Report summary:

Incidents:

Haohai Biotech released its 2023 annual report. In 2023, the company achieved revenue of 2,654 million yuan/ +24.59%, net profit of 416 million yuan/ +130.58%, net profit after deducting non-return to mother of 383 million yuan/ +141.52%, and non-recurring profit and loss of 32 million yuan, mainly from government subsidies included in current profit and loss. In Q4, in a single quarter, the company achieved operating income of 672 million yuan/ +22.74%, net profit attributable to mother of 89 million yuan/ +377.12%, after deducting net profit of 79 million yuan/+ 330.78%. It is proposed to distribute a cash dividend of 10 yuan (tax included) for every 10 shares and transfer 4 additional shares.

Comment:

Ophthalmic products have shown increased resilience, and medical and aesthetic hyaluronic acid continues to gain strength. In 2023, the company achieved revenue of 2,654 million yuan/ +24.59%, by product: 1) Ophthalmology products: revenue of 928 million yuan/accounting for 35.09%/+20.57%; of which the cataract product line revenue was 497 million yuan/ +35.07%, including artificial lenses 382 million yuan/ +37.00%, and ophthalmic viscoelastic agents 115 million yuan/ +29.05%; of which myopia prevention, control and refraction correction product line revenue was 401 million yuan/ +5.82%, including optometry materials , optometry terminal products 192 million yuan/ -6.34%. The company's intraocular lenses have maintained a stable price system after the past two rounds of provincial collection, and were fully selected in the national collection in November 2023. The market share was further increased; combined with the steady recovery of cataract surgery, the company's ophthalmology revenue grew steadily. 2) Medical beauty and wound care products: revenue of 1,057 million yuan/accounting for 39.96%/+41.27%, of which hyaluronic acid revenue was 602 million yuan/ +95.54%. Haimei/Jiaolan/Haiwei increased by 129.32%/57.70%/94.14% year over year, and Haimei's annual revenue exceeded 230 million yuan; human epidermal growth factor revenue was 171 million yuan/ +13.58%; RF and laser equipment revenue was 284 million yuan/ -1.97%. The high-end image of Haimei Hyaluronic Acid has been recognized by the market, driving the overall sales of hyaluronic acid combinations to increase. 3) Orthopedic products: Revenue of 476 million yuan/accounting for 18.00%/+22.56%. With a good curative effect and pricing system, the product portfolio formed by medical chitin sugar and sodium hyaluronate injections has continued to expand its market share. 4) Anti-adhesion and hemostasis products: Revenue of 146 million yuan/accounting for 5.54%/-17.32%, mainly affected by policies such as cost control for high-value consumables. 5) Other products:

Revenue of 0.37 million yuan/accounting for 1.42%/+22.56%.

Investment advice: The company's medical and aesthetic sector has outstanding technical and product advantages. As products are released and new products are launched, medical and aesthetic performance will grow rapidly; the growth resilience of the ophthalmology sector continues to show, and it is expected that it will continue to contribute to a steady increase in the company's performance. The company's revenue for 2024-2026 is estimated to be 3.180 million/3,742 billion/ 4.274 billion, and net profit to mother will be 521 million/632 million/751 million, corresponding to the PE of Hong Kong stocks 11 times/9 times/8 times. Maintain a “buy” rating.

Risk warning: industry competition intensifies; new product promotion falls short of expectations; industry regulatory risks; performance forecasts and valuation judgments fall short of expectations