Key points of investment:
It belongs to Fosun Pharmaceutical and has global coverage of various medical and aesthetic businesses. FuRui Medical Technology is controlled by Fosun Pharmaceutical. It is a core member of the Fosun family and has been deeply involved in the global medical aesthetic industry for more than 20 years. The company is centered on its subsidiary Alma Lasers. Many product brands have been widely recognized by medical aesthetic institutions and end users around the world, covering more than 90 countries and regions around the world. It is currently the largest energy source medical aesthetic equipment company in the Chinese market. The company's four pillars of business are energy source medical and aesthetic equipment, digital dentistry, personal care, and injectable fillings.
Energy source medical and aesthetic products lay the foundation of the global market. In 2022, the company's first revenue from energy source medical and aesthetic equipment reached US$310 million, accounting for 87%, which is the company's largest source of revenue. Currently, Energy Source's medical aesthetic product line covers non-invasive medical aesthetics (it has three core series of Soprano, Harmony and Accent), non-invasive beauty, and minimally invasive medical aesthetic devices. The company has the ability to integrate production, marketing and research, and occupies a leading position in the domestic medical and aesthetic optoelectronics market. It is expected that 2-3 new products (iteration of old models+innovative new products) will continue to strengthen its market position in the future.
The injectable products, personal care and dental businesses brought about a second growth curve. In terms of injectable products, the company's botulinum toxin products have the competitive advantage of proprietary stabilized peptide excipient technology. Furthermore, the company is expected to launch the first compliant injectable fat-dissolving needle product in China. The first-mover advantage brings huge growth potential. In terms of personal care, the company launched a new home beauty device brand LMNT to expand its business to the C-side and achieve the synergy of “medical aesthetics - natural beauty - personal care”. In terms of dental business, the company integrated Copulla and Fosun Dentistry to seize the development of cosmetic dentistry and create new dental services with digital processes.
Profit forecast and investment advice: Furui Medical Technology is a leading medical and aesthetic equipment company that is energy source. At the same time, it is accelerating the layout of major medical and aesthetic businesses such as injection filling, personal care, dentistry, etc., and its business is diversifying. Based on the exchange rate of the US dollar to RMB on April 13, 2023, we expect the company to achieve revenue of 3,04/385/4.87 billion yuan in 2023-2025, with a year-on-year growth rate of 23.0%/26.8%/26.4%, and Guimu's net profit of 36/46/ 580 million yuan. The corresponding PE for the closing price on 2023/4/13 was 17/13/10 times. We selected representative Hong Kong-listed companies on the medical and aesthetic circuit as a valuation reference. Comparable companies expected an average PE of 26/17/16 times in 2023-2025, so the company was given 26 times PE in 2023. The corresponding market value was HK$10.758 billion, with a target price of HK$23.04, covering a “buy” rating for the first time.
Risk warning: risk of increased competition in the industry; risk of excessive sales and distribution expenses; risk of R&D progress falling short of expectations; risk of market regulatory compliance.