Incident: Huaxi Biotech discloses semi-annual results for 2024. 24H1, the company achieved revenue of 2.811 billion yuan, yoy -8.61%; net profit to mother 0.342 billion yuan, yoy -19.51%; net profit not attributable to mother 0.316 billion yuan, yoy -12.38%. According to Q2 alone, the company achieved revenue of 1.45 billion yuan, yoy -18.09%; net profit to mother of 0.098 billion yuan, yoy -56.10%; net profit of 0.084 billion yuan after deducting non-return to mother, yoy -59.70%.
The raw materials business grew steadily, the medical terminal business maintained rapid growth, and the functional skincare business continued to adjust, putting pressure on 24H1's overall revenue. 24H1, the company achieved revenue of 2.811 billion yuan, -8.61%; by business, 1) Raw materials business: 24H1 revenue 0.63 billion yuan, +11.02%, accounting for 22.47% of the company's main business revenue; among them, the company's export raw material sales revenue was 0.328 billion yuan, +19.30% YoY, accounting for 52.06% of the company's raw materials business revenue, and sales in Europe, Japan, America and other places continued to grow; 2) Medical terminal business: 24H1 revenue 0.743 billion yuan, +51.92% year-on-year, accounting for 26.51% of the company's main business revenue; the company adheres to the family application of products, continues to focus on and dig deeper into the differentiated advantages of its own products, and builds a complete product system through various products such as micro-crosslinked moisturizer needles, moisturizer No. 2, No. 3, No. 5, etc., to provide consumers with one-stop overall solutions. 24H1's skin medical products achieved revenue of 0.555 billion yuan, compared to +70.14%, of which the differentiated advantage category of micro-crosslinked Runzhi Doll needles earned the same revenue The ratio increased by more than 200%; in addition, the company is actively broadening overseas channels and promoting registration in international markets such as Russia and Thailand. 24H1 has obtained 7 international medical device registration certificates; 3) Functional skincare business: 24H1 revenue of 1.381 billion yuan, -29.74% of the company's main business revenue, accounting for 49.29% of the company's main business revenue. The company's major skincare brands are still in a phased adjustment period; at the product level, 24H1 brands continue to build large single products and large single product lines, launch new products and related products. Stabilize the product system and form a scientific and complete product layout, including ① Runbaiyan: completed the upgrade of the white gauze series and water lotion, driving the “White Gauze” series's online sales revenue to increase by more than 30%, and the 24H1 “White Gauze” series sales revenue already accounts for 50% of Runbaiyan's overall sales revenue. At the same time, it also lays out the collagen sector and launches a “energy bomb” to complete the strategic layout of the core anti-aging product line; ② Muscoactive launched a new essence and cream for oily skin and oily skin, and upgraded the large “brown rice water ③”; Bell further strengthens the large single “Blue Bandage” series Sales of related products, the 24H1 “Blue Bandage” series sales revenue accounts for more than 60% of Mibel's overall sales revenue; at the channel level, the channel structure continues to be adjusted to enhance refined operation efficiency and increase the share of self-operated channels. 24H1 Runbaiyan and Bio-meso muscle activation self-operated channels account for more than 60%; 4) Functional food business: 24H1 revenue 0.029 billion yuan, compared to -11.23%. The company's functional food business is still in the early stages of adjustment and consumer education in the future. The company and other measures achieve more independent market-based operations and enhance the flexibility and vitality of business operations.
Management changes affected short-term profit and loss, and the 24H1 net interest rate after deducting non-return mother fell 0.5pct to 11.2% year over year.
1) In terms of gross margin, in 24H1/Q2, the company's gross margin was 74.52%/73.38%, +0.72/-0.43pct year-on-year. 2) In terms of cost ratio, 24H1/Q2, the company's sales expense ratio was 41.93%/47.45%, year-on-year -4.25/1.44pct; management expense ratio was 8.77%/8.99%, +2.09/+2.24pct; R&D expense ratio was 7.13%/7.23%, year-on-year +1.06/1.38pct. 3) In terms of net interest rate, in 24H1/Q2, the company's net interest rate to mother was 12.16%/6.79%, -1.65/5.87pct year on year; net interest rate without return to mother was 11.24%/5.82%, -0.48/ -6.01pct year on year.
Investment advice: The company is a leader in hyaluronic acid. The raw materials business base is stable, the Runzhi brand drives rapid growth in the medical and aesthetic business, and medium- to long-term performance growth can be expected. We expect net profit from 24-26 to be 0.712/0.859/1.077 billion yuan, with a year-on-year growth rate of +20.1%/+20.6%/+25.4%. The current stock price corresponding to 24-26 PE is 36x, 30x, and 24x, respectively, maintaining the “recommended” rating.
Risk warning: Industry competition intensifies; product development progress falls short of expectations; cost control falls short of expectations.