The company expects revenue of about 138 million yuan in 2023, about +1110.8% year on year. According to the company announcement, the company is expected to achieve revenue of about 138 million yuan in 2023, or about +1110.8% year on year; on a quarterly basis, 1Q/2Q/3Q/4Q companies expect to achieve revenue of about 0.13/0.21/0.30/73 million yuan respectively.

Revenue for 4Q23 and 2023 exceeded market expectations, mainly due to the rapid expansion of the hair and skin care product line. Looking ahead, we believe that the company has outstanding commercialization capabilities and comprehensive pipeline layout, and is optimistic about the broad growth space to become a leading skin management platform in the medium to long term.

Key points of interest

1. The revenue in 2023 was about 138 million yuan, and the hair and skin care product line was launched quickly. The company's revenue for 23 years was about 138 million yuan, an increase of about 1111%, of which Q4 revenue was about 73 million yuan, an increase of about 1051%, mainly due to the company actively building and expanding the product matrix, expanding the “Blue Silk Geometry” hair product line while continuing to release the star product “French Little White Tube” minoxidil spray, and since September, it has exclusively represented the US high-end high-efficacy skincare brand Oma Phyto-C in the domestic market to enter the skincare market. During the Double 11 period, according to the company's official account, the company's GMV exceeded 41.5 million yuan, of which: ① Hair: GMV exceeded 16.7 million yuan, the same increase of 234%; France's Xiaobai GMV ranked in JD's top 1 overseas skin medication brands and single products; ② Skincare: GMV exceeded 24.8 million yuan, an increase of 374%. Ouma Olive Repair Essence became the top 1 in the hot selling list of oil control essences imported from Tmall, further verifying commercialization capabilities.

2. Strong team execution and flexible architecture to continuously build a 2B+2C skin business ecosystem. China's pan-dermatology treatment and care market is in a period of rapid growth and has broad prospects. The company has built an efficient market-based team, flexible marketing style, and continuous omni-channel expansion. Since its listing, the company's growth momentum has been strong, exceeding performance targets, showing the team's strong execution ability. We believe it is expected to grasp the needs of the middle and high-end pan-skin market and continue to expand its business layout.

3. Multi-product pipeline research and development is progressing smoothly, and we are optimistic about medium- to long-term growth space. According to the company's announcement: ① Hair loss:

The NDA for topical finasteride (CU-40102) was accepted in January '24, and phase I clinical trials of thyroid hormone receptor agonists (CU-40101) reached the main end in November '23; ② Local anesthesia: lidocaine (CU-30101) phase III clinical reached the main end in January '24; ③ Localized fat management:

The first phase II clinical trial of recombinant mutant collagenase (CU-20401) submandibular fat accumulation management was completed in January '24, and phase I clinical trials for abdominal fat accumulation management were completed in February '24; ④ Skin: 4% minocycline foam (CU-10201) for external use was accepted by the FDA in September '23 and included in the priority review. We believe it is expected to speed up the marketing approval process. We are optimistic about the company's broad growth space towards a skin management platform in the medium to long term.

Profit forecasting and valuation

Considering that the commercialization process of the company exceeded expectations, we raised our 23-24 revenue forecast by 84%/96% to 138/230 million yuan, and introduced a 25-year revenue forecast of 504 million yuan; considering increased marketing investment, we lowered our net loss for 23-24 from 1,76/30 million yuan to 1,87/49 million yuan, and introduced a 25-year net loss forecast of 420 million yuan. Maintaining an outperforming industry rating, the target price was lowered by 64% to HK$12.7 based on the DCF model and changes in market risk appetite, with 59% upside compared to the current stock price.

risks

Product commercialization falls short of expectations; clinical progress falls short of expectations; risk of medical accidents.