Incident: The company achieved operating income of 808 million yuan in 24Q1, +28.24% year over year; net profit to mother of 527 million yuan, +27.38% year over year; net profit after deducting non-return to mother of 528 million yuan, +36.53% year over year.
Revenue continues to grow steadily, and channel endowments solidify the competitive foundation. Benefiting from the growth of medical and aesthetic terminal consumption and the increasing competitiveness of the company's products and brand influence, the company's revenue continues to grow steadily. On the product side, as the only approved neck wrinkle improvement product, there is still room for improvement in market penetration; the number of covered institutions and sales scale of Wet White Angel continues to increase; new products such as Life Angel take on customer demand for recycled material products and are expected to build a new growth pole. On the channel side, by the end of '23, the company had more than 400 sales and marketing personnel, covering about 7,000 medical and aesthetic institutions; the subsequent company continued to improve the diversified marketing network layout to enhance the depth and breadth of customer coverage; relied on Quan Xuan Academy to join forces with online and offline formats to increase academic promotion efforts and comprehensively enhance brand influence.
R&D products have been expanded, and profitability has been maintained at a high level. The company's 24Q1 gross profit margin was 94.55%, -0.75pcts year-on-year. The sales/management/R&D expense ratio was 8.34%/4.07%/7.13%, respectively -2.08pcts/-3.91pcts/+0.21pcts. The decrease in the management fee ratio is expected to be due to the costs of pre-listing of Hong Kong stocks in the same period last year. Taken together, the 24Q1 net profit margin was 65.35%, -0.19pcts year on year, and profitability is still at a high level.
Multi-product collaborative layout to expand production capacity and continue to drive future growth. Based on hyaluronic acid injection products, the company continues to advance the core pipeline of reserve products such as botulinum toxin, simeglutide, and lipolytic injections, and expands market opportunities in the field of energy source equipment and collagen, and lays out more accurate segmentation and products that meet the differentiated needs of consumers. In order to further optimize the industrial layout, the company plans to invest in a “beautiful health industrialization innovation construction project” to expand product production capacity, enrich the supply of new products, and further increase market share.
Investment advice: The company's Hi-Tee and Wet White series are growing steadily and are gaining momentum. Subsequent approval of new products is expected to provide new growth points, and the differentiated product matrix is expected to help the company grow in the long term. The company's EPS is expected to be 8.20/10.75/13.43 yuan from 2024 to 2026, respectively, maintaining the “gain” rating.
Risk warning: industry competition intensifies; new product promotion falls short of expectations; changes in the industry regulatory environment.