Incident: The company recently announced its 2024 quarterly report. The 24Q1 revenue was 81 million yuan/year over year, and net profit was 530 million yuan/year over year +27%. Revenue growth was in line with expectations, and performance was close to the forecast limit (previously, 24Q1 revenue increased 27.5%-3%, and net profit increased 23%-29%). We expect the continuation of rapid growth in Q1 mainly due to the steady growth of the Hi-Tech series and the rapid growth of Wet White Angel.
Profitability remained high, with 24Q1 gross margin/net margin of 94.55%/65.27%, respectively. 1) Gross profit margin: 94.55% /-0.7pct year-on-year in 24Q1. The slight decrease is mainly due to product restructuring, and the revenue growth rate of solution products is expected to be faster than that of gel products. 2) Expense side: Sales/management/R&D expense ratios were -2.1/-3.9/+0.2pct to 8.34%/4.07%/7.13%, respectively. The sales expenses were further optimized. The main reason for the decline in management expenses was 23Q1 including Hong Kong stock listing fees; 3) Net interest rate: 24Q1 net profit margin was 65.3% /year over year -0.4 pct, after deducting non-return net interest rate of 65.4% /year on year +4pct. The difference was mainly due to the impact of Boan Biotech's investment income, and the overall profit level remained high.
Looking ahead to 24 years, the joint drive on the product side and channel side will lead to continued growth. 1) Product side:
The Hi Ti series is growing steadily, and the rapid release of Twin Angels is expected to be a strong support point in the phenomenal product matrix and is expected to exceed expectations; Bonito 2.0 (under the chin) and botulinum toxin are already in the registration and application stage, and I am optimistic about the increase in the contribution of subsequent new products approved for launch. 2) Channel side: By the end of '23, the company had more than 400 sales and marketing personnel, covering 31 provinces, cities and autonomous regions across the country, of which Hi-Tech covered 7,000+ organizations across the country. Twin Angels are expected to accelerate penetration after early market development.
The product pipeline in various fields is rich in reserves, and the orderly launch relay contributes to the increase. 1) Optoelectronic layout:
A laser skin tightening instrument from Korea's Jeisys Company entered the optoelectronic equipment circuit; 2) There are plenty of products under development: medical modified sodium hyaluronate gel with microspheres containing polyvinyl alcohol gel microspheres and injectable A botulinum toxin (used to improve freckles) are already in the registration phase, and 7 other products are in the clinical or pre-clinical stage, and biomedicines such as recombinant proteins and peptides are also being developed. The launch of new products one after another will drive the company's performance to continue to grow.
Profit forecast and investment advice: As a leading domestic upstream medical and aesthetic equipment company, the company continues to verify its R&D, certification and channel capabilities, and stricter regulations are improving the share of leading compliance companies. We maintain our previous profit forecast for the company. Net profit due to mother for 2024-26 was 24.5/31.8/3.99 billion yuan, respectively, and the corresponding PE was 26/20/16 times, respectively, giving it a “buy” rating.
Risk warning: risk of changes in medical and aesthetic policies; product approval falls short of expectations; market competition increases risks, etc.