Matters:
24Q1 achieved revenue of 808 million yuan, up 28.24% year on year and 15.60% month on month; net profit to mother of 527 million yuan, up 27.38% year on year, up 19.83% month on month; net profit after deducting non-return to mother of 528 million yuan, up 36.53% year on year. Net cash flow from operating activities was $537 million, up 25.73% year over year.
Commentary:
Previously, the company predicted a year-on-year increase of 27.5-31% of revenue for the first quarter, a 23-29% year-on-year increase of net profit for the first quarter, and a 33-39% year-on-year growth rate for net profit after deducting non-return income. We expect the company to continue its rapid year-on-month growth in the first quarter, thanks to the rapid growth of Wet White Angel and the steady growth of the Hi Body series. Among them, Hi Body 2.5 and Hibai Bubble Needle had the highest growth rates.
The company's gross profit margin for the first quarter was 94.5%, -0.7 pct year on year and +0.1 pct month on month; sales, management, and R&D expense ratios were -2.1, -3.9, and +0.2 pct, respectively. The obvious decline in management expenses was mainly due to 23Q1 including Hong Kong stock listing expenses, and the sales expense ratio was optimized. The net profit margin for 24Q1 was 65.3%, down 0.4 pct from the previous year, and was relatively stable.
The company continues to invest in research and development. Botulinum toxin and bonida-like products (chin indications) are expected to be approved for marketing. Energy source equipment is expanding the matrix for ultrasound and radiofrequency projects under Jeisys in Korea, and the weight management field lays out simeglutide and deoxycholic acid injections. Currently, it is in the pre-clinical research stage, and the pipeline is still sufficient.
Investment advice: We maintain our previous financial forecast for the company. We expect net profit to be 24.2, 31.4, and 3.94 billion yuan in 24-26 years, up 30.2%, 29.7%, and 25.5% year-on-year, corresponding to PE 26/20/16 times.
The company's multi-pipeline products are expected to be approved for listing after 25 years. The integrity of the product matrix will further reflect its advantages under platformization. It is recommended to take a longer period of time to look at the company's valuation, referring to the optional consumer valuation level and the consolidated company's net profit cagr of about 28.5% for 23 to 26 years. The target price is 406 yuan for 25 years, maintaining the “recommended” rating.
Risk warning: competitive products approved for listing, safety emergencies, increased regulation, etc.