Matters:
The company announced the 2023 performance forecast and the completion of the performance promises of three medical and aesthetic institutions, including Kunming Han Chen. Among them, it is expected to achieve net profit of 200-250 million yuan in 2023, an increase of 836%-1070% year-on-year, after deducting non-net profit of 19-240 million yuan, an increase of 2866%-3647% year-on-year. In addition, all three medical and aesthetic institutions acquired by the company, including Kunming Han Chen, have fulfilled their 2023 performance promises.
Guoxin Retail's opinion: Looking at the fourth quarter of a year, the company is expected to achieve net profit of 610-56.1 million yuan, turning a loss into a profit compared to the same period last year; it is expected to deduct non-net profit of 15 to 65.5 million yuan, turning a loss into a profit compared to the same period last year. The company achieved good performance growth in 2023, benefiting from the company actively seizing opportunities for consumer recovery. Among them, medical and aesthetic endogenous growth+epitaxial mergers and acquisitions brought increased performance, and the women's clothing business improved its performance through marketing and embracing new retail.
Overall, the company's medical and aesthetic business has achieved excellent recovery growth with strong product repurchase stickiness. In the future, it will continue to strengthen endogenous growth and promote medical and aesthetic fund operations, and epitaxial mergers and acquisitions to help build a national medical and aesthetic ecological map. At the same time, the women's clothing and children's clothing business is expected to grow steadily with brand upgrades and channel construction improvements. We maintain the company's 2023-2025 net profit forecast of 229/312/381 million yuan, corresponding PE of 33.6/24.6/20.1 times, respectively, and maintain the “increase in holdings” rating.
Commentary:
Overall performance growth was good in 2023. The acquired medical and aesthetic companies all completed their performance promises. The company expects to achieve net profit of 200-250 million yuan for the full year of 2023, an increase of 836%-1070% over the previous year. Looking at the fourth quarter alone, the company is expected to achieve net profit of 610-56.1 million yuan to mother, turning a loss into a profit compared to the same period last year. Overall, beneficiary companies actively seize opportunities for consumer recovery. Among them, medical and aesthetic endogenous growth+epitaxial mergers and acquisitions brought increased performance, and the women's clothing business improved performance through marketing and embracing new retail.
Looking specifically at the medical and aesthetic business, the company acquired 90% of the shares of Wuhan Wuzhou Plastic Surgery Hospital Co., Ltd. and 70% of the shares of Wuhan Hanchen Medical Aesthetic Hospital Co., Ltd. in 2023. The net profit performance promises of Wuhan Wuzhou and Wuhan Han Chen for 2023 were 17.1 million yuan and 9.07 million yuan respectively, and the final actual net profit is expected to be 174.34 million yuan and 9.01 million yuan respectively, all fulfilling the 2023 performance promises. In addition, Kunming Han Chen is a medical and aesthetic agency that acquired 75% of the company's shares in September 2022. The net profit expected to be achieved in 2023 is 16.3872 million yuan, which also fulfills its 2023 performance promise.
Investment advice
Overall, the company's medical and aesthetic business has achieved excellent recovery growth with strong product repurchase stickiness. In the future, it will continue to strengthen endogenous growth and promote medical and aesthetic fund operations, and epitaxial mergers and acquisitions to help build a national medical and aesthetic ecological map. At the same time, the women's clothing and children's clothing business is expected to grow steadily with brand upgrades and channel construction improvements. We maintain the company's 2023-2025 net profit forecast of 229/312/381 million yuan, corresponding PE of 33.6/24.6/20.1 times, respectively, and maintain the “increase in holdings” rating.
Risk warning
Terminal medical and aesthetic consumption falls short of expectations; medical and aesthetic fund management is poor; industry competition pattern deteriorates; women's clothing and baby business development falls short of expectations