Key points of investment
Incident: In 2023, the company achieved revenue of 1,737 billion yuan (+13.89%, same below), net profit to mother of 667 million yuan (+6.85%), net profit of non-return to mother of 572 million yuan (+2.27%).
The results were in line with our expectations.
In '23, revenue from corneal reshaping lenses continued to grow, and monthly orders fluctuated greatly. In 2023, the company achieved revenue of 817 million yuan (+7.06%) and a gross profit margin of 89.20% (-0.42pct). Monthly orders showed an fluctuating trend from low to high and then falling. Mainly due to weak high-end consumption, competition for defocus frames, and increased market competition, the company actively adjusted its sales strategy, and the 23Q4 increase was good.
Revenue from nursing liquid products declined in '23, and gross margin increased. In 2023, the company's nursing products achieved revenue of 263 million (-12.02%), and gross margin was 57.33%. Mainly due to: 1) the increase in nursing product brands and increased competition; 2) the sales share of e-commerce platforms increased and the sales share of offline professional institutions decreased; 3) the company adjusted its product structure to increase the promotion of self-produced nursing products, and introduced some promotion policies during the reporting period. The net interest rate of self-produced nursing products is high, which is conducive to the continuous and steady expansion of subsequent nursing product sales.
The growth rate of the ordinary frame mirror business was high in '23, and gross margin declined due to changes in product structure.
In 2023, the company's ordinary frame mirror achieved revenue of 345 million (+70.47%) and gross margin of 56.74% (-10.40%). The company's general frame mirror business increased significantly in 2023, mainly from the sales revenue of medical equipment and consumables from the newly merged subsidiary and sales of non-hard mirror products such as defocus frame lenses launched by the company.
Profit forecast and investment rating: Considering the good recovery in 23Q4, the 24-year trend is expected to continue. We adjusted net profit from 2024-2025 from RMB 746/845 million yuan to RMB 76T/881 million yuan, and is expected to be RMB 1,015 million in 2026. The PE corresponding to the current market value is 22/19/17X. Maintain an “Overweight” rating.
Risk warning: Risk of product release falling short of expectations, policy risk, increased risk of market competition, etc.