The company released its 2023 annual report: In 2023, the company achieved operating income of 2,869 billion yuan, a year-on-year increase of 47.99%, and realized net profit of 1,888 million yuan, a year-on-year increase of 47.08%, with non-net profit deducted of 1,831 billion yuan, an increase of 52.95%; in a single quarter, the company's operating income was 699 million yuan, an increase of 59.00% year-on-year.
Net profit has maintained rapid growth, and the cost control effect is good. The company's net profit margin was 64.65%, down 0.73 pct year on year. The company's gross margin was 95.09%, up 0.25pct year over year. The sales expense ratio was 9.07%, up 0.68pct year on year, and the management expense ratio was 5.03%, down 1.44pct year on year. The financial cost ratio increased slightly, and the new R&D center helped develop new products. The financial cost ratio was -1.89%, up 0.44pct year on year, and the R&D expense ratio was 8.72%, down 0.21pct year on year.
Hi-Body series products and gel products all achieved year-on-year growth. Among them, (1) solution injection products achieved operating revenue of 1,671 billion yuan (yoy +29.22%), accounting for 58.22% of revenue; (2) gel injection products achieved revenue of 1,158 billion yuan (yoy +81.43%), accounting for 40.35% of revenue. Among them, solution injection products with “Hi Body” as the core are growing steadily, and the safety and efficacy of “Hi Body” have been fully recognized by downstream medical institutions and end consumers, and the brand value is increasing; among gel products, Wet White Angel has continued its good growth trend and has become a strong support point for the company to build a phenomenal product matrix.
Adhere to the differentiated marketing model of “direct sales as the main focus, and distribution as a supplement”. Direct sales accounted for 62.26% and distribution accounted for 37.74% in 2023. By the end of the reporting period, the company had more than 400 sales and marketing personnel, covering 31 provinces, cities and autonomous regions across the country, covering about 7,000 medical and aesthetic institutions in China.
The research pipeline is rich, which helps the company grow in the long term. In the research project, a 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 dinacaine 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.
Maintain an “Overweight” rating. The company continues to promote product research and development to enhance market competitiveness. We expect the company's net profit to be 25.29/33.43/4127 billion yuan in 2024-2026, up 36%/32%/23% year-on-year, corresponding PE 29.0/21.9/17.7 times, maintaining the “increase” rating.
Risk warning: Product promotion falls short of expectations, and industry competition increases the risk.