Brief performance review
On August 15, 2024, the company released its 24-year semi-annual report. In 2024H1, the company achieved revenue of 0.883 billion yuan (YoY +13.21%), net profit to mother 0.324 billion yuan (YoY +4.42%), net profit of 0.283 billion yuan (YoY +6.72%); in breakdown, 2024Q2 achieved revenue of 0.419 billion yuan (+10.56% YoY) and net profit of 0.131 billion yuan (YoY -4.37%), net profit not attributable to mother 0.116 billion yuan (+0.45% year over year).
Management analysis
Curette revenue declined slightly and showed an increase in contributions to the medical business & other optometry products.
2024H1 revenue was split by product, 1) Hard corneal contact lens revenue 0.373 billion yuan (-3% YoY). The slight decline in revenue from hard corneal contact lens products is mainly due to: ① high-end consumer demand needs to recover; ② myopia prevention and control products such as defocus frame lenses have diverted some potential users; ③ increased competition in the corneal reshaping lens industry. 2) Revenue from nursing products was 0.118 billion yuan (-4% year over year). Among them, the share of self-produced nursing products increased dramatically, and gross margin also increased markedly. 3) Healthcare revenue was 0.191 billion yuan (+46% year over year). The increase was mainly due to revenue from new consolidated hospitals. 4) Revenue from other optometry products and technical services such as framed mirrors was 0.161 billion yuan (+44% year over year), mainly due to the increase in revenue from non-hard mirror products such as functional framed mirrors and technical service revenue from non-medical institutions. At the same time, new mergers also contributed to revenue.
The terminal business is growing steadily, and the number of optometry service stores continues to rise. According to the division of sales channels, the company's 2024H1 distribution channel revenue was 0.296 billion yuan, direct sales channel revenue was 0.119 billion yuan, and terminal business revenue was 0.468 billion yuan. Terminal business revenue increased by more than 25% year-on-year, mainly due to the continuous increase in the number of optometry service terminal stores. 2024H1 has more than 470 optometry service terminal stores (360 for 2023H1).
Marketing efforts have been strengthened, and the momentum for profit continues. 2024H1's gross margin was 73.77% (YoY -1.01pct) and net margin was 40.45% (YoY -1.51 pct), mainly due to a decline in revenue from high-margin hard mirror products and changes in product structure. The company's sales expenses ratio was 24.75% (+3.4pct year over year), mainly due to increased marketing efforts. Furthermore, the upfront revenue of newly built optometry terminals is small but the fixed cost is high. It is expected that profits will gradually be released as costs are diluted in the future.
Profit Forecasts, Valuations, and Ratings
The company's product matrix continues to be rich, and we are optimistic that the company will gradually expand the new growth curve. The company's net profit for 2024-2026 is expected to be 0.757/0.855/ 0.959 billion yuan, respectively, up 14%/13%/12% year on year, EPS is 0.84/0.95/1.07 yuan respectively, and PE corresponding to the current price is 19/17/15 times, respectively, maintaining the “increase” rating.
Risk warning
Medical malpractice risk; industry competition increases risk; risk of impairment of goodwill; risk of optometry service terminal construction falling short of expectations.