Incident: The company released 24H1 results, achieving revenue of 0.686 billion yuan/year over year, net profit of 0.208 billion yuan/year on year +27.49%, net profit after deducting non-return to mother 0.199 billion yuan/year on year +29.95%, and net cash flow of 0.122 billion yuan/year on year +52.72%.

Comment:

24Q2 revenue and profit maintained relatively rapid growth: 24Q1/24Q2 achieved revenue of 0.31/0.375 billion yuan, +63.55%/+72.91% YoY, net profit to mother of 0.103/0.105 billion yuan, +31.26%/+24.01% YoY, net profit not attributable to mother 0.099/0.1 billion yuan, +31.70%/+28.26% YoY.

Surgical products segment: intraocular lenses contribute the main revenue. 24H1 intraocular lenses achieved revenue of 0.319 billion yuan/year over year, accounting for 46.49% of total revenue and 89.48% gross profit margin. Revenue from “prognomine” and other series of intraocular lenses increased by 30.20% year on year. Benefiting from successful bid collection and selection, and continuous improvement in product competitiveness (multifocal intraocular lenses gradually expand the market), sales continued to grow. In terms of overseas sales, the company sells crystals to 30+ countries. With the advancement of overseas academic and promotion activities, it successively obtained multiple CE registration certificates such as single-focus EDOF astigmatism and multi-focus astigmatism at the end of 23. We expect significant growth in 24 years; revenue from other surgical products is 0.013 billion yuan/year over year +37.84%, with a gross profit margin of 49.79%.

Myopia prevention and control sector: 24H1 corneal shaping lenses achieved revenue of 0.113 billion yuan/year over year, gross profit margin of 85.73%; various defocus frame lenses were launched to form effective complementarity, driving revenue of other myopia prevention and control products of 0.041 billion yuan/year ratio +64.77%, gross profit margin of 71.42%. Among them, the revenue of “Puno Eye” corneal contouring lenses increased 6.89% year over year; “Puno Eye” and “Xinnuoti” defocus lenses are one of the complementary products of corneal reshaping lenses and are in an accelerated phase, with revenue +86.78% year over year; 24H1 also launched new products such as defocus softeners to further enrich the product line.

The contact lens business refers to the industry leader and has become the company's third growth curve: 24H1 contact lenses achieved revenue of 0.183 billion yuan/year over year +956.92%, accounting for 26.76% of total revenue and a gross profit margin of 29.38%. The company rapidly increased production capacity through mergers and acquisitions of Tianyan Pharmaceutical, Fujian Unicon, and Meiyuetong. Currently, the color film production line is at full capacity, and continues to improve production line efficiency by relying on the company's R&D advantages. The share holdings after the merger and acquisition were as follows: ① The company held 77.78% of Tianyan Pharmaceutical's shares, with 24H1 revenue of 0.085 billion yuan and net profit of 6.8242 million yuan; ② The company held 51% of Fujian Youyou Kang's shares, and Youyou Kang 24H1 achieved revenue of 0.06 billion yuan and a net loss of 0.012 billion yuan. Youyoukang has obtained various registration certificates including silicon hydrogels. Revenue of other vision care products was 0.012 billion yuan/year over year +283.15%, gross profit margin 24.10%.

Continued investment in R&D, many key products are worth looking forward to: 24H1 invested 0.069 billion yuan in R&D per year +25.43%. The company is positioned as an R&D platform-based enterprise. The 24H1 lens eye intraocular lens (PR) has been registered, and clinical projects such as aspherical trifocal astigmatism correction artificial lenses, aspherical extended depth of field (eDOF) artificial lenses, and contact lenses are progressing rapidly and progressing well.

Profitability: The increase in 24H1's revenue led to an increase in overall gross profit, but was affected by the decline in prices after collection of artificial lenses, and as the eyesight care business, which mainly focuses on contact lens products, the company's overall gross margin declined. Coupled with the contact lens business being in a period of capacity expansion, various costs were high, and profit margins had not reached a steady level, affecting the company's overall net profit growth rate. 24H1 gross profit margin 69.68%, year-on-year -13.47PCT; sales rate 15.61% /-2.88pct, management fee rate 11.26% /-0.02pct, financial rate 1.04% /+0.96pct, R&D rate 6.88% /-3.34pct.

Investment rating: As a platform-based company with strong R&D capabilities, the company has also verified its excellent commercialization capabilities in recent years. We expect the company's 24-26 revenue to be 1.443/1.911/2.514 billion yuan, respectively; net profit to mother will be 0.405/0.514/0.683 billion yuan, respectively. Corresponding to the closing price of PE on August 22, 2024, PE will be 34/27/20X, respectively, maintaining a “buy” rating.

Risk factors: Weak consumption power, risk of price reduction in collection, hidden business volume falling short of expectations, etc.