2023 results are in line with our expectations
The company announced 2023 results: revenue of 2.87 billion yuan, +48.0% year on year; net profit to mother of 1.86 billion yuan, +47.1% year over year; deducted non-net profit of 1.83 billion yuan, +52.9% year on year. The performance was in line with the previous forecast range and our expectations, and exceeded the equity incentive target. By quarter, Q1-Q4 revenue was +46%/+83%/+18%/+56% year over year, and net profit to mother was +51%/+77%/+13%/+59% year over year, after deducting non-net profit +49%/+79%/+17%/+83% year over year. Looking ahead, we are optimistic about the broad growth space brought by the company's differentiated pipeline layout and excellent sales capabilities.
Development trends
1. Revenue increased 48% in 2023, and recycled products continued the rapid growth trend. The company's revenue in '23 was +48%, of which Q4 alone was +56%, mainly benefiting from the company's continuous efforts on the marketing and product side, expanding the marketing team and optimizing the marketing system. By the end of '23, it had more than 400 sales and marketing personnel, covering a total of about 7,000 medical and aesthetic institutions in 31 provinces/cities/autonomous regions across the country. By product: ① Solution category: 23 years/2H23 achieved revenue of 16.7/80 billion yuan, +29%/+23% year over year; ② Gel category: 23 year/2H23 achieved revenue of 11.6/590 million yuan, respectively, +81%/+47% year over year. Among them, we expect the annual revenue of Wet White Angel and Single Q4 to achieve rapid year-on-year growth of more than three digits. At the same time, new products such as Angel are gradually being cultivated. The company continues to adopt a doctor certification system to help Ryubai quickly penetrate different types of institutions across the country and form a good word-of-mouth foundation, driving the brand's influence to increase.
2. Gross margin was improving steadily in 2023, and profitability remained stable. The company's gross margin in '23 was +0.2ppt to 95.1% year over year. We think it is mainly due to the continued increase in the share of high-margin recycled products. On the cost side, the company's 23-year sales expense ratio was +0.7ppt to 9.1% year over year, mainly due to marketing increases in labor costs and marketing activity costs; management/R&D/finance cost ratios were -1.4pp/ -0.2pp/ +0.4pt to 5.0%/8.7%/-1.9%, respectively. Under the combined influence, the company's net interest rate in '23 was -0.4ppt to 64.8% year on year, and net interest rate after deducting non-return net interest rate was +2.1ppt to 63.8% year on year.
3. Optimistic about the broad growth space brought by the company's differentiated pipeline layout and excellent sales capabilities. Looking ahead, we believe: ① Existing products: The advantages of core products are outstanding. As the company continues to increase the depth and breadth of customer coverage, Hi-Body is expected to continue to grow steadily, and the second curve still has plenty of room for improvement in penetration; ② Reserve pipeline: According to the company announcement, modified sodium hyaluronate gel containing medical polyvinyl alcohol gel microspheres (corrects back in the chin), injectable type A botulinum toxin is in the registration phase; second-generation facial implants and lidocaine are in clinical trials. Stage; simeglutide and deoxycholic acid injections are in In the pre-clinical research phase, subsequent product launches are expected to support medium- to long-term performance growth. Reiterate that they are optimistic about the company's broad growth space.
Profit forecasting and valuation
Maintaining the 2024-25 profit forecast, the current stock price corresponds to 24-31 xP/E. Maintaining an outperforming industry rating and target price of 408 yuan, corresponding to 36xP/E in 24 years, with 16% upside.
risks
Risk of failure in product development under development; increased competition in the industry; risk of repeated domestic epidemics.