Earnings grew steadily in the first quarter, and major products continued to expand in scale. The company's revenue for the first quarter of 2024 was 808 million yuan, up 28.24% year on year, and net profit to mother was 527 million yuan, up 27.38% year on year. After deducting non-net profit of 528 million yuan, up 36.53% year on year, it is at the upper end of the previous performance forecast.
Overall, it has benefited from the steady recovery of the medical and aesthetic industry, the steady growth of the company's solution injection products, and the continued increase in the volume of recycled material products.
The cost ratio was optimized during the period, and R&D investment was continuously increased. The company's gross profit margin for the first quarter was 94.55%, a slight decrease of 0.75pct against the backdrop of increased competition in the industry. The sales expense ratio and management fee ratio for the first quarter were 8.34%/4.07%, respectively, down 2.08/3.91 pct year on year. Expenses were optimized. Among them, the large decrease in management expenses was mainly due to the large amount of money, including Hong Kong stock listing fees in the same period last year. The company continues to focus on R&D investment. The R&D cost rate in the first quarter was 7.13%, an increase of 0.21pct over the previous year. The company also has abundant reserves of products under development in the future, including botulism, weight loss products, etc., and signed a “distribution agreement” with Korea's Jeisys Medical Inc. in 2023 to achieve a breakthrough in energy source equipment pipelines. The first quarter achieved net operating cash flow of $537 million, an increase of 25.73% over the previous year. The cash flow situation was good.
Risk warning: New product promotion falls short of expectations; research projects fall short of expectations; medical and aesthetic consumption falls short of expectations.
Investment advice: Looking ahead to the whole year, the company will rely on the existing product matrix to actively expand terminal channels and achieve steady overall performance growth; in the long term, the company will continue to enrich its product pipeline reserves through a combination of self-development+epitaxial extension to build a domestic medical and aesthetic platform enterprise. At the same time, from an industry perspective, there is still plenty of room for improvement in the medium- to long-term penetration rate of the medical and aesthetic industry, and the advantages of leading companies under the trend of compliance supervision will also be further highlighted. We maintained the company's net profit forecast for 2024-2026 at 25.01/32.77/4,093 billion yuan, respectively, and the corresponding PE was 24.9/19/15.2 times, respectively, and maintained a “buy” rating.