Events: The company released its 2023 three-quarter report. The first three quarters of 2023 achieved revenue of 4,221 million yuan, -2.29%; net profit of 514 million yuan, -24.07%, net profit after deduction of 433 million yuan, -27.97%; 23Q3 achieved revenue of 1,146 million yuan in the single quarter, -17.26%, net profit of 90 million yuan, minus 56.03%, net profit of the company was temporarily under pressure.
Raw materials and medical devices are growing rapidly, and the efficacy and skincare sector has been optimized and adjusted. The company's raw materials business maintained a good growth trend; in terms of medical device business, orthopedics and ophthalmology businesses grew steadily; in October, the share of medical and aesthetic products continued to rise; in October, the “injectable cross-linked sodium hyaluronate gel” was approved, while the collagen track was laid out to improve the medical and aesthetic injection product matrix for facial rejuvenation in all aspects; the efficacy and skincare sector was optimized and adjusted, and in July, the moisturizing white gauze mask was upgraded to 2.0. In August, it was upgraded to white gauze mask 2.0, and in October, a new brightening mask was introduced; in October, Quadi upgraded Blue throw 2.0, which is expected to drive effectiveness The performance of the skincare sector has rebounded.
The sales expense ratio was optimized year over year, and R&D investment continued to increase. In January-September, the company's sales/management/R&D expenses were 46.02%/7.57%/6.56% respectively, year-on-year -0.96/+1.26/+0.14pct. The sales expense ratio was optimized year over year, and R&D investment continued to increase. The company's gross margin/net margin in January-September was 73.07%/12.01%, year-on-year -4.16/-3.43pct.
New products in the medical and aesthetic business can be expected, but let's wait for effective skincare products to gain strength. In October, the company was newly approved as a type III medical device, “crosslinked sodium hyaluronate gel for injection”. It is suitable for the red edge of the lip and red body from the skin (or submucosa) to the oral cavity to increase lip tissue volume. The volume of high Maori medical and aesthetic products is expected to drive the company's revenue and profit to both rise; the effective skincare sector is upgraded iteratively, and Yun Bai is closely promoted; the company's entire industry chain layout, from raw materials to terminals, is optimistic about the company's long-term development space.
Investment advice: Considering that short-term performance is under pressure, we will lower our profit forecast and wait for the inflection point in the business. It is estimated that the EPS for 23-25 will be 1.60/1.83/2.45 yuan, respectively. The current price corresponding to PE is 47/41/31 times, maintaining the company's “buy” rating.
Risk warning: Regulatory policies exceed expectations; market demand recovery falls short of expectations; industry competition intensifies; promotion of new products falls short of expectations; progress of products under development falls short of expectations; product safety risks.