24H1 net profit to mother +14.64%, in line with expectations. (1) 24H1: Revenue 1.404 billion/ +6.97%, net profit to mother 0.235 billion/ +14.64%, deducted non-net profit 0.23 billion/ +22.66%. The performance was in line with expectations. (2) 24Q2: Revenue 0.758 billion/ +8.10%, net profit to mother 0.138 billion/ +11.03%.

Sales structure adjustment+collection terminal price reduction, gross margin stabilized, net profit margin increased year-on-year. (1) Gross profit ratio: 24H1 was 70.51% /-0.5pcts, and the increase in high-margin hyaluronic acid revenue led to an increase in overall gross margin, but ophthalmology products were in the collection implementation stage, and terminal prices declined to offset the increase in gross margin caused by hyaluronic acid; (2) The cost for the period was 50.90%, a year-on-year decrease of 1.66 pcts, of which the sales rate was 28.86% /-3.21pcts; the net profit margin to mother was 16.8%, up 1.1 pcts year over year.

The medical and aesthetic business continued its high growth trend, and the fourth-generation hyaluronic acid Haimeiyuebai was approved. (1) Overall operation: 24H1 medical and aesthetic business achieved revenue of 0.634 billion/ +25.72%, continuing the high growth trend, including hyaluronic acid revenue of 0.417 billion/ +51.3%, human epidermal growth factor 0.081 billion/ +8.11%, RF and laser equipment 0.136 billion/ -11.54%; (2) The fourth generation hyaluronic acid Haimeyue White was approved: In July '24, the company's R&D of the fourth generation hyaluronic acid Haimeiyue White was approved, making it the world's first organic delivery Hyaluronic acid products have characteristics such as better long-term safety, longer efficacy, and can stimulate local collagen growth. In the future, they will form a high-end hyaluronic acid matrix with “Haimei” and “Haimiyun”, which is expected to drive sales volume with high product strength and high demand on segmented racetracks; (3) New product planning: 1) Medical crosslinked chitin glycogel (water light) products entered clinical trials in February 24; 2) Use the new regulation window to promote the registration of three types of registered devices for the beauty product Medimai.

The full implementation of ophthalmology collection and the reduction in unit prices led to a decline in revenue and restorative growth in orthopedics. (1) Ophthalmology business: 24H1 revenue was 0.452 billions/ -6.02%, 1) Cataract business: revenue was 0.232 billion/ -10.7%, and sales of pre-assembled aspherical products and regional refractive bifocal products increased 25%/12%, but collection led to a sharp drop in prices and year-on-year sales. It is expected that the impact of future collection will continue. Sales revenue growth was driven by optimization of the internal structure of the product. In February '24, the impact of harvesting continued. Surface artificial lens Physical products have entered the registration stage; 2) Myopia prevention, control and refractive correction product line: revenue was 0.201 billion/ -2.44%, and the optometry materials business was 0.108 billion/ -2.6%, mainly related to the cyclical influence of downstream manufacturers on raw material preparation; optometry terminal products were 0.094 billion/ -2.26%, leading to a decline in revenue from corneal shaping lenses. In terms of product structure, Hiline was clearly impacted, but Maierkang and Tongxiang relied on high oxygen permeability materials and advanced design and prescriptions Tablet revenue increased by 48.6%/189.9%, and it is expected that future segmentation demand will continue to drive product restructuring; (2) Orthopedic business: 24H1 revenue 0.233 billion/ +0.42%, medical chitin sugar (for intra-articular injections) achieved 2.65% revenue growth, and osteoarticular injection products ranked first in the country for 10 consecutive years.

Investment proposal: As a leading biomedical materials company, Haohai Biotech has built pipelines such as “injection filling+photoelectric instrument+botulic+collagen”, and collects “price for quantity” of artificial lenses, and is optimistic about “medical+pharmaceutical” two-wheel drive. The 24-26 operating income was adjusted to 2.985 billion/3.392 billion/3.816 billion, and net profit to mother was 0.495 billion/0.599 billion/0.721 billion, an increase of 19%/21%/20%. The corresponding PE was 28X/23X/19X, maintaining the “gain” rating.

Risk warning: macroeconomic expectations have returned to low expectations; competition in the medical and aesthetic market has intensified; product approval falls short of expectations.