Incident: Mingyue Lens revealed its 2023 annual report and 2024 quarterly report. In '23, the company achieved revenue of 749 million yuan, +20.17% year over year; net profit to mother of 158 million yuan, +15.65% year over year; net profit after deduction of 136 million yuan, +46.99% year over year. In 24Q1, the company achieved revenue of 192 million yuan, +11.93% year over year; net profit to mother of 42 million yuan, +20.42% year over year; net profit after deducting non-return to mother of 35 million yuan, +15.04% year over year.
Revenue bucked the trend and continued to grow due to external factors, and operational resilience was highlighted. In 23Q4/24Q1, the company achieved revenue of 186/192 million yuan, +10.37%/+11.93%. Against the backdrop that the company's offline consumption was affected by the objective environment and the raw materials business and export business were under pressure due to turbulence in overseas situations, the product structure was optimized to drive rapid growth in the “Easy Control” series of myopia management lenses and star products in conventional lenses, thereby achieving continuous growth in overall revenue and showing operational resilience.
The 24Q1 gross margin was +1.9pct to 58.1% year over year, and net profit margin after deducting non-return to mother was +0.5pct to 18.1% year over year, further improving profitability. 1) In terms of gross margin, in 23Q4, the company's gross margin was 56.60%, +3.20pct year on year; in 24Q1, the company's gross margin was 58.07%, +1.94pct year on year.
2) In terms of cost ratio, in 23Q4, the company's sales expense ratio was 18.80%, +1.95pct year on year; management expense ratio was 12.39%, +4.25pct year on year; R&D expense ratio was 5.93%, +1.61 pct year on year.
In 24Q1, the company's sales expense ratio was 18.68%, -0.59pct year on year. The main reason was that the company adjusted the pace of expenditure appropriately in consideration of external circumstances. At the same time, the company actively sought new ways of playing in digital marketing media such as Douyin, Xiaohongshu, and Zhihu to improve marketing efficiency; the management fee rate was 12.31%, +2.18pct year on year; R&D expenses rate was 3.61%, up 0.50pct year on year. 3) In terms of net interest rate, in 23Q4, the company achieved net profit of 35 million yuan, corresponding to net interest rate of 18.90%, -10.18 pct year on year; realized net profit deducted from non-return mother of 0.29 million yuan, corresponding net interest rate of 15.76% without return to mother, or -0.12 pct year on year. In 24Q1, the company achieved net profit of 42 million yuan, corresponding to a net interest rate of 21.97%, +1.55pct year on year; realized net profit of 0.35 million yuan without return to mother, corresponding net interest rate of 18.11%, or +0.49pct year on year.
The strategy of conventional lenses for large single products is progressing steadily, and the “Easy Control” series continues to be released rapidly. Excluding the adverse effects of overseas business, the lens business of the 23/24Q1 company was +29%/+20%; among them, 1) conventional lenses: benefiting from product focus strategies, sales of large single products were outstanding, such as PMC Super Bright Series products +80%/77% year-on-year revenue, 1.71 series products increased 30%/33% year-on-year in 23/24Q1, and the three star products accounted for more than half of conventional lens revenue and continued to increase. The revenue structure of conventional lenses was 52.31%/54%, respectively. Continuous optimization. 2) Myopia prevention and control products: By the end of '23, the company's myopia management lens category had a total of 24 SKUs on sale, including 12 SKUs in retail channels, 12 SKUs in medical channels, rich myopia prevention and control product matrices, and product sales continued to rise. Sales of “Easy Control” series products in '23/24Q1 were 13338/41.08 million yuan respectively, up 70%/50% year-on-year respectively.
Investment advice: The company is a leader in domestic lenses. Revenue and profit from the conventional lens business are expected to grow steadily and become a hidden growth gripper, actively lay out a myopia prevention and control circuit, build a second growth curve with a high growth rate, and have strong scarcity. We expect the company's net profit to be 1.85/2.20 billion yuan in 24-26, with a year-on-year growth rate of +17%/+19%/+23%. The current stock price corresponds to 24-26 PE of 29x, 24x, and 20x respectively, maintaining the “recommended” rating.
Risk warning: industry competition intensifies; raw material prices fluctuate; new product development progress falls short of expectations.