Brief performance review
On March 19, 2024, the company released its 2023 annual report. In 2023, the company achieved revenue of 2,869 billion yuan (+48%), net profit attributable to mother of 1,888 billion yuan (+47%), and net profit of non-return to mother of 1,831 billion yuan (+53%);
Looking at a single quarter, the company achieved revenue of 699 million yuan (+56%), net profit to mother of 404 million yuan (+62%), and net profit of 436 million yuan (+88%) after deducting non-return to mother.
Management analysis
Gross margin has been rising steadily, and sales channels have continued to expand. On the profit side, in 2023, the company achieved a gross sales margin of 95.09%, an increase of 0.24pct over the previous year. Mainly due to product structure optimization, the proportion of high-margin gel injection products increased by 7.44pct. At the same time, the company achieved a net sales margin of 64.65%, and the net interest rate was stable. On the channel side, the company strengthened domestic market construction. By the end of 2023, the company had more than 400 sales and marketing personnel (over 300 in 22 years), covering 31 provinces, cities and autonomous regions across the country, covering about 7,000 domestic medical and aesthetic institutions (5,000 in 22).
Revenue from injectable gels has increased rapidly, and revenue from injectable solutions has been rising steadily. By product, gel injection products achieved revenue of 1,158 billion yuan (+81.43%) and sold 1.068 million units (+36.13%) in 2023. Among them, Wet White Angel brought strong support to the company's product matrix with strong product strength. In 2023, the company's solution injection products grew steadily, achieving revenue of 1,671 billion yuan (+29.22%) and sales volume of 5.1413 million units (+48.88%). The core product is Hi-Tec. Furthermore, in 2023, the facial implant line business achieved revenue of 5.919,500 yuan (+10.06%), sold 16,800 packs (+5.45%), and revenue increased steadily.
The pipeline of products under development is progressing smoothly, laying the foundation for subsequent development. By the end of 2023, the company had entered the clinical and registration process with a total of 3 projects, namely injectable botulinum toxin type A (registration declaration phase), liraglutide injection (phase I clinical trial completed), and lidocaine butacaine cream (phase III clinical trial phase). The company is progressing smoothly in the research pipeline. At the same time, the company is developing biomedicines such as recombinant proteins and peptides, which are expected to meet the needs of more consumers in the future.
Profit Forecasts, Valuations, and Ratings
We expect the company's net profit to be 25.08, 33.93, and 4.287 billion yuan respectively in 2024-2026, up 34.96%, 35.28%, and 26.34% year-on-year respectively. EPS is 11.59, 15.68, and 19.81 yuan respectively. The PE corresponding to the current price is 30, 23, and 18 times, maintaining the “buy” rating.
Risk warning
Product development progress falls short of expectations; market competition increases risks; marketing falls short of expected risks, etc.