The company's recent situation

According to public disclosure on the company's public account, Wu Zhong Aesthetics, a subsidiary of the company, recently signed a strategic investment and cooperation agreement with Beijing Lilai Technology Co., Ltd., and Wu Zhong Aesthetics will obtain exclusive rights in Lilai Technology's injectable sodium hyaluronate - polydeoxyribonucleotide (“PDRN”) composite solution products. PDRN solution is a functional water light product with multiple effects such as anti-inflammatory and restorative effects. Currently, no three types of medical device products of this type have been approved in China, and if successfully approved, they are scarce. Follow up on the progress of domestic forensics on this product.

reviews

Invest in recycled water light PDRN products to further enrich medical and aesthetic pipelines. Currently, the domestic water light market is mainly dominated by hyaluronic acid products, and functional products are scarce; PDRN is a regenerated water light product with anti-inflammatory, tissue repair, and collagen regeneration effects, and the market prospects are broad. The safety and efficacy of PDRN products have been verified against overseas standards, and the representative brand, Korea's PharmaResearch's Regal, has grown rapidly since it was approved for marketing in Korea. In addition, PDRN products have further improved the layout of medical and aesthetic injection pipelines in Wuzhong, Jiangsu, and are expected to complement existing childcare products, further strengthening the company's position in the medical and aesthetic market.

Tongyan acupuncture products were successfully cultivated as scheduled, showing the strong execution ability of the company's medical and aesthetic team. Since the company's childcare acupuncture product was approved for certification in China at the beginning of the year, many medical beauty conferences have been held. By the end of June, the product had signed contracts with more than 200 institutions, and was approved by doctors for its differentiated product positioning and promotion plans among leading medical and aesthetic institutions. We believe it is expected to be further expanded in the future.

The follow-up pipeline is fully stocked, and I am optimistic about the broad growth space of the company's medical and aesthetic business. Looking ahead, the company's medical and aesthetic business pipeline is fully stocked, and the R&D registration process is progressing steadily: ① Hyaluronic acid: Korea's latest injectable dual-phase crosslinked lidocaine-containing sodium hyaluronate gel is progressing smoothly, and all subjects have been enrolled by the end of 23; ② Collagen: The project for two recombinant type III collagen fillers has now been completed. In addition, the pipeline for fat dissolving and table hemp products is progressing smoothly. We believe that the company's rich product pipeline is expected to lay the foundation for the promotion of its combined treatment plan, and we are optimistic about the broad growth space of the company's medical and aesthetic business in the medium to long term.

Profit forecasting and valuation

Maintaining the 2024-25 profit forecast, the current stock price corresponds to 24/25 41/23x P/E. Maintaining an industry rating and target price of 12.7 yuan. At the same time, considering that Tongyan acupuncture products are still in the early stages of being marketed for 24 years, we continue to use the 25-year target valuation, which corresponds to 36x P/E in 25 years, with 54% room for growth.

risks

Competition in the industry has intensified; research progress and new product promotion have fallen short of expectations; regulations have become stricter.