Incidents:
Langzi Co., Ltd. released its 2023 annual report. In 2023, the company achieved revenue of 5.145 billion yuan/ +24.41%, net profit of 225 million yuan/ +953.37%, net profit after deducting non-return to mother of 196 million yuan/ +16845.56%, and non-recurring profit and loss of 30 million yuan, mainly from net profit and loss of 30 million yuan from the merger of subsidiaries. Q4 In a single quarter, the company achieved revenue of 1,452 billion yuan/ +30.83%, net profit attributable to mother of 31 million yuan/reversal of losses, and net profit of not attributable to mother of 121 million yuan/reversal of losses. A cash dividend of $4.5 (tax included) is proposed for every 10 shares.
Comment:
The apparel business picked up, and the medical and aesthetic industry maintained rapid growth. In 2023, the company's revenue was 5.145 billion yuan/ +24.41%, by industry: 1) fashion women's clothing revenue of 1,984 million/ accounting for 38.56%/+29.27%; 2) green baby revenue of 975 million/accounting for 18.96%/+11.13%; 3) medical and beauty revenue of 2,127 million/accounting for 41.33%/+27.75%; 4) other business revenue of 59 million/ accounting for 1.15%/+1.27%. Looking at medical credit categories: 1) surgical revenue of 347 million/accounting for 6.74%/-3.04%; 2) non-surgical revenue of 1,780 million/accounting for 34.59%/+36.19%. Looking at medical beauty brands: 1) Milan Baiyu's revenue is 1,011 million/accounting for 19.65%/+29.25%; 2) Gao Sheng's income is 152 million/accounting for 2.94%/+27.63%; 3) Crystal Skin Medical and Aesthetic revenue is 405 million/accounting for 7.87%/+30.85%; 4) Han Chen's medical and aesthetic revenue is 341 million/accounting for 6.62%/+24.77%; 5) Wuhan Wuzhou's revenue is 218 million/accounting for 4.24%/+20.59%. Through years of operation, the company has gradually developed a mature institutional operating model. All of its major medical and aesthetic brands have grown rapidly, and the proportion of non-surgical aesthetic medicine continues to rise.
Medical and aesthetic gross margins have increased, and profitability has gradually improved. In 2023, the company's gross profit margin was 57.44% /+0.31pct, net profit margin 4.37% /+3.99pct, net interest rate of 3.80% /+3.77pct; in terms of gross margin business: fashion women's clothing 62.94% /-2.76pct, green babies 60.66% /+0.66pct, medical beauty 53.15% /+3.27pct. Medical and aesthetic profits have steadily declined, driving the company's profitability to increase significantly.
Investment advice: The company's fashion women's clothing and green baby business is operating steadily, its brand influence and operating capacity continue to improve, and its market share will further increase. The medical and aesthetic business has achieved steady expansion through the integration of high-quality resources, and is expected to quickly occupy the market with a mature operating system. Considering the active expansion of the company's medical and aesthetic sector and adjusted profit forecasts, revenue for 2024-2026 is estimated to be 5.949 billion, 6.719 billion yuan/7.593 billion, respectively, and net profit to mother is 323 million/396 million/474 million, respectively. The corresponding PE is 22 times/18 times/15 times, respectively. Maintain a “buy” rating.
Risk warning: Market competition intensifies; store expansion falls short of expectations; industry regulatory risks; performance forecasts and valuation judgments fall short of expectations.