The company's revenue rose in '23, and profits were under phased pressure
In '23, the company achieved revenue of 1,934 million yuan/yoy of 9.29% and net profit of 749 million yuan/yoy -11.56%, mainly due to the increase in related sales expenses driven by the increase in the share of online sales, increased depreciation and amortization of the company's Beigu base in the north, and continued increase in R&D investment. 24Q1 revenue was 409 million yuan/yoy 9.65%, net profit to mother was 152 million yuan/yoy -4.77%, and profitability improved month-on-month. On the product side, the company rapidly expanded functional skincare products based on medical dressings, and gradually accumulated market reputation through innovative applications in product ingredients and formulations; on the channel side, the company's online channel revenue share increased, and online direct sales revenue grew faster; on the supply side, the company enhanced the market supply capacity of the company's products through the expansion of production capacity in Beigu. EPS2.21/2.43/2.61 yuan is expected to be 24-26, compared to the company's 24-year Wind's consistent profit forecast of 24 times PE. Considering the company's slow growth rate in recent years, the 24-year PE was given 18 times, and the target price was 39.78 yuan (maintained) to maintain the “gain” rating.
In line with market demand, insist on the equal development of medical dressings and functional skincare products. In 23 years, the company achieved revenue of 850 million yuan per 1,083 million yuan, yoy -1.79%/19.92%.
Relying on medical sodium hyaluronate repair patches to form a leading position in the medical dressing market, the company launched Class II medical collagen dressings in 2022 to build a two-wheel drive strategy of sodium hyaluronate and collagen, further enhancing the market influence of the company's medical dressings. Furthermore, in line with market demand, the company has successively launched functional skincare products such as “whitening masks,” “acne masks,” “overnight masks,” and “anti-wrinkle masks,” to meet consumers' needs for “scientific skin care” and “precise skin care.”
Coordinate online and offline development to further deepen channels
The company implements a combination of online and offline methods on the channel side. The sales model is divided into three types: direct sales/consignment/distribution. The share of the company's online sales channels increased in '23, with online revenue of 924 million yuan/yoy 28.53%, accounting for 47.77% (+7.15pct) of main business revenue, including online direct sales revenue of 790 million yuan/yoy 33.94%, online consignment sales revenue of 133 million yuan/yoy 3.66%, and offline distribution revenue of 1,010 million yuan/yoy -3.87%.
Profit growth was weak due to rising company expenses in '23
In '23, the company's gross profit margin was 82.23% /yoy-0.84pct, and the net profit margin was 38.76% /yoy-9.13pct. The cost rate for the 23-year company period is 30.02%, including sales expense ratio 27.53% /yoy+5.48pct, management expense ratio 4.67% /yoy+1.98pct, R&D expense ratio 1.70% /yoy+0.83pct, and management expense ratio 4.67% /yoy+1.98pct. In '23, the company achieved operating cash flow of 826 million yuan, a year-on-year decrease of 8.10%.
Risk warning: new products climb slowly; sales expenses increase; high concentration of equity.