A benchmark domestic intraocular lens company, the contact lens business is expected to become a new growth pole. The company's main business is R&D, production and sales of ophthalmic medical devices, covering the three major fields of cataract surgery, myopia prevention and control, and optometry consumption. In the field of cataract surgery, the company's first non-spherical diffraction multifocal intraocular lens was approved in 2022, and lenticular intraocular lenses are expected to be approved one after another. In the field of myopia prevention and control, the PunoPupil Pro series OK lenses, etc. are gradually being approved for release. In the field of optometry consumption, the production capacity of Tianyan Pharmaceutical and Youyoukang is rapidly climbing, and the company's self-developed high-permeable silicon hydrogel contact lenses are expected to be approved one after another. We are optimistic about the long-term development of the company. We expect net profit to be 4.03/524/667 million yuan in 2024-2026, corresponding to PE of 34.3/26.4/20.7 times. Considering the company's rapid growth in performance and high certainty, it was covered for the first time, giving it a “buy” rating.

The artificial crystal and curetinal plastic business is growing rapidly. Research projects continue to promote the company's many brands of artificial lens products covering multiple types and grades of artificial lenses. It has products under development such as crystal eye artificial lenses (PR crystals), aspherical trifocal astigmatism correction artificial lenses, and aspherical extended depth of field (eDOF) artificial lenses, etc., to reach the leading international level. The company's artificial crystal revenue grew rapidly, from 223 million yuan in 2020 to 500 million yuan in 2023, with a compound growth rate of 30.88%. Aibo Healthcare obtained a corneal reshaping lens product registration certificate in March 2019. It is the second manufacturer in China to obtain a registration certificate for this product. The company's corneal reshaping business revenue grew rapidly. Revenue from the corneal reshaping segment increased from 41 million yuan in 2020 to 219 million yuan in 2023, with a compound growth rate of 74.80%.

Contact lens business production capacity is climbing, and performance is expected to grow rapidly

The company entered the contact lens industry through the acquisition of Tianyan Pharmaceutical and Fujian Youyoukang Company. As of Q1 2024, the company has developed a variety of myopia correction products and supporting daily care products, including transparent contact lenses (blue film) and colored contact lenses (color film) under its own brands such as “Lanbai,” “Okura,” and “TOPPOP,” and provided product OEM services. As Tianyan Pharmaceutical and Youyoukang's production capacity climbs and yield increases, the contact lens business is expected to usher in rapid growth.

Risk warning: changes in domestic policies, deterioration in the competitive pattern of the square plastic industry, contact lens business falling short of expectations, etc.