Event: 2023Q3 revenue +23.9%, net profit +339.6% The company released three quarterly reports: the first three quarters of 2023 achieved revenue of 3.694 billion yuan (+22.06%) and net profit of 194 million yuan (+585.75%); 2023Q3 alone achieved revenue of 1,216 billion yuan (+23.94%) and net profit of 47 million yuan (+339.57%). Relying on the pan-fashion ecosystem built by the company, the three major businesses developed collaboratively, and achieved steady overall growth. We maintain our profit forecast unchanged. We expect the company's net profit from 2023-2025 to be 2.42/320/410 million yuan, corresponding to EPS of 0.55/0.72/0.93 yuan, and the current stock price corresponding to PE of 38.8/29.3/22.9 times, maintaining the “buy” rating.
The revenue side achieved good growth, and the company continued to make efforts to reduce costs and increase efficiency on the revenue side. As residents' willingness to spend and consumption capacity gradually rebounded, the company's overall revenue grew well.
Among them, we expect the medical and aesthetic sector to grow rapidly, mainly due to the low base for the same period in 2022, the renewal and upgrading of Shenzhen and Milan in April, and the rapid expansion of business scale. In terms of profitability, the comprehensive gross profit margin for the first three quarters of 2023 was 57.6% (+1.0pct), maintaining a steady increase; net profit margin was 5.7% (+4.4pct), a significant increase.
In terms of expenses, the sales expense ratio for the first three quarters of 2023 was 40.9% (-1.2pct), which is expected to benefit from a reduction in the difficulty of acquiring customers after the offline travel scenario is restored; the management/development/finance cost ratio is 8.0%/1.9%/1.8%, respectively, -0.6pct/-0.9pct/-0.4pct over the same period last year, and the company continues to make efforts to reduce costs and increase efficiency.
The “endogeny+extension” of medicine and beauty continues to advance the Soviet Union, and the expansion of the industrial chain stabilizes the leading position of institutions. Women's clothing: the omni-channel sales network continues to improve, and online channels such as Douyin are expected to contribute growth. Babies: In the Korean market, we focus on operation, optimization and efficiency, while in the Chinese market, we lay out marketing and expand channels, which can be expected to increase market share.
Medical aesthetics: On the one hand, as consumption further recovers, the future growth momentum of internal institutions is expected to improve; on the other hand, the company bought two hospitals in cash and consolidated the third quarter and has invested in the establishment of the Boheng No. 2 Medical and Aesthetic Fund. It is also planned to increase capital raising in the future to increase the medical and aesthetic layout. It is expected that “endogeny+extension” will continue to advance in the Soviet Union. Furthermore, the company continues to expand upstream in the industrial chain. On the one hand, it has launched its own brand, Funivia, which has performed well in terminal institutions; on the other hand, controlling shareholders Mr. Shen Dongil and Boheng have acquired a controlling interest in medical device company Relais on the 3rd. The two lines are combined, which is expected to further stabilize the leading position of medical and aesthetic institutions.
Risk warning: store expansion falls short of expectations, loss of human resources, increased competition, medical malpractice, and weak consumption.