Event: The company released its report for the first quarter of 2024.
1) 2024Q1 achieved revenue of 850 million yuan, an increase of 28% over the previous year; achieved net profit of 530 million yuan, an increase of 27% over the previous year; and achieved withholding of 530 million yuan from mother, an increase of 37% over the previous year. Net profit attributable to mother and net profit from non-return to mother are close to the upper end of the forecast (net profit attributable to mother increased by 23%-29% in the performance forecast, and by 33%-39% after deduction).
2) 24Q1 gross margin was 94.5%, -0.7 pct year on year; net margin was 65.4%, -0.2 pct year on year. On the cost side, the sales/management/R&D expense rates were 8.3%/4.1%/7.1%, respectively, -2.1/-3.9/+0.2pct.
The growth rate of withholding has reached 37%, and the platform-based layout continues to lead the way. Revenue grew steadily in 24Q1. The relative pressure on the growth rate of return to mother was mainly due to losses from non-recurring profit and loss projects. This is a short-term factor. The growth rate of non-return income was significantly higher than revenue, indicating that the company's operating side maintained excellent profitability. In terms of product pipelines, neck needles and panda needles in the Hi-Body Matrix continue to have market segmentation advantages. 2.5. Bubble needles are growing significantly in the context of compliance in the water light market. In the regeneration matrix, White Angel maintained a high growth rate with the accumulation of final monuments. For example, Living Angel is expected to increase its contribution performance increase quarter by quarter. Among the products under development, Bonida 2.0 and botulinum have been registered and declared, and are expected to become growth engines that will continue to drive performance growth in 2025. Overall, we believe that the company is expected to continue to maintain its leading position in the context of increasingly competitive medical and aesthetic markets with comprehensive product matrix+forward-looking strategic layout+R&D innovation capabilities.
The actual controller increased its holdings by 200,000 shares, demonstrating long-term confidence in future development. From October 26, 2023 to April 24, 2024, the actual controller of the company, Ms. Jian Jun, increased her holdings of the company's shares by 199,000 shares, with a cumulative increase of 62.5578 million yuan (not including transaction fees). After the completion of the holdings increase plan, Jian Jun directly and indirectly controlled 38.33% of the company's share capital (after deducting the number of shares repurchased).
Investment advice: As an upstream medical and aesthetic leader, it is expected to continue to grow in the context of rich research pipeline reserves, expansion and compliance in the medical and aesthetic market to promote increased concentration. We expect the company to achieve operating income of 38.3/49.9/6.32 billion yuan in 2024-2026, and achieve net profit of 24.5/31.6/3.97 billion yuan, corresponding PE 25/20/16 times, respectively. Maintain an “Overweight” rating.
Risk warning: the risk of changes in medical and aesthetic policies; product approval falls short of expectations; market competition increases risk