Incident: On April 18, 2024, the company announced that in 2023, it achieved operating income of 1,468 billion yuan, up 17.42% year on year; realized net profit of 240 million yuan, up 13.39% year on year; gross margin was 77.37%, down 1.37 pct year on year. Due to changes in the company's revenue composition, the share of medical service revenue declined, and gross margin decreased 2.34%.
Increased revenue for eye drops and gels/eye ointments. Eye drops achieved sales revenue of 663 million yuan in 2023, a year-on-year increase of 47.86%. The gel/eye cream achieved sales revenue of 374 million yuan, an increase of 18.37% over the previous year. Ophthalmic surgery resumed after the epidemic, due to the dosage of drugs such as ciclosporin.
Fee rates have all declined. In 2023, the company's sales expense ratio, management expense ratio, and R&D expense ratio were 36.48%, 10.53%, and 11.40%, respectively, down 0.60 pct, 0.03 pct, and 0.25 pct year-on-year.
Low-concentration atropine is on the market, and performance is expected to explode. In March 2024, the company's low-concentration atropine sulfate eye drops obtained the “Drug Registration Certificate”. Currently, there are no similar products with myopia-related indications on the market in China. According to data released by the National Health Commission in 2023, the overall myopia rate of children and adolescents in China in 2022 was 53.6%, including 14.5% for 6-year-olds, 36% for elementary school students, 71.6% for middle school students, and 81% for high school students; there is no time to delay the prevention and control of myopia among adolescents.
The company always attaches importance to the development of new products and to shareholder returns. By the end of 2023, the number of R&D personnel increased to 239, an increase of 25.13% over the previous year. The two specifications of sodium hyaluronate eye drops, trivoprost eye drops, and diquaphosol eye drops declared by the company have obtained the “Drug Registration Certificate” issued by the State Drug Administration. Based on the current total share capital of 124,589,194 shares, the company plans to distribute a cash dividend of 30.00 yuan (tax included) to all shareholders for every 10 shares, with a total cash dividend of 373,767,582.00 yuan (tax included); the capital reserve fund will transfer 4 shares for every 10 shares to all shareholders without bonus shares.
Investment advice: The company's revenue is expected to be 42.77/67.78/9.034 billion yuan in 2024-2026, up 191.5%/58.5%/33.3% year on year; net profit to mother of 13.38/23.00/3,060 billion yuan, up 457.6%/71.8%/33.0% year on year; maintain the “increase” rating.
Risk warning: Risk of sales falling short of expectations; risk caused by policies and regulations; risk of R&D falling short of expectations.