occurrences

The company released its three-quarter report for 2024. In the first three quarters of 2024, the company achieved total operating income of 1.075 billion yuan (yoy +60.94%), net profit attributable to mother 0.318 billion yuan (yoy +26.04%), and net profit not attributable to mother of 0.304 billion yuan (yoy +27.41%).

In the third quarter of 2024, revenue reached 0.39 billion yuan (yoy +49.11%), net profit to mother 0.11 billion yuan (yoy +23.38%), after deducting non-net profit of 0.105 billion yuan (yoy +22.88%).

Comment:

The apparent gross margin has declined somewhat, and overall profitability has remained

In the third quarter of 2024, the company's revenue reached 0.39 billion yuan, an increase of 49.11% over the previous year. The high growth was mainly due to the incremental eyeliner business and defocus lens products, and we expect the main business of artificial lenses and OK lenses to maintain the growth trend. In the third quarter, the company's gross sales margin and net sales margin were 63.95% and 26.92%, respectively, changing 4.14pct and +0.09pct from the second quarter.

The change in the company's gross margin was, on the one hand, an increase in the share of the company's low-gross margin business. On the other hand, due to changes in accounting standards, the company's overall net sales margin remained stable. The sales, management, and R&D expenses rates of the single Q3 company were 14.03%, 11.23%, and 7.22%, respectively. The year-on-year changes were -4.97pct, -0.06pct, and -2.46pct. Expenses were well controlled during the company period.

Tianyan Medical has already made a profit. Waiting for Youyoukang to lose money at the same time, it will raise about 0.3 billion yuan in capital by issuing shares to specific targets through a simple procedure, mainly to invest in contact lenses and injection mold processing production line construction projects. After completion, the project will have an annual production capacity of 252 million pieces of contact lenses and 50 million sets of male and female models. The project includes commercial production of silicon hydrogel contact lenses independently developed by the company. While meeting consumers' demand for vision care products, it will further enrich the company's product structure, achieve domestic replacement of high-end contact lenses, and increase the market share of the company's products.

In the first half of 2024, the subsidiary Tianyan Pharmaceutical achieved revenue of 84.9492 million yuan, achieved net profit of about 6.8242 million yuan, and the profit was also corrected. The subsidiary Fujian Youyoukang achieved revenue of 62.2497 million yuan in the first half of 2024, realized net profit of about -12.1733 million yuan, and a net sales interest rate of about -19.6%. The implementation of the project will also help the company to further reduce production costs, improve rapid product iteration and delivery capabilities, and reduce dependence on foreign suppliers. It is expected that as the company optimizes various aspects of Youyoukang's production process, management process, and order structure in the future, Youyoukang will also achieve profits.

Investment advice

We expect the company's revenue for 2024-2026 to be 1.383 billion yuan, 1.72 billion yuan, and 2,222 billion yuan, respectively, with revenue growth rates of 45.4%, 24.3% and 29.2% respectively. Net profit to mother in 2024-2026 will reach 0.413 billion yuan, 0.532 billion yuan and 708 million yuan respectively, with growth rates of 35.8%, 29.0% and 33.0%, respectively; EPS for 2024-2026 is 2.18 billion yuan, respectively Yuan, 2.81 yuan, and 3.74 yuan, corresponding to the 2024-2026 PE are 46x, 36x, and 27x respectively. The company is a relatively scarce consumables platform enterprise in the field of ophthalmology. Currently, the three major businesses maintain rapid growth. Artificial lenses are being collected to achieve high-end product release, myopia prevention and control product portfolios are rich, and future profits continue to improve, maintaining a “buy” rating.

Risk warning

The risk that MeiHitomi's profit falls short of expectations.

Competition in the OK mirror market heightens risk.

The amount of intraocular lens released falls short of the expected risk.