In recent years, with the improvement of living standards, people have begun to pursue a higher level of spiritual life, and the face value economy has made great strides. According to a report published by Tencent Marketing Insights, the Chinese medical beauty market has grown at a compound annual growth rate of 17.5% since 2017 to nearly 190 billion dollars in 2021. However, due to multiple factors such as changes in residents' income expectations, the growth rate of medical and aesthetic consumption began to slow in 2022.
The Zhitong Finance App notes that under the market's pessimistic expectations, medicine and beauty have been questioned a lot over the past year or more as an “improved” optional consumption, and many investors are worried that the boom in the medical and aesthetic market will continue to be affected by the macroeconomic environment.
But that may not be the case. Recently, Aimeike (300896.SZ), a leading domestic provider of medical and aesthetic products, revealed its results report for the first quarter of 2024. Financial reports show that during the 24Q1 period, the company achieved revenue of 808 million yuan, an increase of 28.2% over the previous year; net profit after deducting non-return to mother was 528 million yuan, an increase of 36.5% over the previous year.
Under the “weak expectations” of the outside world, Aimeike's performance was frequently rewarded. The stronger contrast is that, as the “king” in the medical and aesthetic field, Aimeike's stock price and valuation were deeply adjusted in the “ghost story” of the market. The cumulative decline in the company's stock price last year was close to 50%. As a comparison, the stock price of Perea, the leading domestic goods company on the beauty circuit next door, has made great strides, rising all the way from an issue price of 15.34 yuan/share to the current position of 110 yuan. Both companies are leading companies in the female consumer segment, but the stock price trend since last year is quite different. Compared with the two, it may be time for the market to think about whether they have seriously underestimated the resilience and growth potential of leading medical and aesthetic companies...
The quarterly report verifies strong fundamental growth
Aimeike is one of the first companies in China to independently develop medical and aesthetic biomedical materials. As of 2023, the company has seven Class III medical device products for medical aesthetics. It is the domestic company that has obtained the highest number of Class III medical devices certified by the State Drug Administration for non-surgical medical aesthetics, including five series of dermal fillers based on sodium hyaluronate, a dermal filler based on poly-L-lactic acid, and a PPDO facial implant product. After 20 years of development, Aimeike has developed a comprehensive strategic layout for the medical and aesthetic industry from products, technology, services to ecology.
Relying on years of self-research capabilities, channel advantages and brand influence, Aimeike's revenue and net profit have maintained a rapid growth trend. According to the 2023 report previously disclosed by the company, the company achieved revenue of 2,869 billion yuan, net profit due to mother of 1,888 billion yuan, and net profit after deducting non-return to mother of 1,831 billion yuan, an increase of 48.0%, 47.1%, and 53.0%, respectively, over the previous year.
Behind impressive financial data, the core factor driving Aimeike's high performance is its comprehensive and differentiated product matrix. Looking at the split revenue structure, Aimeike's revenue is mainly contributed by solution and gel injection products. In 2023, solution injection products with “Hi Body” as the core grew steadily, achieving annual revenue of 1.67 billion yuan, accounting for 58%, an increase of 29% over the previous year.
In the same period, Aimeike's gel injection products achieved revenue of 1.16 billion yuan, accounting for 40%, an increase of 81% over the previous year. Among this series of products, “Wet White Angel” continued its good growth momentum and became a strong support point for the company to build a phenomenal product matrix.
What is invaluable is that on top of last year's high performance base, the fundamentals of Aimeike will continue to advance rapidly in 2024. As mentioned at the beginning of the article, Aimeike's revenue increased by 28.2% year-on-year to 808 million yuan in the first quarter of this year. While the scale was growing steadily, the company's profit performance was also strong. According to the data, Aimeike's net profit to mother during the Q1 period was 527 million yuan, an increase of 27.4% over the previous year; net profit after deducting non-return to mother was 528 million yuan, an increase of 36.5%.
It is worth mentioning that in the first quarter of this year, Aimeike's net profit and corresponding growth rate was significantly higher than the net profit to mother and the corresponding growth rate. This was mainly due to the decline in the price of Boan Biotech's stock in other illiquid financial assets held by the company during the reporting period, which led to changes in fair value and negative returns. If this part of the impact is removed, Aimeike's net profit growth rate is expected to remain above 30%.
Using Aimeike's quarterly report as an observation window, the company's high growth in all aspects of business and profit during the period may have “spoiled” that the company's annual results will once again rise above the high base of 2023. Driven by the “Hi Body” product matrix and the regenerative product matrix represented by “Wet White Angel” and “Like a Living Angel,” it can be expected that the growth elasticity and growth certainty of Aimeike will be further strengthened in 2024.
Product layout continues to expand, leading and strong, Hengqiang
In recent years, due to changes in the macro environment, residents' income expectations tend to be conservative, and the overall growth rate of the medical and aesthetic industry has slowed down due to multiple factors. In this context, the capital market also has doubts about the growth prospects of medical and aesthetic companies.
However, if you look at it from a long-term perspective, overall medicine and beauty are still a growth track with low penetration and high potential. According to the “Tencent 2024 White Paper on Light Medical and Aesthetic Consumption Trends”, the market size of China's medical beauty market is expected to be 266.6 billion yuan in 2023, and this figure is expected to grow to 400 billion yuan by 2026. The industry will continue to grow at a compound annual growth rate of 15% over the next three years.
At the same time, the continuous improvement of the regulatory environment is also conducive to the high-quality development of the medical and aesthetic industry. In May of last year, 11 departments jointly issued the “Guiding Opinions on Further Strengthening the Supervision of the Medical Aesthetic Industry”, which proposed a series of targeted measures to further strengthen the supervision of the medical aesthetic industry and standardize and promote the development of the medical aesthetic industry.
In the meantime, Aimeike, which insists on R&D and the orderly expansion of compliant products, is expected to benefit deeply and further consolidate its leading position.
According to the Zhitong Finance App, strong R&D capabilities are the foundation for Aimeike's continuous and rapid development in the past, and strong technical barriers will continue to help it maintain its leading edge in the future. According to the company's annual report, by the end of 2023, Aimeike R&D personnel accounted for 26.7% of the total number of people in the company. The R&D team has diverse professional backgrounds, covering many fields of expertise such as bioengineering, polymer chemistry and physics, pharmaceutical engineering, and clinical medicine.
A highly qualified R&D team has helped Aimeike accumulate a number of industry-leading core technologies. By the end of last year, the company had obtained 74 authorized patents, of which 35 were authorized for invention patents, and a total of 20 software copyrights had been registered.
Reflected on the product side, continued reinvestment in R&D has also enabled Aimeike to reserve a rich pipeline of ongoing research. According to information, at present, Bonide 2.0 and botulinum toxin have entered the registration stage; medical sodium hyaluronate - hydroxypropyl methylcellulose gel, second-generation implantation line, and lidocaine butacaine cream are in clinical trials; simeglutide injections, deoxycholic acid injections, and hyaluronidase for injection are in the pre-clinical research stage.
On the channel side, Aimeike adheres to the marketing model of “direct sales as the main focus and distribution as a supplement” to seize the market in a flexible manner. By the end of last year, the company had established a sales and service network covering about 7,000 medical and aesthetic institutions in 31 provinces, cities and autonomous regions across the country. With a huge channel network, Aimeike's compliance products will continue to efficiently penetrate the terminal market in the future.
Summarize
After consumption has gone through the historical stage of rapid growth and widespread growth, various sectors within China's consumer market have become more and more clearly divided in recent years. As far as the capital market is concerned, despite the poor overall performance of the consumer market, the female consumer circuit, where fund managers concentrate their positions, is quietly taking more share, and this is in stark contrast to the liquor sector, which is gradually “cooling down.”
At a time when the market's investment preferences are changing, the market's investment preferences are changing, and new consumption, typified by women's “self-pleasing” consumption, is becoming a “favorite” for active capital and institutional funding. Among these, medicine and beauty are the most eye-catching “gold” tracks. Unfortunately, due to market pessimism, the overall stock price performance of medical and aesthetic companies has been weak over the past year. Even leading companies have significantly outperformed the market, and the market has not given sufficient valuation premiums to leading players.
Looking back at the fundamentals, as a platform-based company with many pipeline matrices, Aimeike can be described as one of the most promising targets in the medical and aesthetic circuit. According to Tonghuashun iFind data, the market predicts that Aimeike's net profit for 2024-2026 will reach 2,507 billion yuan, 3.286 billion yuan, and 4,093 billion yuan respectively. Based on the closing price on April 24, the corresponding PE is 25 times, 19 times, and 15 times, respectively. In the future, with the release of new Aimeike products and the commercialization of more products under development, it is foreseeable that it will continue to fulfill growth expectations, and the company's stock price and valuation will eventually return to value at that time.