Aimeike released a preview for 1Q24. It is estimated that 1Q24 revenue will be 80,000-83%, up 27.5%-31% year on year, and net profit to mother will be 51-53 million yuan, up 23%-29% year on year. Benefiting from the growth in medical and aesthetic terminal consumption and the increase in brand influence, we believe that considering the relatively high base for the same period last year, the company's growth trend remained stable, gross margin and expense ratio were well controlled, and a good level of profit was maintained.
The company's revenue in 2023 was 2,869 billion yuan, up 47.99% year on year; net profit to mother was 1,888 billion yuan, up 47.08% year on year. The diluted EPS was 8.60 yuan; the weighted average return on net assets was 30.09%, and the net operating cash flow was 1,954 billion yuan, an increase of 63.67% over the previous year. Based on 215 million shares, it is proposed to distribute a cash dividend of 23.23 yuan (tax included) to all shareholders for every 10 shares, for a total cash dividend of 500 million yuan (tax included).
Brief review and investment advice:
1. The growth rate of core products is remarkable, highlighting brand value. With the advantage of building a product portfolio, the company clearly positions product functions, and has steadily increased its market share and penetration rate. In 2023, quarterly revenue growth rates were 46.30%/82.60%/17.58%/55.55%, and net profit growth rates to mother were 51.17%/76.53%/13.27%/59.00%, respectively.
(A) By product, ① Revenue from solution injection products increased by 29.22% to 1,671 billion yuan, and the revenue share decreased from 66.68% in 2022 to 58.22%, with sales volume of 5.1413,000 units, up 48.88% year on year; gross margin increased 0.25pct to 94.48%; ② The revenue share of gel injection products increased 81.43% to 1,158 billion yuan, and the revenue share increased to 40.35% from 32.91% in 2022, sales volume of 1.068 million units, up 36.13% year on year; gross profit margin Increased 0.97pct to 97.49%. Wet White Angel continued its good growth trend and became a strong support point for constructing a phenomenal product matrix. ③ Revenue from facial implants increased 10.06 percent to 5.92 million yuan.
(B) By sales model, the 2023 direct sales model revenue of 1,787 billion yuan increased 43.09% year on year, accounting for 62.26% of revenue, and gross margin increased 0.90 pct to 96.18%; revenue from the distribution model of 1,083 billion yuan increased 56.86% year on year, and gross profit decreased by 0.77 pct to 93.29%.
2. The cost rate decreased by 0.53 pct to 20.93% during the period, and the channel advantage had a large-scale effect. In 2023, the company's sales expenses increased by 60.0% to 260 million yuan, and the sales expenses rate increased by 0.68pct to 9.07%. We believe that labor costs and conference fees increased dramatically due to the company's active marketing expansion. In 2023, the company added more than 2,000 new medical and aesthetic institutions and added more than 100 sales personnel; management expenses increased 15.02% to 144 million yuan, and the management expenses decreased by 1.44pct to 5.03%. We believe the main reason is the reduction in Hong Kong stock listing expenses; R&D expenses increased by 44.49% To 250 million yuan, the R&D cost rate decreased by 0.21 pct to 8.72%, and the overall cost ratio decreased by 0.53 pct to 20.93% in the final period.
3. Net profit to mother increased by 47.08%, and the profit level remained high. Net income from changes in fair value decreased by 45.49 million yuan to -16.08 million yuan, net income from investment increased by 6.54 million yuan to 3967 yuan, and other operating income totaled 23.59 million yuan. In addition, the effective tax rate decreased by 0.88pct to 13.95%, and minority shareholders' profit and loss was 3.56 million yuan. In the end, net profit due to mother increased 47.08% year-on-year to 1,888 billion yuan in 2023, and net profit after deducting non-return to mother increased 52.95% year-on-year to 1,831 billion yuan.
4. Business review: (1) Focus on independent research and development, innovation drives multi-pipeline collaboration. ① R&D investment: In 2023, the company's R&D investment accounted for 8.72% of revenue, with a year-on-year increase of 44.49%. At the end of 2023, R&D personnel accounted for 26.7% of the total number of people in the company. It had 74 authorized patents and produced 11 scientific research articles. The company was approved as a national postdoctoral research workstation during the year. ② Product matrix: Medical sodium hyaluronate - hydroxypropyl methylcellulose gel (Bonida) with polyvinyl alcohol gel microspheres has added chin filling indications and is in the registration reporting stage; injectable type A botulinum toxin to improve lines between eyebrows is in the registration declaration stage; medical sodium hyaluronate - hydroxypropyl methylcellulose gel (Yimei 1+1) has added filling site indications and is in the clinical trial stage. There are also ongoing research projects such as deoxycholic acid injections, lidocaine butacaine cream, and simeglutide injections.
(2) Expand strategic layout and deepen industrial advantages. ① Investing in peptides has huge market space for weight management. On the basis of cooperation to introduce simeglutide products, the company invested a total amount of 50 million yuan to hold 4.89% of Beijing Quality Peptide Biotech's shares. Peptide Biotech has rich experience in peptide drug development, has formed a pipeline matrix around GLP-1 analogs, and has the ability to continuously innovate and iterate. ② Introduced non-invasive skin anti-aging instruments, and the company signed a “Distribution Agreement” with Jeisys Medical Inc. of Korea to become an exclusive distributor in mainland China. This time, it will achieve a breakthrough in the company's energy source equipment pipeline. It is expected to jointly launch comprehensive solutions with existing products, enrich the company's product range in medical and aesthetic dermatology, and further consolidate its leading position in the industry. ③ To optimize production capacity, the company plans to invest in the “Beautiful Health Industrialization Innovation and Construction Project” in Changping District with its own capital, with an estimated total investment of 81 million yuan to enrich the supply of new products and further meet the needs of the medical and aesthetic market.
Maintain judgment on the company. As an upstream medical and aesthetic leader, the company uses an excellent product pattern view and forward-looking demand insight to build a leading and graded product matrix. It continues to benefit from post-epidemic demand elasticity, domestic substitution, and industry compliance trends. It is expected to continue to increase its share in an environment of stricter regulations. Equity incentive revenue requires a 3-year compound growth rate of 40%, and high growth targets guarantee certainty in mid-term growth.
Update profit forecasts. We expect the company's revenue for 2024-2026 to be 3,918 billion yuan, 5.235 billion yuan and 6.616 billion yuan, respectively, up 36.6%, 33.6%, and 26.4% year on year; net profit to mother will be 2,497 billion yuan, 3.26 billion yuan, and 4.017 billion yuan, up 34.3%, 30.6%, and 23.2% year on year.
Referring to comparable company valuations, considering that the company is a leading domestic medical and aesthetic injection leader, it has constructed a leading, graded product matrix. It is in a period of rapid development. The company was given 30-35 times PE in 2024, corresponding to a reasonable market value of 749-87.4 billion yuan, and a reasonable value range of 346.16-403.86 yuan, maintaining a “superior to the market” rating.
Risk warning: risk of changes in industry policies, risk of product development and registration, intensification of market competition.