Event: the company disclosed the 23H1 performance forecast: the company expects 23H1 to achieve revenue of not less than 1 billion yuan, a year-on-year decline of no more than 30%, mainly due to the generic drug sector affected by collection and price reduction, some products newly included in the key monitoring catalogue resulting in a decline in sales. Among them, the revenue of the generic drugs sector was not less than 800 million yuan, down no more than 33% from the same period last year, and the gross profit margin was lower than 1pct; the income of the medical and beauty department was not less than 190 million yuan, an increase of more than 95% over the same period last year. The loss before tax of the continuing business of 23H1 Group is expected to be no more than 40 million yuan, a decrease of no more than 96 million yuan compared with the same period last year (the profit of 22H1 Group before tax is 56 million yuan).

Yan Yan space sales promotion efforts to promote medical and beauty plate income to achieve high growth. The high increase in sales revenue of the medical and beauty department is mainly due to the sharp rebound of the sales revenue of the group's medical and beauty platform "Yan Yan Space" through the sales upgrade of version 3.0. The company expects the gross profit margin of the medical and beauty department to be no less than 68%, with a year-on-year decline of no more than 10pct, which is basically the same as that of the medical and beauty branch for the whole of last year. The decline is mainly due to the fact that Yan Yan Space has stepped up the promotion of product brands in order to accelerate the growth of Letibao sales and increase the market share of products.

As one of the key customer guide products of medical and American institutions, botulinum toxin has a relatively strong certainty that the demand increases with the passenger flow. At present, most botulinum toxin products are the key products used by medical and American institutions to guide customers into stores, promote regular customers to buy back or carry out combined treatment, and consumer demand has a high degree of certainty with the growth of customer flow. In terms of sales strategy, Letibao achieves differential competition based on Korean imports-relatively high-end product positioning and balance. With the strengthening of product promotion and the relative determination of the recovery trend of medical and beauty passenger flow, it is expected to promote Letibao to increase its market share in the oligopoly market of Botox.

Investment suggestion: the company adheres to the two-wheel drive strategy of "creating new drugs plus medical beauty". The management focuses on the field of high-growth medical beauty and the field of high-value innovative drugs and biopharmaceuticals. The recovery of 23H1 medical customer flow and the adjustment of sales strategy promote the rapid growth of Letibao products. We believe that there are many key sales nodes of H2 medical beauty, which is expected to continue the high growth trend of H1 medical beauty plate. The short-term generic drug sector is under pressure due to factors such as collecting and being included in the key monitoring catalogue. following up, as the company gradually divests part of the generic drug business and other non-core health businesses that do not meet expectations, profitability is expected to improve.

Risk factors: the recovery of spending power is not as expected, the competition in the medical and beauty industry is intensified, and the effect of product promotion is not as expected.