Brief performance review
On April 22, 2024, the company released its 2023 annual report. In 2023, the company achieved revenue of 749 million yuan (+20% year over year), net profit to mother of 158 million yuan (+16% year over year), and net profit after deducting non-return to mother of 136 million yuan (+47% year over year).
In 2023, Q4 achieved revenue of 186 million yuan (+10% year over year), net profit attributable to mother of 35 million yuan (-28% year over year), and net profit without return to mother of 0.29 million yuan (+7% year over year).
The company also released its 2024 quarterly report. 2024Q1 achieved revenue of 192 million yuan (+12% year over year), net profit to mother of 42 million yuan (+20% year over year), and net profit after deducting non-return to mother of 35 million yuan (+15% year over year).
Management analysis
The easy control of the growth rate is impressive, and the brand strategy continues to advance. In '23, the “Easy Control” series of products totaled 24 SKUs (+6 models year over year), achieving revenue of 133 million yuan (+70% year over year).
The company is deeply involved in the youth myopia management lens circuit, and has 1) product strength: According to the company's annual report, Easy Control Pro was 82% effective in delaying myopia deepening; 2) Channel power: By the end of 2023, the company had 2,717 direct sales customers and 53 “Mingyue” brand distribution customers (including medical channels), and has established cooperative relationships with well-known ophthalmology medical institutions such as Aier Ophthalmology, Zhongshan Ophthalmology, and Zhejiang University Eye Hospital. Based on the advantages of the company's easy control series, the company is expected to further increase its market share as the product promotion efforts increase in the future.
Star products led the way, and PMC Super Bright increased nearly 80% year over year. The company's lens revenue in '23 was 595 million yuan (+25% YoY). The total revenue of the company's three star products, PMC Super Bright, 1.71 series, and anti-blue light, accounted for 52.31% of conventional lens revenue. Among them, PMC Super Bright series revenue increased nearly 80% year on year and 1.71 series products increased 30% year on year.
The company's star products have the advantages of a complete product line, perfect industrial chain, and excellent product strength. It is expected that under a differentiated strategy, the company's revenue from star products will continue to increase.
Profitability increased steadily with optimized product structure. In '23, the company achieved a gross profit margin of 57.58% (+3.61pct year over year), with a gross profit margin of 62.08% (+2pct) in the lens sector. The increase in gross margin was mainly due to the optimization of the sales structure and the increase in the share of high-margin lens products.
Profit Forecasts, Valuations, and Ratings
Flagship products, represented by the “Easy Control” series of products, are gradually gaining popularity, and we are optimistic that the company's brand strength will become more and more prominent. We expect net profit for 2024-2026 to be 2.06/25/311 million yuan, respectively, up 31%/26%/20% year over year, EPS of 1.02/1.29/1.54 yuan, respectively, and current price of PE equivalent to 27/21/18 times, respectively, maintaining the “increase” rating.
Risk warning
Domestic substitution falls short of expectations, new product promotion falls short of expectations, risk of bad debts in accounts receivable, and risk of fluctuations in raw material prices.