Description of the event
The company released its 2023 annual report. In 2023, the company achieved operating income of 2.87 billion yuan, an increase of 48%; net profit to mother was 1,888 billion yuan, an increase of 47% year on year; net profit after deducting non-return to mother was 1,831 billion yuan, an increase of 53% year on year. The proposed dividend amount is 23.2 yuan (tax included) for every 10 shares, a total cash dividend of 500 million yuan, 0 bonus shares (tax included), and 4 additional shares for every 10 shares from the capital reserve fund.
Incident comments
Revenue for the fourth quarter was in line with expectations. It is expected that Waibai Angel's sharp growth and strong endogenous resilience are the main reasons for the impressive growth on the revenue side throughout the year. The company achieved revenue of about 700 million yuan in the fourth quarter in a single quarter, in line with expectations. Looking at the whole year, the company achieved operating revenue of 1.67 billion yuan, an increase of 29% year on year, gross margin increased 0.25 percentage points year on year, gel products mainly products such as Wet White Angel and Bonida achieved operating income of 1.16 billion yuan, an increase of 81% year on year, gross margin increased 0.97 percentage points year on year, and the gross margin of gel products increased a lot, showing that Wet White Angel, which has higher added value among its products, achieved a greater growth rate.
In terms of profit performance, sales expenses increased throughout the year, and the increase in gross margin and savings in management expense ratios were the reasons for deducting the increase in non-profit capacity. The company's comprehensive gross margin increased by 0.2 percentage points in the full year of 2023. The increase in comprehensive gross margin was less than that of solution products and gel products. It is expected that the gross margin of other revenue from dressings and sponge formulations, which is mainly due to Peqilon's merger, was low, diluting the overall gross margin level; the annual sales expense ratio increased by 0.7 points, reflecting the company's continuous increase in investment on the sales side to a 400-person team at the end of 2023. The overall institutional coverage of the company expanded from 5,000 companies. To 7,000 companies; the management fee ratio decreased by 1.4 points, mainly due to the high base of Hong Kong stock listing expenses in the same period last year, and the annual R&D expenditure rate fell 0.2 percentage points, maintaining a high R&D cost growth rate. Overall, the increase in gross margin and savings in management expenses offsetting the increase in the sales expenses ratio. Combined, the increase in net profit deducted throughout the year was slightly higher than the revenue growth rate.
Through internal R&D and external cooperation to position a collaborative research pipeline, there are plenty of reserves for future growth. In the company's research project, the modified sodium hyaluronate gel with medical polyvinyl alcohol gel microspheres to correct back chin contraction is in the registration reporting stage; injectable type A botulinum toxin to improve interbrow lines is in the registration reporting stage; second-generation facial implants for soft tissue lifting are in clinical trials; lidocaine decaine cream for local anesthesia on the skin before superficial skin surgery in adults is in clinical trials; injectable hyaluronidase to dissolve hyaluronic acid is in the pre-clinical research stage.
Furthermore, judging from external cooperation, the company cooperated with Korea's Jeisys in 2023 to enrich the range of medical and aesthetic dermatology products, and cooperated with Beijing Quality Peptide Biotech to introduce simeglutide products.
Investment advice: We believe that in the current consumption environment, the company can still record growth of close to 50% throughout the year, which fully reflects the dual resilience of the industry boom and the company's operations. At present, the company's Hi-Ti series products have formed a good consumer mentality, and will fully benefit from the rising popularity of light medical and aesthetic consumption and the trend of compliance; the brand influence of Wet White Angel products is gradually increasing, and the combined application of Twin Angels is worth looking forward to. It is expected to become a strong support for the company to build a phenomenal product matrix. At the same time, the pipeline layout for various indications and product categories is rich in the future, laying the foundation for long-term growth. The company's EPS is expected to be 11.24, 14.64, and 18.15 yuan in 2024-2026, respectively, maintaining a “buy” rating.
Risk warning
1. Product development and registration risks;
2. The risk of increased market competition.