Incidents:

On October 29, 2024, Puri Ophthalmology released its 2024 third quarter report. 24Q1-3 achieved revenue of 2.137 billion yuan (-1.36%), net profit of 0.016 billion yuan (-95.01%), net profit of non-return of 0.018 billion yuan (-92.04%); of these, 24Q3 achieved revenue of 0.716 billion yuan (-9.11%), net profit due to mother -0.027 billion yuan (-133.31%), net profit of non-return to mother of -0.027 billion yuan (- 133.17%).

Comment:

Competition intensified due to the expansion of the new hospital, and the cost rate increased slightly during this period. ① Gross profit ratio: 24Q1-3 was 39.50% (-6.05pct), 24Q3 was 35.96% (-9.88pct), referring to the 2024 semi-annual report, mainly due to damage to the gross margin of the refractive business, which accounted for a significantly higher share; ② period expense ratio: total 24Q1-3 was 35.57% (+4.99pct), 24Q3 was 37.54% (+6.08pct), of which the sales expense ratio was 17.79% (+1.80pct) for 24Q3 (+ 81%) 3.42pct), the management expense ratio 24Q1-3 is 14.67% (+2.20pct), 24Q3 is 14.77% (+2.20pct), the R&D cost ratio 24Q1-3 is 0.23% (-0.10pct), 24Q3 is 0.08% (-0.21pct), the financial cost ratio 24Q1-3 is 2.88% (+0.76pct), and 24Q3 is 2.88% (+0.68pct). The core growth items are sales and management closely related to new hospital expansion and market competition Expenses; ③ Net interest rate: 1.07% (-13.97pct) for 24Q1-3 and -3.49% (-14.32pct) for 24Q3.

Core business is under pressure in the short term, and gross margin is declining in the short term. ① Decline in refractive prices: Investment in the refractive terminal industry has increased and market competition has intensified in recent years. Some emerging terminals have actively adjusted prices to seize market share, which ultimately led to a decline in the price level of the entire industry, which was transmitted to listed companies and had a clear impact on the company's gross margin level of refractive index business; ② National procurement of cataract consumables: the fourth batch of national consumables collection (artificial crystals) has been fully implemented nationwide in 24Q3. Currently, consumption is weak, and the logic of increasing the share of high-end artificial crystals based on the silver hair economy has yet to be verified by the market; ③ comprehensive vision and inspection are yet to be verified by the market; Disease: Percentage of revenue from company-related departments It is low, and the increase in gross margin is yet to be affected by the scale of the department.

Hospitals continued to expand rapidly after listing, and the layout of multiple hospitals in one city accelerated. By the end of October 2024, the company had opened 31 ophthalmology hospitals and 4 ophthalmology clinics. Heilongjiang Purui Ophthalmology Clinic was newly opened during the reporting period. On September 28, Chongqing Purui Eye Hospital moved to a new hospital and officially opened on October 25. The 2024 new hospital is mostly a one-city multi-hospital system plan, which is expected to provide a strong impetus for the company's growth in the next few years.

Profit forecast and investment advice: The company adheres to “national chainization+same city integration” and focuses on setting up boutique ophthalmology hospitals in central cities. The drainage volume of middle and high-end customers and high-end business development expectations are expected to achieve a “sharp rise in volume and price”. Considering the company's latest performance and industry conditions, we expect the company's revenue in 2024-2026 to be 2.731/3.111/3.529 billion yuan (original value 28.36/32.75/37.46), net profit to mother 0.041/0.131/0.201 billion yuan (original value 1.12/2.10/3.00), and the corresponding PE is 180X/56X/37X. We give the company a “buy” rating.

Risk warning: policy risk, risk of hospital expansion falling short of expectations, and increased risk of industry competition.