Brief performance review
On April 25, 2024, the company released its 2023 annual report. In 2023, the company achieved revenue of 20.367 billion yuan (+26% year over year), realized net profit attributable to mother of 3.359 billion yuan (+33%), and realized net profit of 3,514 billion yuan (+20% year over year).
The company also released its 2024 quarterly report. 2024Q1 achieved revenue of 5.196 billion yuan (+4%), realized net profit of 899 million yuan (+15% year over year), and realized net profit of non-return to mother of 843 million yuan (+12% year over year).
Management analysis
Revenue showed strong resilience, and the number of outpatient clinics and surgeries increased steadily. Judging from the terminal situation, the company achieved 15.1064 million outpatient visits in '23 (+34% year over year) and 1.1837 million surgeries (+36% year over year). Among them, in '23, the company's refractive project revenue was 7.431 billion yuan (+17% year over year), cataract project revenue was 3.327 billion yuan (+55% year over year), and optometry service projects achieved revenue of 4.960 billion yuan (+31% year over year). Business growth in various sectors showed strong resilience. The main drivers of the company's revenue growth include the increasing abundance of treatment methods and the release of delayed medical needs for elderly patients in '23. It is expected that in the future, as terminal consumption gradually recovers, it is expected to continue to contribute to revenue growth.
Profitability increased steadily due to scale effects. In '23, the company achieved a gross profit margin of 50.79% (+0.3 pct year on year) and a net profit margin of 17.95% (+1.26 pct year on year). Looking at the breakdown, the gross profit margin of the refractive project was 57.40% (+0.58pct), and the gross profit margin of the optometry service project was 57.05% (+0.61pct), and the profitability of all sectors increased. In terms of cost ratios, benefiting from the continuous expansion of the scale of operations, the company's overall cost ratio has declined steadily.
We are steadily advancing the “1+8+N” strategy domestically, and strengthening strategic cooperation overseas. Domestically, the company has been operating ophthalmology centers in Changsha, Shanghai, Guangzhou, Chengdu, Chongqing, etc. for 23 years, construction is underway in Wuhan and Shenyang, and preparations have already begun in Beijing and Shenzhen. Overseas, as of the end of 23, the company had set up 131 overseas ophthalmology centers and clinics, with European revenue of 1.72 billion yuan (+22% year over year), mainly driven by the continuous expansion of the company's brand influence and the continuous improvement in the success rate of doctors' visits. In the future, the company is expected to achieve simultaneous development of medical technology with the world's advanced level through a highland layout strategy in key regions.
Profit Forecasts, Valuations, and Ratings
As a service leader in the domestic ophthalmology industry, the company has outstanding scale advantages. We are optimistic about the company's long-term development. The company is expected to achieve net profit of 43.72, 5.621, and 6.952 billion yuan in 2024-2026, with year-on-year increases of 30%, 29%, and 24% respectively. EPS is 0.47, 0.60, and 0.75 yuan respectively, and PE is 26, 20, and 16 times the current price, maintaining a “buy” rating.
Risk warning
Market competition heightens risks; risk of talent shortage; risk of cross-regional development; risk of medical safety accident disputes; risk of compliance and supervision, etc.