Core views:
The company disclosed its 2023 annual report, and net profit to mother increased 47.08% year over year. In 2023, the company achieved sales revenue of 2,869 billion yuan (yoy +47.99%), net profit to mother of 1,888 billion yuan (yoy +47.08%), and net profit after deducting non-return to mother of 1,831 billion yuan (yoy +52.95%). The performance maintained a rapid growth trend, in line with market expectations. Looking at a single quarter, the company achieved sales revenue of 699 million yuan (yoy +55.55%), net profit to mother of 440 million yuan (yoy +59%), and net profit after deducting non-return to mother of 436 million yuan (yoy +87.73%) in 23Q4. In 2023, the company achieved a gross profit margin of 95.09%, a year-on-year decrease of 0.21pct; achieved a net profit margin of 64.65%, a year-on-year decrease of 0.58pct.
The Hi Body series has been growing steadily, and the volume of Wet White Angel has driven the rapid growth of gel products. By product line, (1) Hi-Body series (solution injectable products) achieved sales revenue of 1,671 billion yuan (yoy +29.22%) in 23 years. After years of clinical verification, the safety and efficacy of “Hi Body” has been fully recognized by the terminal market, and the brand value is growing. (2) Gel injection products achieved sales revenue of 1,158 billion yuan (yoy +81.43%). Wet White Angel Acupuncture continued its good growth trend in 23 years, and is currently rapidly penetrating into different types of institutions, and is expected to maintain a rapid growth trend in 24 years.
The research pipeline is progressing in an orderly manner, and R&D investment has been further increased. The company's R&D investment in 2023 increased by 44.49% year-on-year, and ongoing research projects are progressing in an orderly manner. According to the company's annual report for '23, modified sodium hyaluronate gel, type A botulinum toxin, which is used to correct medical polyvinyl alcohol-containing gel microspheres, is in the registration reporting stage; second-generation facial implants and lidocaine butacaine cream are in the clinical stage; and hyaluronidase is in the pre-clinical stage. Furthermore, the company has signed a distribution agreement with Jeisys of Korea to introduce its two non-invasive skin anti-aging instruments to the domestic market, achieving a breakthrough in the company's energy source equipment pipeline, and is expected to form a synergy with the company's existing products after launch.
Profit forecasting and investment advice. The company's 24-26 EPS is estimated to be 11.31/15.03/19.40 yuan/share, respectively, corresponding to PE29.93/22.52/17.46x. Referring to comparable company valuations, we think it is appropriate to give the company a reasonable valuation of 35xPE in 24 years, corresponding to a reasonable value of 396 yuan/share, and maintain a “buy” rating.
Risk warning. R&D progress falls short of expectations; competitive landscape deteriorates; policy risks.