Incident: Ameke releases its 2023 annual report.
23 Full year: Achieved revenue of 2.87 billion yuan, up 48% year on year; realized net profit of 1.86 billion yuan, up 47% year on year; realized deduction of 1.83 billion yuan without return to mother, an increase of 53% year on year.
23Q4: Achieved revenue of 70 million yuan, a year-on-year increase of 56%; realized net profit of 404 billion yuan, an increase of 59% over the previous year; realized deducted non-return of 404 million yuan, an increase of 88% over the previous year.
Profit level: Gross margin has been rising steadily, and management rates have improved significantly. Achieved a gross profit margin of 95.1% in '23, +0.2pct year over year. Among them, the gross profit margin for solutions was 94.5%, +0.25pct year on year; gross profit margin for gels was 97.5%, +0.97pct year on year. Achieved a net profit margin of 64.6% in '23, -0.7pct year-on-year. On the cost side, the sales/R&D/management expenses rates for 23 were 9.1%/8.7%/5.0%, respectively, +0.7/-0.2/-1.4pct compared to the same period.
Product split: Driven by wet whitening, the proportion of gels increased by 7 pct. 1. Solution category: achieved revenue of 1.67 billion yuan, accounting for 58%, up 29% year on year; 2. Gel category: achieved revenue of 1.16 billion yuan, accounting for 40%, up 81% year on year; 3. Facial implant line: achieved revenue of 06 billion yuan, accounting for 0.2%, up 10% year on year; 4. Others: achieved revenue of 0.4 billion yuan, accounting for 1% year on year increase of 1266%. Overall, the company's main source of revenue is still mainly solution and gel hyaluronic acid injection products. Among them, due to the rapid growth of wet white angels with increased awareness of regenerative categories, the share of gel products increased by 7 pcts in 23 years. I am optimistic that while Hi-Tei stabilizes the basic market with high awareness of terminals, the Twin Angels Matrix will continue to grow.
Pipeline & Channel: The research pipeline is progressing steadily, and the channel coverage continues to expand. Research pipeline: 1) Bonide 2.0, botulinum toxin has entered the registration stage; 2) Medical sodium hyaluronate - hydroxypropyl methylcellulose gel, second-generation implantation line, lidocaine butacaine cream are in clinical trials, and liraglutide injections have completed phase I clinical trials; 3) simeglutide injections, phenoxycholic acid injections, and hyaluronidase for injection are in the preclinical research stage. Channel layout: By the end of '23, the company had more than 400 sales and marketing personnel, covering about 7,000 domestic medical and aesthetic institutions, accounting for 62%/38% of direct sales/distribution revenue respectively. In 23 years, the company organized a total of 1,753 academic training and conferences, and continued to strengthen terminal promotion.
Investment advice: As a leading upstream medical and aesthetic leader, it is expected to continue to grow in the context of high performance growth in 23 years, abundant pipeline reserves, and increased concentration through expansion and compliance in the medical and aesthetic market.
We expect the company to achieve operating income of 38.3/49.9/6.32 billion yuan in 2024-2026, and achieve net profit of 24.5/31.6/3.98 billion yuan, corresponding PE 31/24/19 times, respectively, to maintain the “increase in holdings” rating.
Risk warning: the risk of changes in medical and aesthetic policies; product approval falls short of expectations; market competition increases risk