Incidents:
The company released its 2023 annual report. In 2023, it achieved operating income of 2,654 billion yuan, a year-on-year increase of 24.59%; achieved net profit of 416 million yuan, an increase of 130.58% over the previous year; and realized net profit of 383 million yuan after deduction, an increase of 141.52% over the previous year.
Reviews:
Sales of hyaluronic acid products grew rapidly. The company's revenue growth was in line with expectations in 2023. The company achieved revenue of 2,654 billion yuan, up 24.59% year on year. Among them, hyaluronic acid products achieved operating income of 602 million yuan, an increase of 95.54% year on year. Thanks to the iteration of “Haiwei”, “Jiaolan”, and “Haimei” third-generation hyaluronic acid products, the products became high-end and increased their operating income; the operating revenue of intraocular lens products was 382 million yuan, an increase of 37% year on year, mainly due to the steady recovery of cataract surgeries nationwide in 2023, and artificial crystals Body products were purchased centrally by the country; the operating revenue of sodium hyrate injections was 314 million yuan, an increase of 20.83% over the previous year. Thanks to the company being the largest manufacturer of orthopedic joint cavity viscoelastic supplements in China, the revenue of orthopedic products grew steadily.
Third-generation hyaluronic acid led to an increase in gross margin. The fourth-generation hyaluronic acid has entered the late reporting period. In 2023, the company achieved a gross profit margin of 70.46%, an increase of 1.51 pct over the previous year, mainly driven by the increase in the operating income and share of high-margin hyaluronic acid products in the company's revenue; the company's sales expenses rate reached 30.69%, a decrease of 1.21 pct year on year; the management expense ratio was 15.74%, down 3.14 pcts year on year. The R&D expenditure rate was 8.29%, a year-on-year decrease of 0.26pct. Among them, biogel products for intraocular fillers entered the registration phase in January 2024, and the novel artificial vitreous products are in the registration and inspection stage.
Fourth-generation organic crosslinked hyaluronic acid products are in the late stages of registration.
All of Ohuamecco's shares were acquired, and ophthalmic product development was promoted in an orderly manner. In 2023, the company fully acquired 36.3636% of Ohuamecco's shares at a total consideration of 153 million yuan, and Ohuamecco became a wholly-owned subsidiary. After taking a wholly-owned stake in Europe and Huamec, the company will strengthen the integration of the company's RF and laser equipment business. In 2024, the company will focus on promoting clinical trial work on important projects such as hydrophobic modeled astigmatism correction aspherical intraocular lenses, hydrophilic aspherical multifocal intraocular lenses, second-generation aqueous permeable PRL products, and research and development of high-end artificial lens projects such as EDOF and multifocal astigmatism correction artificial lenses.
Profit forecast: We expect the company's revenue for 2024-2026 to be 25.72/31.23/36.95 billion yuan, respectively (pre-2024/2025 value of 3.123/36.95 billion yuan, respectively), and net profit to mother of 4.36/5.57/665 million yuan respectively (pre-2024/2025 value was 562/672 million yuan, respectively). The reason for the reduction was that artificial crystal sales were affected by volume procurement. Maintain a “buy” rating.
Risk warning: Risk of poor core technology, product quality and safety issues, increased market competition, and increased costs due to industry policies.