Incident: The company released its 2024 quarterly report. In 24Q1, the company achieved revenue of 10.411 billion yuan/yoy +2.9%, net profit of 862 million yuan/yoy +14.2%, after deducting net profit of 838 million yuan/yoy +10.7%.
Pharmaceuticals: The pharmaceutical industry & commerce both achieved good performance growth. The core subsidiary China and America Huadong achieved revenue (including CSO business) of 3.399 billion yuan/yoy +10.53%, achieving consolidated net profit of 751 million yuan/yoy +11.67%; the pharmaceutical business achieved revenue of 6.717 billion yuan/yoy -1.86%, achieving net profit of 107 million yuan/yoy +1.51%. The slight decline in the company's pharmaceutical business revenue was mainly due to the high base of 23Q1. The company expects positive growth to resume positive growth in 24Q2.
Medicine and aesthetics: Domestic medicine and aesthetics continue to grow at an impressive rate, and overseas medical and aesthetic growth is under slight pressure in the short term. The medical and aesthetic sector (excluding internal offsets) achieved revenue of 630 million yuan/yoy +25.30%. ① Domestic Medicine and Aesthetics:
Xinkley Aesthetics achieved revenue of 257 million yuan/yoy +22.65%/+13.38% month-on-month; the subsequent product pipeline is expected to continue to be rich. The MaiLi Extreme listing application has been accepted, and the radiofrequency therapy device V20 is expected to be launched within the year. ② Overseas medical and aesthetic: British Sinclair achieved 272 million yuan/yoy -4.40%, mainly due to fluctuations in demand caused by a slowdown in global macroeconomic growth. The company expects the growth rate to gradually pick up from Q2.
The improvement in profitability is mainly driven by improved cost rates. The 24Q1 company's gross margin/net interest rate/period expense ratio was 32.03%/8.26%/21.12%, respectively. On the cost side, sales/management/ financial/ R&D rates were 15.12%/3.22%/0.07%/2.71%, respectively, -1.12/-0.04/-0.22/+0.08pct, respectively. All rates other than R&D were optimized to varying degrees.
Profit forecast: In 23, the company's core domestic medical and aesthetic product, Yi Yanshi, continued to grow brilliantly, adding to overseas medical and aesthetic profits, and the company's overall medical and aesthetic business's profitability continued to increase; the filing and listing of domestic medical and aesthetic injection & optoelectronic pipelines progressed steadily, which can be expected to drive the acceleration of revenue growth. We predict that the company's net profit for 2024-2026 will be 33.85/39.17/4.355 billion yuan, respectively, up 19.2%/15.7%/11.2% year-on-year, respectively, and corresponding PE is 17/15/13X, respectively.
Risk factors: R&D clinical progress falls short of expectations, marketing results fall short of expectations, and increased competition for medical and aesthetic products.