Incident: The company released its quarterly report for the year 24. Revenue for Q1-3 in '24 was 1.466 billion, yoy +9.47%; net profit to mother was 0.514 billion yuan, yoy -4.2%. In Q3, the company achieved revenue of 0.527 billion, yoy +11.88%, net profit of 0.173 billion yuan to mother, and yoy -5.16%.

24Q1-3 gross profit margin 81.65%, year-on-year -0.7pct, 24Q3 gross profit margin 82.07%, year-on-year +0.5pct.

24Q1-3 sales expenses increased 38.50% year on year, mainly due to the company's increased investment in promotion and e-commerce channels; R&D expenses increased by 100.80% year on year, and the company is continuously increasing R&D investment.

The medical and aesthetic business layout was expanded. In September, the company's product “Recombinant Type III Humanized Collagen Lyophilized Fiber” passed an ethical review and completed clinical trial registration with the Heilongjiang Drug Administration, and clinical trials can already be carried out. This product improves skin condition through the moisturizing and hydrating effects of the recombinant type III humanized collagen contained in it. It is the company's first superficial injectable filler product, which is of great significance for the company to develop the medical and aesthetic market and enrich the product line.

Investment advice: It is expected that with the gradual restoration of medical and aesthetic beta and the upward trend of the effective skincare circuit, the company's market share is expected to further increase with the ability to cultivate online and offline channels and continuously improve its product power, brand power & marketing power. Considering the impact of the external environment and the third quarter results, the profit forecast was lowered. We expect net profit to be 7.4/8.1/9.0 (originally 0.79/0.86/0.96 billion yuan) for 24-26, corresponding to PE20/18/16x, to maintain a “buy” rating.

Risk warning: industry competition increases risks, industry policy risks, new products fall short of expectations