December 24. 4) additional R & D: in 2022, the company spent 25 million yuan on R & D, and the R & D expenditure rate was 3.8%, an increase of 0.1pct over the same period last year. By the end of 2022, the company has obtained a total of 6 invention patents and 46 utility model patents in the field of wet towels and masks, with the planning of the new Shanghai R & D Center, and the company continues to increase its R & D and build product barriers.

Enter the collagen industry and develop the second growth curve. In 2022, the company cooperated with Chuangjian Medical to establish Jiechuang Medical, relying on the R & D and production advantages of Chuangjian Medical raw materials, superimposing the advantages of Jieya customers and production capacity, and laying out the collagen business. It is expected to mainly involve collagen protein word products, including application, spray and mouthwash, which is expected to open up room for future growth.

Investment advice: the purchase of sterilized wipes by customers has been greatly reduced, which will have an impact on the performance in 2022, but with the steady development of other categories of wipes and the continuous development of cosmetics business, the business is expected to bottom out and pick up in the future. We estimate that the company will have an income of 746 million yuan, 881 million yuan and 1.026 billion yuan from 2023 to 2025, and its net profit will be 160 million yuan, 181 million yuan and 219 million yuan respectively. With reference to the closing price on April 19, the corresponding PE is 20,17,14 times respectively, maintaining the overweight rating.

Risk tips: the risk of high customer concentration, the risk of intensified competition in the industry, the lower-than-expected research and development of new products, the risk of changes in import and export policy, etc.