Incident: The company released its 2023 annual report, with annual revenue of 4,579 million yuan, yoy -64.65%, mainly due to the divestment of the real estate business; net profit of 305 million yuan, yoy +567.44%, higher than the forecast limit; Cosmetics+pharmaceuticals and other businesses achieved profit of 231 million yuan, an increase of 12.9%, or around 9%; the real estate business and asset divestitures affected net profit attributable to shareholders of listed companies of 73.9709 million yuan, net profit attributable to shareholders of listed companies, less net profit of 139 million yuan, yoy +137.40%; 23Q4 Revenue of 1,184 million yuan, yoy -73.22%, mainly due to the impact of real estate divestment; net profit to mother was 65 million yuan.
On the revenue side, by business, ① Cosmetics' 23 yearly revenue was 2,416 billion yuan, yoy +22.17%, 23Q4 revenue was 760 million yuan, yoy +41.1%. In 2023, Yilian's revenue was 857 million yuan, an increase of 20.35%. Dr. Eyre's revenue was 1,348 million yuan, an increase of 27.33%. The company's marketing system continues to be optimized, and the brand development strategy was upgraded from “4+N” to “5+N” to optimize the product structure and help sales growth; ② Pharmaceutical revenue was 520 million yuan, an increase of 1.61%, completed the launch of 18 new products, built a pharmaceutical CDMO platform, and introduced 8 cooperative projects. ③ The revenue of the raw materials, derivatives and additives business was 351 million yuan, an increase of 23.16%; sales volume of oral beauty products increased 3 times over the same period.
On the cost side, by business, 23 cosmetics gross profit margin is 62.13%, yoy+ 1.16pct, mainly due to increased sales of high-margin high-margin products and cost control improvement through collaboration between various links; raw materials, derivatives, and additives gross margin of 32.31%, yoy-1.76pct, mainly due to increased competition and downward pressure on prices; pharmaceutical sector gross profit margin of 53.39%, yoy+0.39pct.
Investment suggestions: In the long run, using business transformation as an opportunity, the company's “1234” innovation strategy shows resilience in sustainable development: ① The cosmetics “5+N” brand strategy establishes multi-brand matrix barriers, consolidates core popular products & optimizes channel layout; ② Medical and aesthetic: launching a new brand, Ke Mi, will focus on light medical and aesthetic surgery periods to create a second growth curve; ③ Pharmaceuticals & Ingredients: Integrate pharmaceutical resources to create a specialized field package and continue to expand sales channels; raw materials promote domestic and foreign API registration projects while actively developing new raw materials & raw materials collaboration. I am optimistic that the company will continue to focus and develop to become a leading comprehensive operator in the big health industry! The net profit for 24-26 is estimated to be 3.7/47/550 million yuan, corresponding to 25/20/17xPE, maintaining a “buy” rating.
Risk warning: risk of macroeconomic fluctuations, risk of falling short of expectations, risk of increased market competition, industry policy risk