Introduction to this report:
The company's 2024Q1 performance exceeded expectations. It is expected that the performance will grow steadily, mainly due to the rapid increase in contact lenses and the release of profits due to the expansion of production lines and scale advantages in the future.
Key points of investment:
Maintain a prudent accumulation rating. Considering that contact lenses are in the early stages of mass production, the profit contribution was limited. EPS for 2024-2025 was lowered to 3.79/4.93 yuan (originally 4.03/5.25 yuan), and the 2026 EPS forecast was added by 6.25 yuan. Considering that the company is in a period of rapid growth, referring to comparable company valuations and giving a valuation premium, the 2024 PE 41X was given, and the target price was lowered to 155.39 yuan, maintaining a prudent increase rating.
Crystals and OK mirrors grew in line with expectations in 2023. In 2023, the company achieved revenue of 951 million yuan (+64%) and net profit of 304 million yuan (+31%) to mother. Separated by production line, (1) surgical products achieved revenue of 520 million yuan (+41%), of which crystals achieved revenue of 500 million yuan (+42%), thanks to continued recovery from cataract surgery after the epidemic. The current national procurement is expected to be carried out one after another in May-June 2024. Bifocal crystals are expected to be rapidly released using domestic procurement; overseas crystal revenue achieved a rapid increase of 128%, and subsequent volumes can be expected; (2) Myopia prevention and control achieved revenue of 276 million yuan (+42%), of which OK Mirror's revenue was 219 million yuan (+26%), affected by the growth rate of competitive products, etc. Slowing down; other Revenue from myopia prevention and control products was 57.36 million yuan (+166%), and defocus lenses achieved rapid growth of 247%. It is expected that both inside and outside the hospital will continue to grow at the same time.
Contact lens production capacity expanded rapidly and became the second growth curve. Vision care achieved revenue of 150 million yuan in 2023, of which contact lenses achieved revenue of 137 million yuan, accounting for an increase of 14%. Tianyan and Youyoukang's production capacity is rapidly expanding. Currently, color film production is at full capacity, and production is expected to continue to rise in the future.
2024Q1 performance exceeded expectations. 2024Q1 achieved revenue of 310 million yuan (+64%) and net profit of 103 million yuan (+31%). Performance exceeded expectations. Thanks to steady growth in crystals and OK lenses, it is expected that contact lenses will continue to release production capacity. At the same time, as the advantage of scale is gradually reflected, contact lens profits are expected to be gradually released.
In the future, steady growth can be expected as PR, trifocal astigmatism, and eDOF are gradually launched.
Risk warning: product commercialization falls short of expectations, R&D falls short of expectations, etc.