Net profit also increased 47%, and the results continued to be realized: the company achieved revenue of 2,869 billion yuan (yoy +48.0%), net profit of 1,888 billion yuan (yoy +47.1%), net profit of 1,831 million yuan (yoy +52.9%), benefiting from improvements in the consumer environment and a recovery in passenger traffic during the same period, Q4 achieved revenue of 699 million yuan (yoy +55.6%) and net profit of 440 million yuan (yoy +62.2%). The strength of high-end products led to an overall annual gross margin increase of 0.25 pcts to 95.1%. The sales expense ratio increased by 0.68 pcts to 9.07% due to the expansion of the sales team and the increase in marketing expenses during the period, the management/R&D expense ratio also decreased by 1.44 pcts/0.21 pcts to 5.03%/8.72%, and the annual net sales margin decreased by 0.73 pcts to 64.65%. By the end of 2023, the company's net operating cash flow increased by 63.7% to $1,954 million, while inventory and accounts receivable increased 6.5%/61.3% to $5/210 million, respectively. The company plans to distribute cash of 2.32 yuan (tax included) per share based on 215 million shares, with dividends accounting for 26.9% of net profit attributable to mother, and a total cash dividend of 900 million yuan in 2023. At the same time, the capital was increased using the capital reserve fund, with an increase of 0.4 shares per share. In total, it is planned to increase 86 million shares.

The relay for new recycled products has increased rapidly, and the Hi Sports series is growing steadily. By category, 1) gel products: achieved revenue of 1,158 billion yuan (yoy +81.4%), when split, sales volume increased 36.1%, and the average unit price of injections increased by 33.3%. We believe that under the progressive aesthetic stock competition pattern, the wet white+like life product portfolio achieved full three-dimensional renewal, and strong volume of recycled products drove high performance growth, driving gel gross margin of 0.97 pcts to 97.49%; 2) Solution products: achieved revenue of 1.671 billion yuan (yoy +29.2%) The sports series has a stable market position, bubble The needle continues to contribute to the increase in performance with the dual-antibody concept card in the middle and upper end of the line. Looking at the breakdown, sales volume increased by 48.9%, and the average price of injections fell 13.2%, or the factory price was under pressure due to upward customer acquisition costs in medical and aesthetic institutions and increased competition in the field of hyaluronic acid in the filling and water treatment fields. The optimization and adjustment of the category structure led to a slight increase of 0.25 pcts to 94.48% in gross margin.

The long-term vitality of the pipeline comes from new product release+premium product upgrade+quality reserves. The increase in the company's performance comes from the release of category dividends. The company's R&D personnel accounted for 26.7% in 2023, and R&D investment also increased by 44.5%, which continues to be positive:

1) Current volume of new products: High-end products such as wet white and raw have further enriched the advantages of regenerative filling, and are expected to continue to be released with positive feedback from terminals; 2) The superior category has been renewed: the classic single product modified sodium hyaluronate gel containing polyvinyl alcohol gel microspheres has added new chin filling indications. It has entered the registration phase and is expected to be marketed within the year. Hydroxypropyl methylcellulose gel has added additional filling site indications and has entered the clinical trial stage, effectively consolidating Aimeike's position in the dermal filler market; 3) Premium pipeline reserves: new products nurture long-term vitality, and introduce two non-invasive anti-aging instruments owned by Jiessys from Korea in the field of light medicine and beauty to achieve breakthroughs in energy source equipment pipelines; self-developed injectable hyaluronidase, liraglutide injections, lidocaine cream, and second-generation implantation lines have entered pre-clinical trials or clinical trials stage, in which A is used for injection Botulinum toxin has entered clinical declarations and is expected to be approved for marketing within the year; simeglutide and deoxycholic acid injections in the field of weight management are all in the pre-clinical research stage.

Channel operations are refined, and the repurchase rate and penetration rate dividends are endless. The company has strengthened domestic market construction, expanded the marketing team and adjusted the sales system. Currently, it has a sales team of 449 people, and its strong sales network has covered about 7,000 high-quality medical and aesthetic institutions across the country (an increase of about 2,000 over the beginning of the year), accounting for 62.3% of direct sales. From a channel perspective, there is room for channel power improvement. 1) Penetration rate: High-end products are stable and stable. Wet White Angel uses a license authorization system to promote it. In the future, it will continue to adopt a combination of training and certification systems to rapidly penetrate national channels. For example, Angel has completed initial contracts and has entered many leading medical and aesthetic institutions one after another, and the overall penetration rate still has rich dividends; 2) Repurchase rate: improving the cooperative stickiness of downstream institutions through refined operation and cultivation, operating various academic brands such as Quan Xuan University and Master Master, and organizing 1,753 academic conferences throughout the year to build a brand reputation with quality service. There is still room for improvement in the quality and efficiency of partner institutions.

Profit prediction and investment advice: Aimeike is driven by pipelines, and channels enable high-quality performance development. The current consumption environment is recovering steadily, early disturbances have been cleared one after another, and the growth momentum contributed by new products is sufficient. Supported by equity incentives throughout the year, the revitalization of the organizational structure is expected to increase confidence in long-term growth. We expect the company to achieve revenue of 39.55/52.99/6.730 billion yuan in 2024-2026, up 37.8%/34.0%/27.0% year on year, and net profit to mother of 24.28/31.23/ 38.54 billion yuan, up 30.7%/28.6%/23.4% year on year, corresponding 30 times PE in 2024.

Risk warning: R&D forensic risks, increased industry competition, weak terminal demand