Semi-annual performance growth under pressure. In the first half of 2025, the company achieved revenue of RMB 1.299 billion, down 21.59% year-over-year, with net profit attributable to shareholders of RMB 789 million, down 29.57% year-over-year, and adjusted net profit attributable to shareholders of RMB 722 million, down 33.7% year-over-year. Looking at the second quarter alone, revenue was RMB 636 million, down 25.11% year-over-year, net profit attributable to shareholders was RMB 346 million, down 41.75% year-over-year, and adjusted net profit attributable to shareholders was RMB 320 million, down 42.83% year-over-year. The company's overall performance was under pressure due to: first, industry terminals still being affected by downward pressure on consumption capacity; second, the increasing number of approved medical aesthetics products leading to intensified competitive landscape, while the company's own product pipeline is in a transition period between old and new products.
Additionally, the company declared a cash dividend of RMB 12 per 10 shares (before tax), totaling RMB 362 million in cash dividends, accounting for 45.82% of the first half net profit attributable to shareholders.
Product line continues to expand, acquisition of Korean medical aesthetics company supplements regenerative product matrix. By product category, in the first half of 2025, solution injection products generated revenue of RMB 744 million, down 23.79% year-over-year; gel injection products generated revenue of RMB 493 million, down 23.99% year-over-year. The company acquired an 85% stake in Korean company REGEN in the first half, whose AestheFill and PowerFil products strengthen the regenerative medical aesthetics field layout and help open international market sales through the acquisition. Additionally, the company's botulinum toxin products are in the registration application stage and are expected to launch in the future to further enrich the product matrix.
Gross margin declined somewhat, R&D expenses continue to be invested. The company's gross margin in the first half of 2025 was 93.44%, down 1.48 percentage points year-over-year, affected by changes in product structure and intensified industry competition. Sales expense ratio and administrative expense ratio were 11.1% and 5.34% respectively, up 2.58 and 1.25 percentage points year-over-year respectively, affected by rigid expenses and declining revenue. R&D expense ratio was 12.05%, up 4.46 percentage points year-over-year, maintaining R&D investment for subsequent product pipeline construction. Financial expense ratio increased by 1.79 percentage points year-over-year to 0.39%, due to foreign exchange losses from overseas foreign currency investments. In terms of cash flow, net operating cash flow in the first half was RMB 655 million, down 43.06% year-over-year, due to year-over-year decline in net profit and changes in working capital.
Risk factors: In-development project progress below expectations; terminal sales below expectations; deteriorating competitive environment.
Investment recommendation: At the industry level, medical aesthetics consumption penetration still has significant room for improvement in the long term, but competition will continue to intensify in the short term with increased product supply. Platform-based external expansion is an important development direction for upstream medical aesthetics companies in the future. The company is building new product lines through self-developed investment on one hand, and enriching product pipelines through external mergers and acquisitions on the other, while also opening up international business to provide new incremental growth for performance. Considering that increased industry competition may affect the company's product sales, we lower the company's net profit attributable to shareholders for 2025-2027 to RMB 1.855/2.073/2.325 billion (previous estimates were RMB 2.122/2.43/2.803 billion respectively), corresponding to P/E ratios of 29.9/26.8/23.9 times respectively, maintaining "Outperform" rating.
Comments