IMEIK(300896)：STABLE GROWTH UNDER THE DISTURBANCE OF THE PANDEMIC

　　Core views:
　　Imeik's 2022 revenue was Rmb1.939bn, representing a YoY increase of 33.9%, while the annual attributable net profit (ANP) was Rmb1.264bn, with a YoY increase of 31.9%, according to its annual report. Equity incentives highlight the Company's cohesion and confidence in sustainable development. Under the disturbance of pandemic in 2022, Imeik remained robust, showcasing the resilience of its growth and the strength of its products. New product CureWhite (濡白天使) will still maintain a rapid growth trend, and the R&D and application progress of botulinum toxin and injection products for correcting chin retraction in the pipeline will continue to push forward. We believe that Imeik will maintain high growth momentum in the future.
　　Abstract:
　　The steady growth of Imeik's annual result verifies its operation resilience. Imeik's revenue was Rmb1.939bn in 2022, representing a YoY increase of 33.9%, while ANP was Rmb1.264bn, with a YoY growth of 31.9%. In 4Q22, Imeik achieved revenue of Rmb449mn, showing a YoY increase of 5.8%, and ANP of Rmb271mn, reflecting a YoY increase of 9.1%. Despite pandemic disruptions in 1H22 and delayed patient admissions after the easing of Covid restrictions in 4Q22, the Company's performance remained robust, showcasing the resilience of its growth and the strength of its products.
　　Equity incentives highlight cohesion and confidence in sustainable development. On the same day of the annual result disclosure, Imeik announced the first restricted stock incentive plan (draft) for 2023, intending to grant 4.4173mn restricted stocks at a price of Rmb282.99/share, accounting for 0.19% of the Company's total share capital, to 141 incentive grantees. The plan aims to grant 80% initially, with 20% reserved for future grants. The grantees include the Company's directors, senior managers, middle managers, and core technical personnel. The performance assessment of this equity incentive plan is based on the operating income in 2022, with the first part of the grant requiring a net profit growth rate of no less than 40%/89%/146% for 2023/24/25, respectively, or an operating income growth rate of no less than 45%/103%/174% for 2023/24/25; the corresponded net profit growth rate is not less than 40%/35%/30% and the growth rate of operating income is not less than 45%/40%/35%. The binding effect of the equity incentive plan on the Company's team has been further enhanced, and the performance goals have also demonstrated the Company's confidence in future development.
　　Solution products progress steadily, while CureWhite continues to grow. In 2022, Imeik's core products grew steadily. ① Solution injection products: Annual revenue of Rmb1.293bn, with a YoY increase of 23.6%, accounting for 66.7% of the total revenue. The Company’s main products generally maintained a high growth rate. Under stricter supervision, skin-boosters may maintain a rapid increase in volume; ②Gel injection products: Annual revenue of Rmb638mn, showing a YoY increase of 65.6%, accounting for 32.9% of the total revenue. Among the above mentioned products, CureWhite is growing rapidly, gradually gaining recognition from downstream institutions and consumers under Imeik’s continuous academic promotion and doctor training. During the reporting period, CureWhite has successfully entered over 600 medical aesthetics institutions, with more than 700 authorized doctors. Imeik plans to further enhance its marketing strategy, providing online and offline training opportunities for doctors, and bolstering its academic influence. The Company has extended its reach to more than 5,000 medical aesthetics institutions and conducted 350 offline conferences through QuanXuan Academy (全轩学院).
　　The R&D and extension efforts continue to increase, and the R&D of a number of advantageous products continues to advance. Imeik continues to increase investment in R&D of developing products in several pipelines. In 2022, R&D expenses were Rmb173mn, with a YoY increase of 69.20%, accounting for 8.93% of total revenue. ①Facial injection field: Two products have entered the application process or phase III clinical trial stage. Imeik's medical modified sodium hyaluronate gel containing polyvinyl alcohol gel microspheres (by using to correct chin recede) has entered the application stage; type A Botulinum toxin for improving eyebrow lines is in Phase III clinical trial stage. ②The field of weight management and fat reduction: Imeik has entered the field of recombinant proteins and peptides, re-planned the deoxycholic acid injection project, and signed an exclusive cooperation agreement with QL Biopharm on the semaglutide injection project, the current product has entered the preclinical research stage. In addition, Imeik also optimizes its strategic layout and enhances product competitiveness through acquisitions. During the reporting period, Imeik signed an agreement with Huons Bio, which specified Imeik as the only distributor in China (including Hong Kong and Macao), and enriched the specifications of product lines and product price. The Company also acquired 100% of Peiqilong Biopharma (沛奇隆) through holding 100% of Yuanzhimei Technology (北京原之美) and entered the field of collagen, which is worth expecting.
　　Potential risks: Regulatory tightening; new product development, registration progress and promotion falling short of expectations; uncertainties over new product innovations; the pace of consumption recovery is slower than expected; intensified market competition.
　　Investment recommendation: Imeik is a leading domestic medical device provider in the field of medical aesthetics with clear first-mover advantages in product matrix, channel management and R&D pipelines. Under the disturbance of pandemics in 2022, Imeik still achieved superior performance growth, demonstrating its strong product strength and growth resilience. We believe that CureWhite will still maintain a rapid increase. The R&D process of botulinum toxin and the injection product for correcting receding chin continues to push forward. We believe that Imeik will continue to maintain a high growth engine in the future. Considering that consumer demand will be slightly delayed after Covid-19, we reduce the 2023E/24E EPS forecast to Rmb 8.56/11.80 (the original forecast was Rmb 10.21/14.12), and add 2025E EPS forecast of Rmb15.69. By using DCF valuation, we assign a TP of Rmb680, and upgrade to "BUY" rating.
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   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。