01846.HK 's income grew by 1.03% to HK $4.7 billion in 2020, of which 64.3%, 22.8% and 12.9% came from Germany (an annual increase of HK $14.9% to HK $3.0 billion), China (an annual decrease of HK $47% to HK $110 million) and Denmark (an annual increase of HK $195 million to HK $6091), respectively. The gross profit margin for the whole year increased by 3.8 percentage points to 45.2% in the same period in 2019, and the annual profit increased from HK $37 million to HK $6407 million.

The overall plan for 2020 will make it possible for the first half of the year to be affected by the epidemic, and for the second half of the year to turn the economy into a profit for the whole year. I am determined to maintain a positive view of the growth of high-margin silicon home technology in the Asian market. I look forward to collecting profits in the Asian market, and estimate that the penetration rate in the Asian market will continue to rise. As a result, we raise our overall profit forecast of about 50.1% to HK $9.35 and maintain the "hold" level.

The overall performance is expected for 2020.

01846.HK 's overall performance in 2020 slightly met our expectations. Due to the impact of COVID-19 's epidemic in the first half of 2020, revenue in the first half of 2020 fell by 8.4% year-on-year to HK $18.88 billion, but the second half of the year showed a clear reversal. The income from Germany / China / Denmark in the second half of the year increased by 29.7%, 17.8%, 39% to 180 million Hong Kong dollars / 7169 Hong Kong dollars / 3798 Hong Kong dollars, while the annual income from Germany and Denmark increased by 14.9 percent and 19.5 percent to 300 million Hong Kong dollars and 6091 million Hong Kong dollars, respectively, but China's services fell by 4.7 percent to 110 million Hong Kong dollars. The gross profit margin of the collection increased by 3.8% to 45.2%, mainly due to the increase in the number of hands and the utilization rate of the collection, and the annual turnover of operating profit was reduced from HK $36 million to HK $6407 million.

The dynamic source of future income growth in the Asian market

The penetration rate of the pre-crystallization device continues to increase.

In addition to Dr. J rgensen, a leading doctor in the field of posterior chamber intraocular lens (ICL) implantation and trifocal lens implantation, its chip technology income has always been in the leading position in the markets of Germany and Denmark, and it is also one of the largest trifocal lens implants in the world. The technology of using chip to treat presbyopia and white internal barrier has always been a collection of surgery, and it is a type of technology with high gross profit.

Chip technology accounts for the largest share of total income, rising from 46.8% in 2019 to 48.0% in 2020, with revenue growth of 13.0% from Germany and 21.1% from Denmark. In the past few years, the advanced market system has recorded an increase in the number of figures in the Asian market, which is higher than the corresponding rate of increase in the number of market units, reflecting the success of the market promotion strategy in Germany and Denmark. We believe that the advanced chip technology and the leading position in the Asian market will continue to increase the penetration rate of the German and Danish markets. at the same time, we believe that the share of the total income of crystal technology in the past two to three years will gradually rise to 53% or more.

Extend to the direction through the trail.

The collection fund is abundant and intends to invest in ophthalmology offices with mature brands and technical skills in the German market, so as to enhance the growth of the market and the success of the market. According to the mid-2020 report, the fair is submitting a proposal to German companies that specialize in crystal technology and refractive laser technology. At present, we are actively proposing a contract and negotiation with the company. We believe that within this year at the earliest, there is a good chance that the fair will complete the sale of foreign financial institutions in Germany and expand to increase the market share of Germany's corresponding technological services.

The pace of growth of China's market is still slow.

There is a slight lack of color within the regional business group.

In 2020, the proportion of services in China's total income dropped from 26.4% to 22.8% year-on-year, and that for the whole year fell by 4.7% to 110 million Hong Kong dollars. As far as business in the first half of the year is concerned, travel restrictions such as city closures are imposed all over the world due to the impact of the epidemic, but the revenue of Chinese services is only 30.7% less than that of Germany and Denmark, respectively, with a decrease of 0.4% and 3.0% respectively. In the second half of the year, China's annual income growth rate was 17.8%, lagging behind 29.7% and 39.0% in Germany and Denmark, but in fact, China's utilization rate is about the same as that in Denmark.

Long payback periods for sales and sales strategies

In the future, the market will continue to expand at the pace of opening one to three new shops every year. This year, apart from the opening of the center in April, the store will open another new store in Puxi, Shanghai. The marketing strategy of the market is to achieve a balance of income and expenditure before the new store is deployed to open another new store in the same city or across the city, while it takes an average of more than a year for the store to achieve a balance of payments, and the expansion of the market is slower than we expected.

In the future, the fair will work with domestic medical and ophthalmic companies to improve brand acceptability. in addition, there are plans to provide treatment advice to customers in second-tier cities, and to guide customers to the direction of treatment in first-tier cities.

However, in 2020, the average selling price of the three major technologies, including refractive laser technology / posterior room intraocular lens (ICL) implantation / crystal implant technology, was HK $15141 / HK $25022 / HK $28772, respectively. The general income level in second-tier cities may not be able to meet the cost of technology. I believe that the sales strategy concentrated in China is still in the exploratory stage, and it is estimated that it will still take longer than expected to promote in second-tier cities in order to attract local high-income customers, thus improving the penetration rate.

The growth of mobile technology services in the Asian market is positive, with an upper target price of HK $9.35 per share, maintaining the "hold" level.

The overall budget for 2020 is expected to be affected by the epidemic in the first half of the year, and it will still be able to turn into profit year by year. I am determined to maintain a positive view of the growth of high-margin silicon home technology in the Asian market. I look forward to actively picking up the market in the Asian market, and estimate that the penetration rate of the market in the future will continue to rise.

We believe that the pace of growth in the Chinese market will take time to cover the high-income clientele in the second-tier cities, so we believe that the short-term growth of the Chinese market is still lagging behind. However, in the long run, the direction of brand deepening and the development of new stores will gradually mature, and we will remain positive for the growth of long-term business in the future. According to our forecast, the profit and expense for 2021 / 2022 / 2023 is HK $74.41 million / HK $81.44 million / HK $99.6 million respectively, and the growth in Asia is certain and will benefit from the new investment service income and technology. therefore, we maintain the "hold" level, with a target price-to-earnings ratio of HK $9.35 per share, which is equivalent to the forward price-to-earnings ratio of 39.6kg.

Negative factor

Serious medical accidents were reported and occurred

The pace of global COVID-19 epidemic recovery is slow.

The strength of the service industry is fierce.

There is a problem with the crystal source of the metal.

Loss of important surgeons and ophthalmologists

China's sales expansion in second-tier cities is not satisfactory.

The German budget plan failed.