Event: The company released its annual report for 2023 and the report for the first quarter of 2024. In 2023, the company achieved revenue of 749 million yuan, +20.17% year over year; net profit to mother of 158 million yuan, +15.65% year over year; basic earnings per share of 0.78 yuan. In 23Q4, the company achieved revenue of 186 million yuan, +10.37% year on year; net profit to mother was 35 million yuan, -28.31% year over year. In 24Q1, the company achieved revenue of 192 million yuan, +11.93% year on year; net profit to mother was 42 million yuan, +20.42% year over year;
Profitability continues to increase, and additional expenditure is being invested to accelerate expansion.
Gross profit margin: In 2023, the company's comprehensive gross margin was 57.58%, +3.61 pct. Among them, the gross margin for the 23Q4 single quarter was 56.6%, +3.2 pct year over year, and -3.6 pct month-on-month. In 24Q1, the company's gross margin was 58.07%, +1.94 pcts year over year and +1.47 pcts month over month.
Expense rate: In 2023, the company period cost rate was 33.91%, +3.15 pct year-on-year. Among them, sales/management/R&D/finance expenses were 19.69%/10.53%/3.74%/-0.05%, respectively, with year-on-year changes of +3.49 pct/-0.75 pct/+0.15 pct/+0.27 pct. In 24Q1, the company's expense ratio was 34.72%, +4.14 pct year-on-year. Among them, sales/management/R&D/finance expenses were 18.68%/12.31%/3.61%/0.12%, respectively, with year-on-year changes of -0.59 pct/+2.18 pct/+0.5 pct/+2.04 pct.
Net interest rate: In 2023, the company's net interest rate was 23.08%, -0.69 pct. Among them, the company's net interest rate for the 23Q4 quarter was 21.28%, -9.85 pct year-on-year, and -2.25 pct month-on-month. In 24Q1, the company's net margin was 23.14%, +1.05 pct year on year and +1.86 pct month on month.
The product focus effect was outstanding, and the sales performance of large single products was outstanding. The company already sells a total of 24 SKUs in the myopia management lens category at the same time, and continues to maintain a clear lead in terms of product line richness; implementing the strategy of focusing on large single products and continuing to increase the promotion of easily controlled and conventional lens star products. In 2023, the lens business reached 595 million yuan, +24.59% over the same period last year. Among them, PMC Super Bright series products increased by nearly 80% year on year, 1.71 series products increased by +30% year on year. The revenue of the three major star products accounted for 52.31% of regular lens revenue; sales of the “Easy Control” series products were 133 million yuan, +70% year over year.
Deeply cultivate offline to implement customer orientation, and expand distribution channels rapidly. During the reporting period, the company's direct sales channel reached 453 million yuan, +14.59% year on year, distribution channel reached 234 million yuan, +31.24% year over year, and direct e-commerce reached 57 million yuan, +18.85% year over year. By the end of 2023, the company had 2,717 direct sales customers and 53 “Mingyue” brand distribution customers (including medical channels). The company began building a base in Jiangsu in 2020, and selected three additional provinces of Guangdong, Zhejiang and Anhui as the second batch of bases in 2023, and will continue to strengthen the coverage of key markets in some regions in the future. At the same time, the company continues to improve its medical channel team building. By the end of 2023, the company had 194 hospital customers. Currently, it has cooperated with Aier Ophthalmology, the First Affiliated Hospital of Wenzhou Medical University, and the Second Hospital of Zhejiang University.
Investment suggestions: The company is deeply involved in the lens industry, achieved high-end product upgrades through R&D, achieved remarkable growth in myopia prevention and control, and continued to improve profitability. The company is expected to achieve basic earnings of 0.99/1.17/1.39 yuan per share in 2024/25/26, corresponding PE is 28X/23X/20X, maintaining the “recommended” rating.
Risk warning: the risk of large fluctuations in raw material prices, the risk of channel expansion falling short of expectations, and the risk of increased market competition.