Seizing the opportunities for consumer recovery, the performance was good in 2023. The company achieved revenue of 5.145 billion yuan in 2023, up 24.41% year on year, net profit of 225 million yuan, up 953.37% year on year, after deducting non-net profit of 196 million yuan, a significant increase from 1.15 million yuan in 23. The company's apparel and medical and aesthetic business achieved excellent performance in the context of consumer industry recovery. Looking at a single quarter, revenue for the fourth quarter and net profit to mother increased by 30.83%/551.37% year-on-year respectively, and the growth rate accelerated compared to the third quarter.
In addition, the company's 2023 profit distribution plan is to distribute cash dividends of RMB 4.5 (tax included) for every 10 shares, and the total distributed profit accounts for 88.46% of net profit returned to mother in 2023.
The growth rate of the medical and aesthetic business is excellent, and epitaxial mergers and acquisitions further expand the business layout. By business, in 2023, the medical and aesthetic business revenue increased by 27.75%, the revenue share increased to 41.33%, and gross profit increased 62.3% to 1.13 billion yuan. In 2023, the company acquired 90% of Wuhan Wuzhou Plastic Surgery's shares and 70% of Wuhan Han Chen's shares. The above targets all fulfilled the 2023 performance promise, further improved the national medical and aesthetic layout through continuous epitaxial expansion, and achieved increased performance. The number of medical and aesthetic institutions in the company reached 38 at the end of 2023, an increase of 8 over last year. At the same time, the revenue of the company's fashion womenswear business/green baby business increased by 29.27%/11.13% respectively in 2023, and the overall performance was also good under the opportunities of consumer recovery.
The gross margin is basically stable, and the cost ratio for the period is optimized. The company's gross profit margin in 2023 was 57.44%, which was basically stable over the previous year. Among them, medical and aesthetic gross margin increased by 3.61 pct. The sales expense ratio and management expense ratio in 2023 were 41.16%/8.11%, respectively, -1.25pct/-0.43pct, respectively. The overall cost ratio was optimized. Inventory turnover efficiency improved in 2023, and the number of inventory turnover days decreased by 56 days to 189 days year-on-year. Net operating cash flow of 804 million yuan was achieved in 2023, an increase of 200% over the previous year, and the cash flow situation is improving.
Risk warning: Medical and aesthetic consumption falls short of expectations; medical and aesthetic fund management is poor; women's clothing business falls short of expectations Investment suggestions: The penetration rate of the medical and aesthetic industry still has a lot of room to improve in the long run, and the operational advantages of leading institutions under strong supervision are expected to continue to show. As a leading medical and aesthetic agency chain, the company actively promotes epitaxial mergers and acquisitions to help build a national medical and aesthetic ecosystem, which helps enhance the overall scale and brand influence. Furthermore, the women's clothing and baby business is expected to grow steadily in the future with brand upgrades and channel construction improvements. We maintained the company's 2024/2025 net profit forecast of 312/381 million yuan, and added a 2026 forecast of 450 million yuan, corresponding to PE 23.1/18.9/16 times, respectively, and maintained the “increase” rating.