The company released its report for the third quarter of 2024

24Q1-3 achieved revenue of 0.58 billion yuan, +3.6% year on year; net profit of 0.14 billion yuan, +11.9% year on year; net profit without return of 0.12 billion yuan, +9.9% year on year; 24Q3 company achieved revenue of 0.2 billion yuan, +0.6% year over year; net profit to mother 0.05 billion yuan, +13.6% year on year; net profit without return to mother 0.04 billion yuan, +15.2% year on year; of which 24Q3 mirror Film revenue was 0.17 billion, up 3.9% from the same period (excluding export business).

The 24Q1-3 company's gross profit margin was 59.3%, the net profit margin was 24.8%, the same increase was 1.2pct; the 24Q3 company's gross profit margin was 59.1%, a decrease of 1.1 pct, the net profit margin was 25.7%, and the net profit margin was 25.7%, the same increase of 2.1 pct.

The product focus strategy has achieved remarkable results, and the easy control of PRO2.0 clinical data is impressive

Benefiting from the product focus strategy, the company's star products maintained rapid growth. For example, the revenue of PMC Super Bright series products increased 50.6% year on year in the first three quarters, and 1.71 series products increased 16.5% year on year.

The company launched a new generation of Easy Control PRO2.0 series products in 24Q3, which further optimized the optical design and imaging quality of the lenses. According to the summary report of a 1-year forward-looking, multi-center, randomized, double-blind, parallel controlled trial initiated by Sun Yat-sen University's Zhongshan Ophthalmology Center, the 12-month equivalent lens efficiency of Easy Control PRO2.0 is 73.82%, which is a significant increase of 60% compared to Easy Control PRO 1.0. On the basis of the same price, Easy Control PRO2.0 products are better, and prevention and control effects are better.

In order for customers and users to sell and experience better PRO2.0 products earlier and faster, the company took the initiative to recall the Easy Control PRO1.0 series products within the channel in accordance with the “sell 2.0, don't sell 1.0” principle.

Sales of the “Easy Control” full range of products in the third quarter were 45.97 million yuan, up 2.4% year on year; after excluding the impact of the aforementioned product upgrades and recycling, sales of the “Easy Control” full range of products in the third quarter were 53.52 million yuan, and sales of “Easy Control PRO” series products increased by 34.2% year on year.

Cooperate with Leica to enter the high-end lens market and lay out smart glasses ahead of schedule

On October 15, the company and global optical giant Leica held the “New Vision · LeicaEyeCare (LeicaEyeCare) China Press Conference”, showcasing the latest technological achievements of Leica lenses and interpreting the essence of the “You deserve to see the real world” brand; future cooperation between the two sides covered many aspects such as sharing optical technology, joint innovation in product development, and expansion of market channels. The company will use its many years of experience in serving the Chinese market to enter the high-end lens market and create a visual feast for consumers.

In terms of smart glasses, the smart glasses SASKY sold by the company on the Xiaomi Youpin platform have a voice assistant function, can wake up Siri, Xiaoyi, Xiao Ai, etc. by voice, and has functions such as answering phone calls and navigating. There is a lot of room for imagination in the application of AR and VR imaging displays in smart glasses. In the future, the company will also strengthen negotiations, cooperation and exchanges with other companies in the industry.

Adjust profit forecasts to maintain “gain” rating

The company's product structure has been clearly optimized, and early cooperation with high-end lens brands and smart glasses layout is expected to open up room for growth. Based on 24Q3 results, we adjusted our profit forecast. We expect the company's net profit to be 0.18/0.21/0.25 billion yuan for 24-26 (previous value was 0.18/0.21/0.26 billion yuan), and the corresponding PE is 50/42/36X, respectively.

Risk warning: macroeconomic environmental risk; risk of price fluctuation of major raw materials; risk of dealer management, etc.