Core views
The company's 23Q4 revenue and performance accelerated month-on-month, and achieved equity incentive targets throughout the year. Among them:
The core product HiTi series has maintained steady growth. Among them, the Hi-Body Bubble Needle/Hi Body 2.5 performed well. The new product Wet White Angel continues to be sold, and it is estimated that it will account for about 30% of revenue. The company has sufficient reserves of products under development such as botulinum toxin and liraglutide injections, and deepens the industrial layout in the fields of medicine, beauty and skin care, fat loss, and optoelectronics. Looking ahead to 2024, the company's performance is expected to maintain a high growth rate under 24Q1 medical and aesthetic recovery. Wet White Angel+ Like a Living Angel and Hi-Body 2.5ml/ml Active Water Light Acupuncture are the main drivers of growth.
occurrences
The company released its 2023 annual report: 23 billion yuan/ +48.0%, net profit of 1,888 million yuan/ +47.1%, net profit after deducting net profit of 1,831 billion yuan/ +53.0%; net cash flow from operating activities of 1,954 billion yuan/ +63.7%, EPS (basic) of 8.60 yuan/share/ +47.3%, and ROE (weighted) of 30.09% /+6.36pct. The company plans to distribute cash dividends of 23.23 yuan (tax included) to all shareholders for every 10 shares, for a total of 50 billion yuan. The dividends account for 26.9% of the net profit to mother, which is combined with the semi-annual dividends to distribute a total of 900 million yuan in cash dividends in 2023. Transfer 4 shares for every 10 shares to all shareholders.
Brief review
Revenue grew rapidly in 23Q4, and equity incentive targets were achieved in '23. The company achieved the equity incentive target for 2023 with revenue of 2.87 billion yuan/ +48.0%, net profit of 1.86 billion yuan/ +47.1%, net profit after deducting non-return to mother of 1.83 billion yuan/ +53%, and achieved equity incentive targets (revenue of 2.81 billion yuan or net profit of 1,676 billion yuan in 23 years). Corresponding to 23Q4 revenue of 699 million yuan, +55.6% YoY, -1.7% month-on-month, 23Q4 net profit of 440 million yuan, +62.2% YoY and -3.3% month-on-month, the 23Q4 growth rate increased faster than 23Q3 revenue of 711 million yuan/ +17.5%, and net profit to mother of 455 million yuan/ +13.3%, mainly due to: 1) The diversion impact of the November-December travel on the passenger flow of medical and aesthetic institutions gradually decreased (low base for the same period in '22); 2) The company continued to grow at the end of its product marketing and product distribution power.
The core product Hi-Tei series grew steadily, and Wet White Angel continued its good growth trend. By business, 1) Solution injection products: In 2023, the revenue of solution injection products with Hi Body as the core was 1,671 billion yuan/ +29.2%, with sales volume up 48.9%, accounting for 58.2% /-8.5pct. Among them, the large single product Hi-Tei series relied on existing brand influence and continued to increase market penetration rate. It is expected to increase 25% + in 23 years. It is expected to continue to increase 25% + in 23 years. 2) Gel injection products: In 2023, the revenue of gel injection products was 1,158 billion yuan/ +81.4%, accounting for 40.3% /+7.4pct of revenue. Since the product “Wet White Angel” was launched in 2022, the number of institutions covered and sales scale has continued to increase. It is expected to double in 23Q4, and the revenue share of Wet White Angel is expected to be close to 30% in '23.
Medical and aesthetic products are being developed with abundant reserves, deepening the industrial layout in the fields of medicine, aesthetic skin care, fat loss and weight loss, and optoelectronics. The company continues to guarantee investment in R&D innovation and strengthen academic brand building. In 2023, the company's R&D investment accounted for 8.72% of revenue. In 2023, the company organized a total of 1,753 academic training and conferences, including 337 online meetings and 1,416 offline meetings. The products currently being developed by the company include: modified sodium hyaluronate gel with medical polyvinyl alcohol gel microspheres to correct back chin contraction (registration stage), injectable type A botulinum toxin to improve lines between eyebrows (registration stage), second-generation facial implants for soft tissue lifting (clinical trial stage), lidocaine butacaine cream (clinical trial stage) for local skin anesthesia before adult superficial skin surgery (clinical trial stage), and injectable hyaluronidase to dissolve hyaluronic acid (pre-clinical research stage). In addition, the company is deepening its industrial layout in the fields of medical and aesthetic skin care, fat loss, optoelectronics, etc. 1) On the basis of introducing simeglutide products in collaboration with peptidebio, the company invested 50 million yuan to hold 4.89% of the shares in the weight management market; 2) The company launched three major skincare brands for different areas of the post-medical and aesthetic market: “Aifuyuan” targets post-operative facial repair and daily skin care; “Hi Body Panda” targets post-operative eye care and daily skin care 3) Optoelectronics sector: company and Korea JeisysMedical Inc. signed a distribution agreement to introduce its two optoelectronic medical and aesthetic equipment products, Density (radio frequency equipment) and LinearZ (ultrasound equipment), to help the company break through the energy source equipment pipeline.
Looking ahead to 2024, the company's performance is expected to maintain a high growth rate under 24Q1 medical and aesthetic recovery. Wet White Angel+ Like a Living Angel and Hi-Body 2.5ml/Active Water Light Activating Acupuncture are expected to contribute the main increase. Demand for medical and aesthetic medicine has gradually recovered over the past 24 years. Among them, March is the peak season for medical and aesthetic sales. Under the relatively low base of 23Q1 and institutional stocking, the company is expected to maintain a high growth rate in 24Q1. Looking at the full year of '24, it is estimated that: 1) the core product, Wet White Angel, will continue to increase. New products such as Fresh Angel and Wet White Angel can be developed collaboratively, and are expected to be gradually released; 2) The company's Hi-Body 2.5ml and Liuhuo Water Light Acupuncture products are expected to benefit from the market compliance process, and the market share is expected to continue to increase.
Profit forecast: Estimated revenue for 2024-2026 was 38.5, 50.4, and 6.31 billion yuan, up 34.3%, 30.8%, and 25.2%; net profit to mother was 24.5, 32.1, 4.0.2 billion yuan, up 32.1%, 30.9%, 25.1%, corresponding PE to 31, 24, and 19 times, maintaining the “buy” rating.
Risk warning: 1) Strengthening medical and aesthetic supervision: The company's main products are Class III medical devices, which are licensed products. If the country's policy on medical device production and operation changes, it may have an impact on the company's business plan; 2) Product development and registration risks: The company's new product development, from laboratory research to final approval for marketing and sale, generally requires multiple steps such as laboratory research, animal experiments, registration tests, clinical trials, and registration declarations. There is some uncertainty, and the company faces product development and registration risks. 3) Risk of increased market competition: The company is a leading domestic provider of innovative medical and aesthetic products, and has a certain first-mover advantage in the domestic market. Demand in the medical beauty market has grown rapidly in recent years, and the development prospects of the company's industry are positive. The average gross margin level of the leading product industry is high, attracting many enterprises to enter the domestic market through independent research and development or mergers and acquisitions. Industry competition will gradually intensify, and the company's business performance will face the risk of increased market competition.