Incidents:
Haohai Biotech released its 2023 performance report. In 2023, the company achieved operating income of 2,654 billion yuan, a year-on-year increase of 24.59%, and net profit to mother of 416 million yuan, an increase of 130.58% year-on-year, after deducting net profit of 383 million yuan without return to mother, an increase of 141.52% over the previous year. The company achieved revenue of 672 million yuan in the single quarter of 2023Q4, up 22.74% year on year, net profit to mother of 89 million yuan, up 377.12% year on year, net profit excluding net profit of 79 million yuan, up 330.78% year on year.
Comment:
Revenue growth is steady, and hyaluronic acid continues to gain strength. The company's annual and quarterly revenue performance is very steady. Ophthalmology and orthopedic surgery are expected to grow steadily, and medical and aesthetic hyaluronic acid continues to exceed expectations. The company's first-generation hyaluronic acid, Haiwei, continues to show vitality. The second-generation Jiaolan achieved another breakthrough under the expansion of lip indications. The third-generation Haimei positioned high-end and created excellent product capabilities under the company's deep technical accumulation. It is well recognized by downstream institutions and consumers, and the product has maintained rapid growth. The fourth-generation organic crosslinked hyaluronic acid product is already in the registration process and is expected to be approved in the first half of 2024, which will further consolidate the company's leading position in the high-end hyaluronic acid field.
Low base is superimposed on product structure optimization, and net profit is growing rapidly. The company's net profit was in line with the previous forecast range, and net profit increased rapidly throughout the year and the fourth quarter. On the one hand, production and operation of the company and its production subsidiary located in Shanghai stagnated from March to March 2022. Coupled with the goodwill and intangible assets accruing goodwill and intangible assets of the US subsidiary in 2022/Q2 and 2022/Q4, the result was a low base for 2022 and 2022/Q4. On the other hand, the company's high-margin hyaluronic acid products grew strongly, driving a marked improvement in overall gross margin and profitability; in 2023, the company's net profit margin was 15.68% /+7.21pct, after deducting 14.45% /+6.99pct of non-return net interest rate; the company's net interest rate to mother was 13.29% /+9.87pct in a single quarter, after deducting a non-return net profit margin of 11.73% /+8.39pct. 2023Q4
Investment advice: The company continues to consolidate its technical advantages of hyaluronic acid, and its differentiated product capabilities are favored by downstream customers. With new products and channel expansion, market share and profitability are expected to further increase.
In addition, the company has a complete product line of optoelectronic equipment and a smooth botulinum toxin layout, which will bring new performance increases to the company's medical and aesthetic sector. Taking into account the steady growth of the company's revenue side and adjusting profit forecasts, revenue for 2023-2025 is estimated to be 2,654 million/3.181/3.43 billion, and net profit attributable to mother will be 416 million/521 million/631 million, respectively. The corresponding PE for Hong Kong stocks is 14 times, 11 times, 9 times, respectively, maintaining a “buy” rating.
Risk warning: industry competition is intensifying; policy supervision is becoming stricter; promotion of new products falls short of expectations; performance predictions and valuation judgments fall short of expectations.