Key points of investment
Net profit of 1.86 billion yuan returned to the mother in '23, which was in the middle of the performance forecast, which was basically in line with expectations.
Revenue also increased 48% in '23, and net profit to mother also increased 47%. Low base+wet white volume, which is faster than in '22.
1) Year 23: Revenue of $2.87 billion (+48%, same ratio in parentheses, same below), net profit of $1.86 billion (+47%) to mother, net profit of $1.83 billion (+53%) 2) 23Q4: Revenue of $70 million (+56%), net profit to mother of $440 million (+62%), deduction of non-return to mother of $436 million (+88%)
Previously, the company had issued a performance forecast. The estimated net profit for 23 years was 1.81 to 1.9 billion yuan, which was actually 1.86 billion yuan. The median figure was in line with expectations.
Stick to high dividends. The company paid out a total cash dividend of 900 million yuan in 23 years (48% of net profit attributable to mother), using the capital reserve fund to increase 4 shares for every 10 shares, for a total increase of 86.08 million shares. Since its listing, the company has accumulated dividends of 2.38 billion yuan (53% of net profit attributable to mother).
23-year revenue split: The recycling series is the core incremental source for 23 years, distribution growth rate > direct management growth rate.
By product: 58% solution +40% gel +2% other. 1) Solution category (Hi-Body series, including neck needle, panda acupuncture, etc.): Revenue of 1.67 billion (+29%). 2) Gel category (wet white/like life, Bonida, Avray, Ameifei, Yimei 1 plus 1): Revenue of 1.16 billion dollars (+81%), driven by Wet White Angel as the core. 3) Facial implants: revenue of 5.92 million (+10%); 4) Other (cosmetics, etc.): Revenue of 35 million, accounting for a low proportion.
By channel: 62% direct sales +38% distribution. The company's direct sales revenue in '23 was 1.79 billion (+43%), and distribution revenue was 1.08 billion (+57%). In '23, the company expanded its marketing team, adjusted the marketing system, and further increased institutional coverage, covering about 7,000 medical and aesthetic institutions in '23 (an increase of about 2,000 compared to '22).
Profitability: Product structure optimization+good cost control, high profitability remained stable for 23 years: gross margin/net interest/net interest rate after deduction of 95.1%/64.6%/63.8%, +0.2pp/ -0.7pp/ +2.1% year over year. Sales/management/R&D expenses were 9.1%/5.0%/8.7%, respectively, +0.7pp/-1.4pp/ -0.2pp compared to the same period
23Q4: gross margin/net profit margin 94.5%/62.8%, -1.2pp/+1.5pp year over year. Sales/management/R&D expenses were 6.9%/4.6%/13%, respectively, +0.5pp/ -9.5pp/+0.1pp compared to the same period.
In the short term, we expect the company to maintain a growth rate of around 30% in 24Q1, mainly considering the low base in January-February '23, but medical and aesthetic demand recovered rapidly in March '23, and the base is relatively high.
Looking at the whole of '24, we expect that the core driver will still come from recycled products: 1) The core product, Wet White Angel, continues to grow and continue to climb; the new product, Like Life Angel, is still in the early stages of market cultivation and is expected to be officially released in '24, so we are optimistic about its potential for collaborative development with Wet White Angel. 2) As a scarce compliant product, the market share of the Hi-Ti 2.5ml/Active Water Light Blue Sea Circuit is expected to continue to increase; 3) The Hi-Ti series follows the recovery in passenger flow in the medical and aesthetic industry, and the margins are improving. 4) In the inventory of various products under development, we expect Bonida (Chin Indication) to be approved in 24, and has now entered the registration stage; botulinum toxin is expected to be approved in around 25 years.
In the medium to long term, the medical and aesthetic market's low penetration and high growth logic remains unchanged. Based on the basic models of the two major star series, Hi-Tei and Regeneration, higher growth requires attention to the continuous expansion of the product matrix boundaries. The penetration rate of medicine and beauty in China is still low, and the core driver for the future will still be the double increase in penetration rate and consumption frequency. As a leading domestic injectable medical and aesthetic company, the company currently maintains a leading position in the field of hyaluronic acid injections and regenerative product injections, and lays the foundation for medium- to long-term growth on blue ocean tracks such as botulinum toxin, weight loss products, and collagen. In '23, the company cooperated with Peptide Biotech to introduce simeglutide and invested 4.89% of its shares; signed a distribution agreement with JEISYS MEDICAL, a leading medical and aesthetic instrument company in Korea, to lay out two high-potential products: high-intensity focused ultrasound instruments (similar products are ultrasound knives) and single-stage radiofrequency instruments (similar products are Thermage), which we expect to be launched in 25-27.
Profit forecasting and valuation: The company is in the most bargaining power in the rapidly growing medical and aesthetic industry. As an industry leader with outstanding product scarcity and matrix integrity, Aimeike has great potential and broad scope. We expect net profit to be 23.9/297/3.57 billion yuan for 24-26, an increase of 28%/25%/20%. The current market value corresponds to PE 31/25/21 times, maintaining a “buy” rating.
Risk warning: Consumption recovery falls short of expectations; market competition intensifies; new product launch progress falls short of expectations, etc.