Maintain a prudent accumulation rating. In 2024Q1, revenue of 465 million yuan (+15.71%), net profit attributable to mother was 193 million yuan (+11.39%), and net profit after deducting non-return to mother was 167 million yuan (+11.59%). The results were in line with expectations. Maintain the 2024-2026 EPS forecast of 0.86/0.99/1.14 yuan, maintain the target price of 20.64 yuan, correspond to PE24X in 2024, and maintain a cautious holdings increase rating.
The growth rate of hard lenses and nursing products remained flat, and the growth rate of instruments and frame mirrors was high. (1) The revenue growth rate of 2024Q1 hard lenses is basically the same. Among them, holding optometry terminals and private channels continue to grow, while revenue from public hospitals is declining. It is expected that it will still be affected by the impact of defocus lenses and the increase in OK mirror competition. After the company takes active marketing measures, it is expected to maintain steady growth in 2024. (2) After the company coordinated online and offline sales channels and promoted its own brands, 2024Q1 stopped the downward trend, revenue remained flat, and the share of self-produced nursing products increased dramatically. It is expected that nursing products will resume growth in 2024. (3) Medical devices and functional frame mirror products have maintained high growth, and demand for terminals is strong. It is expected to continue to increase throughout the year. (4) The number of optometry centers controlled by the company continues to increase and is expected to continue to contribute.
Changes in product structure have led to a decrease in gross margin and an increase in short-term cost investment. The 2024Q1 gross margin was 76% (-2.36pct), mainly due to the increase in the share of low-margin frame mirrors and medical services. The sales/management/R&D expense ratios were +4.81/-2.97/-0.21pct, respectively. The sales expense ratio increased rapidly, mainly due to increased labor costs outside the province, the initial revenue of new stores was still climbing, and the sales expenses of subsidiaries were relatively high. It is expected that the sales expense ratio will decline as the scale effect will follow.
The product lineup under development is rich. The company has a rich lineup of follow-up products, including next-generation angular plastic materials, multi-focal soft lenses, lubricants, nursing solutions, eye comfort devices, etc., progressing normally, and there is plenty of room for development.
Risk warning: competition increases risk, commercialization of new products falls short of expectations, etc.