Jiangsu Wu Zhong revealed its 24-year interim results:

24H1: Revenue 1.207 billion yuan/ +9.62%, net profit to mother 0.024 billion yuan/ -10.75%, net profit not attributable to mother 0.011 billions/ +417.83%.

24Q2: Revenue 0.503 billion yuan/ +2.92%, net profit attributable to mother 0.019 billion yuan/+0.02 billion yuan, net profit not attributable to mother 0.013 billion yuan/+0.017 billion yuan.

Aisufei's core progress: Aisufei's sales boom has exceeded expectations, and is expected to maintain the annual sales target sales performance exceeding expectations: 24H1's medical, aesthetic and biotechnology business revenue is about 0.08 billion, up 2694% year on year. It is mainly due to the Q2 launch. Q3 is expected to continue the volume pace, and Q4 is expected to accelerate month-on-month sales through the review of the new production line in Korea and peak season support. We estimate that sales will reach 0.4 billion lion for the whole year.

Team expansion is progressing steadily: Since institutional sales performance has exceeded expectations since the product was launched, the channel coverage and team expansion rate are expected to be steady, reserving sufficient space for subsequent growth. We expect to cover about 300-400 institutions throughout the year.

The outlook is for continued high growth next year. The company's volume is expected to accelerate in 25 years after the expansion of production capacity. Referring to the current sales situation and the growth trend of recycled products in the same industry, we expect the sales growth rate to double in 25. In addition, it may push the 100mg product market to expand the efficacy and price band matrix, and profit margins are expected to continue to rise during the full year of sales.

Other medical and aesthetic matrices are expected to gradually be implemented

① HARA hyaluronic acid (Alivie's upgraded product) and table linen products are expected to be launched by the end of '25.

② The agent PDRN “baby needles” are expected to be approved in the first batch of 26H1, which can complete water light positioning.

③ Two three-class recombinant collagen products are expected to be launched by the end of '26. Among them, freeze-dried fiber is expected to target products already marketed in the same industry, and Dongwan Cooperative's implants are expected to focus on eye filling with standard Shuangmei products.

The pharmaceutical business declined, and profits improved significantly due to medical and aesthetic improvements

Pharmaceutical sector revenue: 2024H1 pharmaceutical industry revenue 0.32 billion yuan/ -6.33%, pharmaceutical commercial revenue 0.54 billion yuan/ -6.21%.

24Q2 gross profit margin: 40.66% /+9.30pct, mainly driven by the increase in the share of the medical, aesthetic and biological sector with a gross profit margin of 82.9%.

24Q2 sales, management, and R&D expenses were 24.83% /+3.61 pct, 6.34% /+1.22pct, and 2.05% /+0.42pct, respectively. The related investment increased accordingly after the new expansion of the main medical and aesthetic business.

The net profit margin for 24Q2 was 3.85% /+4.01pct, mainly driven by an increase in gross margin.

Investment advice: After the launch, Asafei was booming, and sales performance exceeded market expectations. In the short term, it can be expected that Aesofei will continue to drive high revenue and profit growth in the medical and aesthetic business; HARA hyaluronic acid and table hemp are expected to be approved by the end of 25. In addition, matrices such as collagen, baby acupuncture, liposolysis, and botulism are expected to gradually land in the long term. The net profit for 24-26 is expected to be 0.127/0.253/0.413 billion yuan, corresponding to the 25/26 PE is 24/15x, maintaining the “Highly Recommended” rating

Risk warning: Product approval progress falls short of expectations; risk of product sales falling short of expectations; risk of industry policy; risk of trustworthiness and delay in referring to third-party data.