The two wings of medicine, beauty and medicine drive development, and mergers and acquisitions+self-research strengthen competitive advantages. The company is a technology-innovative enterprise engaged in R&D, production and sales of medical devices and pharmaceuticals. It is committed to providing innovative medical products to the market through technological innovation and transformation, integration of domestic and foreign resources and large-scale production, gradually realizing import substitution of related pharmaceutical products, and becoming a leading enterprise in the field of biomedical materials. The company's four major business segments include ophthalmology, medical aesthetics, orthopedics, anti-adhesion and hemostasis. The main products cover intraocular lens series, myopia refractive terminal series, medical and aesthetic photoelectric terminal series, hyaluronic acid series, recombinant human epidermal growth factor series for external use, medical collagen sponge series, medical chitin series, etc.

Medicine and beauty: The product matrix is rich, and the contribution of high-end products is increasing. Looking at the medical and aesthetic development history of the US and South Korea, the increase in demand-side GDP per capita, increased medical and aesthetic intentions, improved policy-side industry supervision and industrial policy support, and continuous breakthroughs in supply-side technical resources to enrich the product structure and expansion of indications are key driving forces driving the vigorous development of the medical and aesthetic industry. Consumer satisfaction is thriving, medical and aesthetic consumption awareness and consumption intentions have increased, demand continues to be released, and increased penetration rates drive industry growth. The size of the medical and aesthetic market is expected to rise from 75.2 billion yuan in 2021 to 227.9 billion yuan by 2025, GAGR 31.9%. The company has achieved the three major medical and aesthetic pipeline business layouts through self-research and mergers and acquisitions to meet the consumer needs of end customers in all aspects. Among them, hyaluronic acid products meet differentiated needs through technological iteration, and the product matrix can be expected; the comprehensive layout of optoelectronic medicine is expected to increase performance contributions in the future; human epidermal growth factor products are scarce and market share continues to rise; and the active layout of botulinum toxin and collagen is actively deployed to further expand the medical and aesthetic product matrix.

Ophthalmology: The entire industry chain lays out the field of ophthalmology to create a comprehensive manufacturer of ophthalmology products.

Ophthalmology diseases are diverse and extensive, demand rigidity is remarkable, and the future market space is broad. The market size of ophthalmology services in China is roughly 186.3 billion yuan in 2022. The market growth rate from 2015 to 2019 (CAGR = 15%) is the benchmark. According to a 10% compound growth rate, it is expected to reach 247.9 billion yuan in 2025, with plenty of room for growth. The company focuses on leading technology in the field of global ophthalmology. Through independent research and development, the company is committed to accelerating the localization process of the Chinese ophthalmology industry through independent R&D and investment, and aims to become an internationally renowned manufacturer of comprehensive ophthalmology products. The company's ophthalmology products cover two major pipelines and four major segments. It includes intraocular lenses, ophthalmic viscoelastic agents, optometry materials, optometry terminal products, and ophthalmic surface medications, and has deployed a number of products under development in the field of fundus disease treatment. In 2023, the total revenue of the company's ophthalmology business increased from 121 million in 2016 to 928 million yuan in 2023, with a CAGR of 33.8%.

Orthopedic & anti-adhesion and hemostasis products: leading segment, steady growth. As the population ages and treatment awareness increases, and the technical level and quality of orthopedic joint cavity viscoelastic supplementation treatment are recognized by doctors and patients, the demand for orthopedic joint cavity injectable gels is expected to continue to grow. The company is the largest manufacturer of orthopedic joint cavity viscoelastic supplements in China, with the highest market share. In the field of anti-adhesion, medical chitin sugar and medical sodium hyaluronate gel anti-adhesion products independently developed by the company have been widely used in clinical practice. The company's market share of anti-adhesive materials is 29.90%, ranking first in the market for 14 consecutive years, and the absolute leading position in the country continues to be consolidated.

Investment advice: As a leading enterprise in the field of medical biomaterials, the company focuses on differentiated development into an enterprise strategy, focusing on the four rapidly developing treatment fields of ophthalmology, medical beauty and wound care, orthopedics and surgery. Through cooperation with well-known R&D institutions at home and abroad, independent research and technology introduction, the company continues to maintain its leading position in technology, and continuously expand and improve the product line and integrate the industry chain. Various product segments have been highly recognized by the market. With the stabilization of the external business environment, the production, operation and sales situation of the company and its subsidiaries recovered steadily and continued to improve. We expect Haohai Biotech to achieve revenue of 33.37/40.680.801 billion yuan in 2024-2026, corresponding growth rates of 25.75%/21.67%/18.24%, respectively; EPS is 2.85/3.31/3.61 yuan/share, and PE corresponding to the current closing price is 32.3/27.8/25.5 times. Based on multi-dimensional considerations, the company's ophthalmology and aesthetic markets have broad prospects, giving Haohai Biotech 34 times PE in 2024. Covered for the first time, a “gain” rating was given.

Risk warning: the risk of increased market competition, the risk that product development and launch progress falls short of expectations, industry policy risks, macro-environmental risks, medical accident risks, and the risk of mispublishing data from cited data sources.