The company achieved revenue/net profit of 16.302/3.452 billion yuan (yoy +1.6%/+8.5%) in 1-3Q24, of which 3Q24 achieved revenue/net profit of 5.756/1.402 billion yuan (yoy -0.7%/-4.6%). Influenced by external consumption environment factors, the company's 3Q24 performance was under pressure. Considering the company's leading diagnosis and treatment technology and brand influence, the superposition service network is steadily expanding, and I am optimistic that the company will return to a relatively rapid development path after the external consumption environment recovers. Maintain “buy-in.”

I am optimistic that the company's various ophthalmology businesses will continue to develop positively for 24 years

1) Cataract and basic eye disease projects: We estimate that the revenue of basic eye disease projects such as 1-3Q24 cataracts, anterior and posterior eye diseases was relatively stable; looking ahead to 24, considering the company's industry-leading cataract and basic eye disease diagnosis and treatment capabilities, and the continued increase in emerging businesses such as fundus disease and dry eye disease, we are optimistic that the company's cataract and basic eye disease projects will all achieve positive development; 2) Consumer ophthalmology: considering the company's extensive coverage of refractive and optometry service networks, and actively introduce cutting-edge refractive surgery and refractive surgery in the industry Optical diagnosis and treatment methods further meet the individual needs of patients, and are optimistic about refraction and vision The trend of business growth over the past 24 years has been upward.

Business capabilities continued to be strengthened, boosting domestic and foreign revenue trends in 24 years. The company continued to promote domestic and foreign business capacity building, including: 1) Domestic: According to the company's announcement, the company acquired some shares in 52/35 hospitals in 5M24 and 7M24, respectively, and the company's domestic service network was further improved. Considering the continuous improvement of the company's brand strength and the continuous emergence of the advantages of a hierarchical chain service network, we are optimistic that the company's domestic business will maintain a positive momentum in 24 years; 2) Overseas: As of 1H24, the company had 140 overseas ophthalmology centers and clinics (131 at the end of VS 23), and has achieved a wholly-owned acquisition of the British Optimax Group. Considering the steady progress of the company's overseas expansion, we are optimistic that the company's overseas business will continue to develop steadily over 24 years.

Maintain publicity and promotion efforts and build strong brand influence

The company's gross margin for 1-3Q24 was 51.0% (yoy-0.9pct). We estimate that this is mainly due to regular changes in the business structure. The company's 1-3Q24 sales/management/R&D expenses rate was 10.1%/13.7%/1.4%, yoy+0.05/+0.7/-0.1pct, respectively. The company maintained investment in promotion and continued to strengthen its brand influence.

Profit forecasting and valuation

Considering the short-term impact of external consumer environment factors on the company's business, we lowered the company's revenue growth rate and gross margin forecast. The estimated EPS for 24-26 was 0.39/0.45/0.52 yuan (previous value: 0.43/0.52/0.63 yuan). The company is a global leader in ophthalmology services, leading the industry in business capabilities and continuing to expand its service layout at home and abroad. The company was given 39x PE for 25 years (comparable to the company Wind, a consistent expected average value of 31x), corresponding to a target price of 17.55 yuan (previous value of 13.91 yuan), maintaining a “buy” rating.

Risk warning: Market competition increases risk, risk of medical accidents and disputes, and management risk of continuous expansion.