The 2023 results were in line with expectations, and revenue/net profit to mother increased by 48%/47%, respectively. The company achieved revenue of 2,869 billion yuan (yoy +47.99%) in 2023, realized net profit of 1,888 million yuan (yoy +47.08%), and realized net profit after deducting non-return to mother of 1,831 million yuan (yoy +52.95%); in a single quarter, 2023Q4 achieved revenue of 699 million yuan (yoy +55.55%) and net profit to mother of 440 million yuan (yoy +59.00%). Gross margin continued to be optimized. In 2023, the company's gross margin was 95.09%, +0.25pcts year-on-year. On the cost side, the company's sales/management/ financial/ R&D expense ratios were 9.07%/5.03%/-1.89%/8.72%, respectively, +0.68/ -1.44/ -0.21pcts, respectively. Among them, the increase in sales rates was mainly due to an increase in labor costs and marketing activity costs, and the decrease in management expenses was mainly due to a decrease in Hong Kong stock listing costs. In 2023, the company paid cash dividends of 23.23 yuan (tax included) for every 10 shares, with a total cash dividend of 500 million yuan (tax included). The capital was increased by 4 shares for every 10 shares of the capital reserve, for a total share capital of 86.0777 million shares.
The company has a rich product line with a multi-tier consumer base, building a good foundation for steady growth in performance. By product line: (1) Solution injection products: Achieved operating revenue of 1,671 billion yuan (yoy +29.22%) in 2023, accounting for 58.2%, achieving sales volume of 5.1413 million units (yoy +48.88%), gross margin increased 0.25pcts year-on-year to 94.48%, and the core Hi-Tech series grew steadily. Among them, Shuiguang products are expected to continue to grow rapidly under compliance dividends. By the end of 2023, the company had covered nearly 7,000 medical and aesthetic institutions (about 5,000 at the end of 2022), and is expected to further penetrate the market and enhance the certainty of sales growth; (2) Gel injection products: achieved operating revenue of 1,158 billion yuan (yoy +81.43%) in 2023, accounting for 40.3%, achieving sales volume of 1.068 million units (yoy +36.13%), and gross margin increased 0.97 pct to 97.49%. Among them, sales of Wet White Angel, which is positioned at the high end, continue to grow well and have become a strong support point for building a phenomenal product matrix. Like Living Angel, which can effectively collaborate with Wet White Angel, is expected to contribute more revenue one after another.
The pipeline and epitaxial layout are being steadily expanded, and racetrack reserves such as fat loss and energy source equipment have been expanded. The company currently has 8 Class III device registration certificates and has a number of research projects. Among them, Bonide and botulinum toxin for the chin are in the registration and application stage; second-generation facial implants and lidocaine butacaine cream are in clinical trials; and injectable hyaluronidase is in pre-clinical research. During the period, the company cooperated to invest in peptidebio to strengthen its strategic layout in the field of weight management and fat loss, and signed a distribution agreement with Korea's Jeisys to lay out an energy source equipment circuit. As research projects and multiple product pipelines with epitaxial layout are launched one after another, the company is expected to continue to prove its platformization capabilities.
Profit forecasting and investment advice. As a leader in upstream medical and aesthetic injection devices, the company competes at terminals based on superior injection categories and rich pipeline reserves. Through endogenous extension, the company continues to enrich its product matrix and superposition channel and sales strategy optimization, and its performance is expected to grow steadily. Based on the annual report, we adjusted our forecast that in 2024-2026, the company would achieve revenue of 3,954/52.74 billion yuan and net profit of 25.04/33.08/4.181 billion yuan, maintaining the “buy” rating.
Risk warning: risk of changes in industry regulatory policies, risk of product development and registration, risk of increasing terminal demand and mergers and acquisitions falling short of expectations.