Revenue and profit increased slightly, cost control was good, and profit remained stable at a high level. In the first three quarters of 2023, Opcomm achieved operating income of 1,320 million yuan, +8.95% year-on-year; net profit of 538 million yuan, +6.49% year-on-year. The company's sales, management, and R&D expenses were 20.22%, 6.31%, and 2.31% respectively, with a year-on-year ratio of +2.10pct, -0.80pct, and +0.23pct, respectively. The company's gross profit margin and net profit margin for the first three quarters were 76.68% and 45.67% respectively, -1.02pct and -1.09pct, respectively.
The gross margin of newly merged subsidiaries was low in the third quarter, so the increase in total profit fell short of revenue. Compared with the initial revenue scale, the company invested a lot in fixed expenses to build new stores. While increasing overall investment in marketing and R&D, net interest rates declined slightly, but remained at a high level.
Consumption power is low, and competition between alternative products and competitors has increased, and corner plastic's Q3 revenue has declined slightly.
In 23Q3, Angle Plastic achieved revenue of 293 million yuan, -2.90% year-on-year. The order volume in the first three quarters fluctuated, accumulating customers concentrated on seeking services. Orders in March-April showed a high growth trend, but began to decline in May-June, then declined in July-August and resumed a slight increase in September. The pressure to increase performance mainly comes from the fact that, on the one hand, some potential users of corner plastic have chosen replacement products to reduce the focus frame glasses. Prices are lower, marketing and publicity controls are less, and the terminal channel is eyewear stores, so the volume is huge and the cost is lower; on the other hand, consumer consumption capacity is weaker than expected. Despite improvements in July, high-end consumer health care still lacks growth momentum; furthermore, competition has intensified during the peak market entry period for competing brands.
The nursing products business was restructured, and the proportion of self-production increased through online development. The company's care products mainly include Boshton (distribution), imported Jingteshu (OEM), and self-produced Jingteshu. Overall sales revenue of nursing products declined, but the share of self-produced nursing products continued to rise. In 23Q3, nursing products achieved revenue of 165 million yuan, -21.71% year-on-year. The main reasons for the decline were mainly concentrated online. On the one hand, sales channels for nursing products were concentrated online, while in the past, the main channel was offline professional optometry agencies, which accounted for a relatively small share of online sales; on the other hand, the company adjusted its product structure and increased the promotion of self-produced care products. Q3 introduced a number of promotion policies to increase the share of self-produced care products, which is conducive to the stability, control and continuous expansion of sales policies; furthermore, the number of nursing product brands in the market has increased, and competition has intensified. The company has set up an online marketing team to strengthen online sales and promotion of nursing products. At the same time, it will launch new scarce nursing categories such as hydrogen peroxide and nursing products of different specifications to meet customer needs.
The holding of optometry terminals performed well, and the addition of additional subsidiaries greatly boosted the general framed mirror business. 23Q3 ordinary frame mirrors achieved revenue of 96 million yuan, +59.64% year-on-year; medical services achieved revenue of 84 million yuan, +4.10% year-on-year; and overall holding terminals achieved revenue of 261 million yuan, +4.86% year-on-year. In the first three quarters of 2023, the company's optometric terminals maintained a good development trend. The sales growth was far higher than that of other channels, and the sales share increased further, reaching 48.03%. Q3 added 13 terminals and 1 hospital. In the next 2-3 years, the company will continue to strengthen the construction of holding terminals and further increase sales of existing holding terminals.
[Investment advice]
As a leading company in the optometry industry that has been deeply involved for 20 years, Opconvision will adjust and optimize the marketing structure in the future, actively upgrade, iterate, and introduce new products on the product side, continue to strengthen its holding terminal advantages, and performance is expected to return to a rapid growth trend, based on adhering to a two-tier strategy of product+service terminals. We gave the company 2023/2024/2025 operating income of 17.10/19.38/2.294 billion yuan, net profit of 7.31/88/983 billion yuan, EPS of 0.81/0.91/1.10 yuan, and corresponding PE of 31/27/23 times, respectively, giving the company a rating of “increase in holdings”.
[Risk Reminder]
Risks of changes in centralized procurement policies
The risk that the existing product structure is relatively uniform
The risk of concentrated sales regions