Brief performance review

On August 21, 2024, the company released its 2024 semi-annual report. 2024H1 achieved revenue of 0.686 billion yuan (+69% YoY); realized net profit of 0.208 billion yuan (+27% YoY); realized net profit without deduction of 0.2 billion yuan (+30%).

Looking at a single quarter, Q2 in 2024, the company achieved revenue of 0.375 billion yuan (+73% year over year), net profit due to mother 0.105 billion yuan (+24% year over year), and net profit after deducting non-return to mother was 0.1 billion yuan (+28% year over year).

Management analysis

Artificial crystals were collected and released quickly after winning the bid, and multifocal intraocular crystals gradually opened up the market.

2024H1 earned 0.319 billion yuan (+30.20% year-on-year) from “pronomine” and other series of intraocular lenses. The high increase in intraocular lens revenue is mainly due to the company benefiting from successful bid collection and selection, continuous improvement in product competitiveness (such as multi-focal intraocular lenses gradually expanding the market), and sales continued to grow, driving the continuous growth of intraocular lens revenue.

Contact lens revenue increased rapidly, and production capacity climbed rapidly. 2024H1's contact lens revenue was 0.183 billion yuan (+956.92% YoY), accounting for 26.76% of revenue (14.36% in 2023). The company has been in the field of contact lenses for many years, and has accumulated rich product and production line experience. Through mergers and acquisitions of Tianyan Pharmaceuticals, Fujian Youyou Kang, and Meiyuetong, the contact lens market has been rapidly increased. Currently, the color film production line is at full production, and continues to improve production line efficiency by relying on the company's R&D advantages.

There is still room for improvement in the long-term profit margin of contact lenses. In terms of profitability, 2024H1 achieved a gross profit margin of 69.68% (YoY -13.47pct) and a net profit margin of 29.05% (YoY -9.94pct). The decline in profit margins is mainly due to: 1) the price drop after the collection of artificial lenses; 2) as the share of the company's revenue in the eyesight care business, which mainly focuses on contact lens products, the share of low gross margin products increased, and overall gross margin decreased; 3) The contact lens business is in a period of capacity expansion. The gross margin for 2024H1 contact lenses is 29.38%, and the profit margin has not yet reached a steady level. It is expected that in the future, as contact lens sales scale increases and costs are diluted, the company's overall profit margin is expected to increase.

Profit Forecasts, Valuations, and Ratings

The company's core products continue to expand. We are optimistic about the company's future development prospects. We expect net profit to be 0.392/0.495/0.623 billion yuan in 2024 to 2026, up 29%/26% year-on-year respectively, EPS 2.06/2.61/3.30 yuan, and PE corresponding to the current price is 37/29/23 times, respectively, maintaining the “increase” rating.

Risk warning

Market promotion falls short of expectations; product development progress falls short of expected risk; risk of mergers and acquisitions falling short of expectations; risk of shareholder holdings reduction.