Investment Rating - The investment rating for the company is "Buy" [1]. Core Views - The company reported a revenue of 3.524 billion with a year-on-year growth of 49%, and a net profit of 1.448 billion with a year-on-year growth of 45% for the year 2023. The adjusted net profit was 1.469 billion, reflecting a year-on-year increase of 39% [1]. - In the second half of 2023, the company achieved a revenue of 1.918 billion, which is a 39% year-on-year increase, and a net profit of 0.782 billion, also a 39% year-on-year increase [1]. - The company's operational capabilities in cosmetics and new product promotion have been continuously validated, with significant growth in online sales during major promotional events [1][2]. Summary by Sections Financial Performance - The company achieved a revenue of 3.524 billion in 2023, with a year-on-year increase of 49%. The net profit was 1.448 billion, up 45% year-on-year, and the adjusted net profit was 1.469 billion, reflecting a 39% increase [1]. - For the second half of 2023, the revenue was 1.918 billion, showing a 39% year-on-year growth, and the net profit was 0.782 billion, also a 39% increase year-on-year [1]. Brand Performance - The brand "可复美" generated a revenue of 2.788 billion, with a year-on-year growth of 73%, accounting for 79.1% of total revenue, an increase of 10.9 percentage points year-on-year. The brand's major product, "可复美胶原棒," saw significant sales growth during promotional events [1]. - The brand "可丽金" reported a revenue of 0.617 billion, a slight decline of 0.3% year-on-year, with its revenue share decreasing to 17.5%, down 8.7 percentage points year-on-year. The decline was primarily due to a drop in sales from the micro-business channel [1]. Sales Channels - Direct sales revenue reached 2.421 billion, up 73% year-on-year, accounting for 68.7% of total revenue, an increase of 9.4 percentage points year-on-year. The growth was attributed to enhanced online platform presence and increased sales of essence products [1]. - Distribution revenue was 1.104 billion, up 15% year-on-year, but its share decreased to 31.3%, down 9.4 percentage points year-on-year, mainly due to the decline in micro-business channel revenue [2]. Profitability - The gross margin was 83.6%, a decrease of 0.8 percentage points year-on-year, attributed to increased sales costs and a higher proportion of lower-margin products. The net profit margin was 41.1%, down 1.3 percentage points year-on-year [2]. - The company is expected to maintain strong growth, with projected net profits of 1.803 billion, 2.304 billion, and 2.809 billion for 2024, 2025, and 2026, respectively [2][3].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company achieved a revenue growth of 49.0% in 2023, with a net profit growth of 44.9%, exceeding market expectations [2][3] - The company is recognized as a global leader in restructured collagen, with significant growth in its core product lines [3] - The direct sales channel continues to grow, contributing to a strong performance during promotional events [3] - The company maintains a high gross margin of 83.6%, despite a slight decline due to product diversification [3][4] Financial Performance Summary - In 2023, the company reported total revenue of 3.524 billion yuan, with a net profit of 1.452 billion yuan [2] - The revenue growth rates for 2023 were 63.0% in the first half and 39.1% in the second half [2] - The company forecasts net profits of 1.723 billion yuan for 2024, 2.157 billion yuan for 2025, and 2.561 billion yuan for 2026, with respective growth rates of 19%, 25%, and 19% [4] Product and Market Expansion - The company’s core brand, "Kefumei," saw a revenue increase of 72.9% in 2023, while "Keli Jin" remained stable [3] - The company launched new products in 2024, including collagen masks and creams, to further enhance its product portfolio [3] - Direct sales accounted for 68.7% of total revenue in 2023, reflecting a 9.4 percentage point increase year-on-year [3] Valuation Metrics - The current market valuation corresponds to a P/E ratio of 23 for 2024, 18 for 2025, and 15 for 2026 [4][10] - The company’s return on equity (ROE) is projected to decline from 40.2% in 2023 to 26.9% by 2026 [10]

Revenue and Profit Growth - Revenue increased by 49.0% to RMB 3,524.1 million in 2023 compared to RMB 2,364.4 million in 2022[2] - Gross profit rose by 47.7% to RMB 2,947.1 million in 2023 from RMB 1,995.2 million in 2022[2] - Net profit attributable to owners of the parent company grew by 44.9% to RMB 1,451.8 million in 2023 from RMB 1,002.0 million in 2022[2] - Adjusted net profit (non-IFRS measure) increased by 39.0% to RMB 1,468.7 million in 2023 compared to RMB 1,056.4 million in 2022[2] - Basic earnings per share increased by 50.5% to RMB 1.49 in 2023 from RMB 0.99 in 2022[2] - Sales revenue reached RMB 3,524.1 million in 2023, a year-on-year increase of 49.0%[51] - Net profit for the year reached RMB 1,448.2 million, a year-on-year increase of 44.6%[51] - Total revenue for 2023 reached RMB 3,524.1 million, a 49.0% increase compared to RMB 2,364.4 million in 2022, driven by product expansion and enhanced marketing efforts[66] - Gross profit increased by 47.7% to RMB 2,947.1 million in 2023, with a gross margin of 83.6%, down from 84.4% in 2022[81] - Net profit for 2023 was RMB 1,448.2 million, a 44.6% increase compared to RMB 1,001.6 million in 2022[84] - Basic earnings per share increased by 50.5% to RMB 1.49 in 2023, compared to RMB 0.99 in 2022[84] Financial Position and Assets - Total assets increased to RMB 4,442.5 million in 2023 from RMB 2,857.3 million in 2022[5] - Cash and cash equivalents grew to RMB 2,503.9 million in 2023 from RMB 1,330.9 million in 2022[5] - Inventory levels rose to RMB 200,440 thousand in 2023, up from RMB 183,895 thousand in 2022, with a notable increase in finished goods from RMB 111,906 thousand to RMB 150,590 thousand[38] - Trade receivables and bills increased to RMB 102,029 thousand in 2023 from RMB 69,420 thousand in 2022, with trade receivables growing from RMB 56,247 thousand to RMB 81,690 thousand[39] - Prepayments, other receivables, and other assets decreased to RMB 53,835 thousand in 2023 from RMB 87,496 thousand in 2022, with a significant reduction in prepayments from RMB 63,245 thousand to RMB 29,248 thousand[42] - Financial assets measured at fair value through profit or loss increased to RMB 1,274,776 thousand in 2023 from RMB 865,973 thousand in 2022, reflecting a growth in financial product investments[43] - Cash and cash equivalents surged to RMB 2,503,999 thousand in 2023, nearly doubling from RMB 1,330,951 thousand in 2022, with RMB-denominated cash and bank balances reaching RMB 1,891,140 thousand[44] - The company's liquidity as of December 31, 2023, was RMB 2,504.0 million, an 88.1% increase compared to RMB 1,331.0 million as of December 31, 2022[90] - The company held RMB 2,250 thousand in fixed-income products from China Merchants Wealth Management, representing 0.05% of total assets[88] - Non-principal-guaranteed floating income wealth management products from Xi'an Bank and Chang'an Bank accounted for 6.47% and 6.47% of total assets, respectively, with fair values of RMB 321,996 thousand and RMB 321,712 thousand[88] Dividends and Shareholder Returns - The company proposed a final dividend of RMB 0.44 per share and a special dividend of RMB 0.45 per share[2] - The proposed final dividend for 2023 is RMB 0.44 per ordinary share, and a special dividend of RMB 0.45 per ordinary share is also proposed[33] - The company plans to pay a final dividend of RMB 0.44 per share and a special dividend of RMB 0.45 per share for the year ended December 31, 2023, subject to shareholder approval at the annual general meeting[105] - The record date for determining eligibility for the proposed final and special dividends is June 21, 2024, with share transfer registration suspended from June 19 to June 21, 2024[106] R&D and Product Development - R&D expenditure was RMB 75.0 million, a year-on-year increase of 70.5%, accounting for 2.1% of revenue[52] - The company has over 40 types of collagen molecules in its recombinant collagen protein library, leading the industry[52] - The company launched several self-developed raw materials, including rare ginsenoside CK monomer and a specialized collagen repair ingredient group[52] - The company plans to increase R&D investment in 2024 to advance new product development and expand its product portfolio, focusing on medical-grade skincare products[65] - The company's research on C5HA recombinant collagen protein was published in December 2023, using advanced technologies such as laser scanning confocal microscopy and two-photon excitation[59] Sales and Marketing Performance - Revenue from customer contracts increased to RMB 3,524,143 thousand in 2023, up from RMB 2,364,445 thousand in 2022[21] - Revenue from professional skincare products grew significantly, with functional skincare contributing RMB 2,647.3 million (75.1% of total revenue), up from RMB 1,561.6 million (66.0%) in 2022[68] - Online direct-to-consumer (DTC) sales through the company's own stores generated RMB 2,154.5 million, a 77.5% increase from 2022, accounting for 61.2% of total revenue[71] - Revenue from sales to distributors increased by 14.6% to RMB 1,103.6 million, representing 31.3% of total revenue in 2023[74] - Revenue from online sales through third-party e-commerce platforms grew by 42.7% to RMB 177.5 million, accounting for 5.0% of total revenue[72] - Offline direct sales increased by 39.6% to RMB 88.5 million, driven by expanded retail presence and enhanced in-store marketing activities[73] - The company's online and offline channel layout has expanded, with products entering approximately 1,500 public hospitals, 2,500 private hospitals and clinics, 650 chain pharmacy brands, and 6,000 CS/KA stores in China[60] - The company's direct sales channel revenue reached RMB 2,420.5 million, accounting for 68.7% of total revenue, with a year-on-year increase of 9.4 percentage points[61] - The company's e-commerce channels achieved rapid growth, with GMV growth rates for Kefumei and Kelijing exceeding 165% and 70% respectively during the 618 shopping festival, and exceeding 100% and 50% respectively during the Double 11 shopping festival[61] Brand Performance - The Kefumei brand achieved revenue of RMB 2,788.3 million, a year-on-year increase of 72.9%[56] - The Keliji brand achieved revenue of RMB 616.6 million, flat compared to the same period in 2022[57] - Revenue from the Kefumei brand reached RMB 2,788.3 million, a 72.9% increase year-over-year, accounting for 79.1% of total revenue in 2023[77] - Revenue from the Kelijing brand was RMB 616.6 million, remaining stable compared to 2022, accounting for 17.5% of total revenue in 2023[78] - Other brands generated RMB 103.2 million in revenue, a 14.2% increase year-over-year, accounting for 2.9% of total revenue in 2023[78] - Health food and other products revenue decreased by 62.4% to RMB 16.0 million, accounting for 0.5% of total revenue in 2023[79] Operational and Financial Commitments - Capital commitments for buildings and plant machinery increased to RMB 490,223 thousand in 2023, compared to RMB 335,563 thousand in 2022[50] - Capital commitments for the year ending December 31, 2023, totaled RMB 490.2 million, primarily for factory buildings, machinery, and equipment[91] - Capital expenditures for the year ending December 31, 2023, amounted to RMB 229.6 million, mainly for new factory construction and production line equipment purchases[91] - The company completed the expansion of its recombinant collagen protein fermentation workshop, adding 2 new production lines for recombinant collagen protein, 4 new production lines for cosmetic products, and 2 new production lines for medical device products[62] Corporate Governance and Compliance - The financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) and the disclosure requirements of the Hong Kong Companies Ordinance, using the historical cost convention except for financial assets measured at fair value through profit or loss[10] - The consolidated financial statements include the financial statements of the company and its subsidiaries for the year ended December 31, 2023, with subsidiaries' financial statements prepared using consistent accounting policies[11] - The company has adopted new and revised IFRS standards for the current year's financial statements, including amendments to IAS 1 and IAS 8, which clarify the distinction between changes in accounting estimates and changes in accounting policies[13] - The company has disclosed significant accounting policies in the financial statements, with no impact on the measurement, recognition, or presentation of any items in the financial statements due to the amendments[13] - No major financial impact is expected from the adoption of revised International Financial Reporting Standards (IFRS) in the future[16] - The company has no significant deferred tax assets or liabilities related to the International Accounting Standards (IAS) 12 amendments[14] - The company has consistently adhered to the Corporate Governance Code, except for a deviation from Code Provision C.2.1, where the roles of Chairman and CEO are not separated, currently held by Mr. Yan Jianya[99][100] - The company has fully complied with the Standard Code for Securities Transactions by Directors during the reporting period and up to the date of the results announcement[101] - The annual general meeting is scheduled for June 13, 2024, with share transfer registration suspended from June 7 to June 13, 2024[106] - The financial data in the performance announcement has been verified by the auditor, Ernst & Young, but no assurance opinion is provided[107] - The audit committee, composed of independent non-executive directors, has reviewed the annual results for the year ended December 31, 2023[108] - The annual results announcement and annual report are available on the Hong Kong Stock Exchange website and the company's website[109] - The board of directors includes executive directors and independent non-executive directors as of March 25, 2024[109] Other Income and Expenses - Government subsidies increased to RMB 53,864 thousand in 2023, compared to RMB 44,871 thousand in 2022[25] - Interest income rose significantly to RMB 47,491 thousand in 2023 from RMB 13,159 thousand in 2022[25] - Other income, including government subsidies and interest income, totaled RMB 102,963 thousand in 2023, up from RMB 68,712 thousand in 2022[25] - Foreign exchange gains in 2023 amounted to RMB 1,091 thousand, compared to a loss of RMB 14,446 thousand in 2022[27] - The fair value gain on financial assets measured at fair value through profit or loss was RMB 29,329 thousand in 2023, compared to a loss of RMB 8,281 thousand in 2022[27] - Total other income or net loss for 2023 was RMB 30,927 thousand, a significant improvement from a net loss of RMB 23,378 thousand in 2022[27] - Pre-tax profit for 2023 was RMB 1,745,089 thousand, up from RMB 1,177,749 thousand in 2022[32] - Government subsidies in 2023 totaled RMB 53,864 thousand, compared to RMB 44,871 thousand in 2022[28] - Employee benefits expenses increased to RMB 115,492 thousand in 2023 from RMB 75,777 thousand in 2022[28] - Total tax expenses for 2023 were RMB 296,887 thousand, up from RMB 176,163 thousand in 2022[31] Product and Market Performance - The company operates as a single business segment focused on the development, manufacturing, and sale of beauty and health products based on bioactive ingredients[17] - Revenue from sales of goods is recognized at the point when control of the asset is transferred to the customer, typically upon delivery[24] - The company has no major customers contributing more than 10% of total revenue in 2023[20] - The company led the drafting and release of industry standards for recombinant collagen protein in 2023, including the first group standard for cosmetic use[53] - The company has over 100 product SKUs as of the end of the reporting period[54] - The collagen dressing product maintained its position as the top-selling product in the wound dressing category on Tmall and the medical beauty category on JD during the 618 and Double 11 promotions[54] - The collagen stick product achieved a GMV growth of over 700% during the 618 promotion and over 200% during the Double 11 promotion[55] - The collagen stick ranked first in the annual essence gold list on Douyin and the family care category on JD during the 618 promotion[55] - The collagen stick ranked first in the facial essence category on Tmall and the family care single product category on JD during the Double 11 promotion[55] - The collagen milk product ranked first in the Tmall new product list for lotions from March to April and in the top 3 of the Tmall repair lotion list from August to September[55] - The collagen milk product ranked first in the Douyin repair essence lotion list and eighth in the Douyin cream hot-selling list during the Double 11 promotion[55] - The collagen soothing patch product was awarded the Douyin Top 100 Beauty Products Gold List - Home Beauty Salon 2023 Gold List Single Product[55] Corporate Social Responsibility and Awards - The company donated over RMB 1 million worth of supplies to nearly 20,000 educators in March 2023 as part of its corporate social responsibility initiatives[64] - The company was awarded the title of "National Quality Integrity Benchmark Enterprise" and "National Recombinant Collagen Protein Industry Quality Leading Enterprise" in October 2023[63] - The company was recognized as a "Shaanxi Province Green Factory" for its achievements in green manufacturing and sustainable development[63] Employee and Shareholder Plans - The company had 1,164 full-time employees as of December 31, 2023, with 33.8% in production, 14.2% in R&D, 33.5% in sales and marketing, and 18.5% in general and administrative roles[94] - The company adopted a Restricted Stock Unit (RSU) plan in December 2021, with a maximum of 19,000,000 shares, representing approximately 1.91% of the total issued share capital[96] - The 2023 Share Option Plan and 2023 Share Award Plan allow for the issuance of up to 99,500,000 shares, representing 10% of the total issued shares[96] Financial and Operational Risks - The company had no outstanding bank loans or borrowings as of December 31, 2023, resulting in a capital-to-debt ratio of 0%[85] - As of December 31, 2023, the company had no significant contingent liabilities[91] - The company did not engage in any purchase, sale, or redemption of its listed securities during the reporting period[97] Global Offering and Proceeds Utilization - Global offering net proceeds amounted to approximately HKD 573.7 million, allocated as follows: 11% for R&D investment, 28% for production capacity expansion, 46% for sales and distribution network enhancement, 5% for operational and information system upgrades, and 10% for working capital and general corporate purposes[102] - As of December 31, 2023, the company has utilized HKD 383.6 million of the net proceeds, with HKD 173.4 million remaining, expected to be fully utilized by December 31, 2027[104] Market Expansion and Retail Presence - The company launched its first offline standard store for Kefumei in Xi'an in November 2023, and opened 3 Kelijing stores in Xi'an from May to December 2023[60] - The company's story film "Component China" achieved a total exposure of over 500 million across all platforms[59] - The company conducted over 1,000 training and exchange activities for hospitals and pharmacies during the reporting period[60]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% in the next 6-12 months [1][6]. Core Insights - The company's stock price rose by 8.47% to HKD 3.11, with a cumulative increase of 16.53% from March 10 to March 14, driven by positive fundamentals and improved market sentiment [2]. - The company has demonstrated strong online sales growth, particularly for its key products, with sales for its flagship products showing year-on-year increases of 98% for "可复美" and 84% for "可丽金" [2]. - The company is expected to launch medical aesthetic products by mid-2024, leveraging its strong R&D capabilities and established distribution channels [2][3]. Financial Performance Summary - The company’s revenue is projected to grow from RMB 2,364 million in 2022 to RMB 6,143 million by 2025, reflecting a compound annual growth rate (CAGR) of approximately 30.49% [4]. - The net profit attributable to the parent company is expected to increase from RMB 1,002 million in 2022 to RMB 2,216 million by 2025, with growth rates of 39.62%, 25.07%, and 26.64% for the years 2023, 2024, and 2025 respectively [4][5]. - The report forecasts a price-to-earnings (P/E) ratio of 27, 22, and 17 for the years 2023, 2024, and 2025, respectively, indicating a favorable valuation trend [3][4].

Investment Rating - The report maintains a "Recommended" rating for the company, with a current price of 41.95 HKD [2]. Core Insights - The company has achieved a technological breakthrough in the high-temperature stable triple helix structure of recombinant human collagen, enhancing its R&D leadership in the field [1]. - The launch of the new "胶卷面霜" (Collagen Cream) under the 可丽金 brand signifies the initial formation of the "胶卷系列" (Collagen Series), targeting the mid-to-high-end market with multifunctional skincare products [1]. - The company is well-positioned for growth in the recombinant collagen sector, with a rich product line in cosmetics and anticipated approvals for two Class III medical devices in 2024 [1]. Financial Forecast and Key Metrics - Projected revenue growth rates are 52.3% for 2023, 45.0% for 2024, and 30.7% for 2025, reaching revenues of 2,364 million, 3,430 million, and 4,483 million respectively [2][6]. - Adjusted net profit is expected to be 1,002 million in 2023, 1,372 million in 2024, and 1,731 million in 2025, with growth rates of 21.0%, 36.9%, and 26.2% respectively [2][6]. - The earnings per share (EPS) is projected to increase from 1.01 in 2023 to 2.11 in 2025, with corresponding P/E ratios of 38, 28, and 22 [2][6]. Product Development and Market Position - The company has developed over 40 types of recombinant collagen, with a strong focus on R&D for over 20 years, which solidifies its leading position in the market [1]. - The introduction of the "胶卷面霜" complements the previously launched "胶卷眼霜" (Collagen Eye Cream), enhancing the product matrix to meet consumer demands for anti-aging solutions [1]. - The company plans to launch two Class III medical devices in 2024, further expanding its product offerings in the medical aesthetics sector [1].

股 票 研 究 [Table_industryInfo] 家庭及个人用品 [ Table_Main[巨I Tnaf 子bol]e 生_Ti物tle]（ 2367） [评Tab级le_：Inv est] 增持 当前价格（港元）： 39.05 38 大促亮眼，明星单品持续放量 2024.03.12 海 ——巨子生物更新点评 [ 交Ta易bl数e_M据a rket] 外 訾猛(分析师) 闫清徽(分析师) 杨柳(分析师) 52周内股价区间（港元） 29.30-58.15 当前股本（百万股） 995 公 021-38676442 021-38031651 021-38038323 当前市值（百万港元） 38,855 司 zimeng@gtjas.com yanqinghui@gtjas.com yangliu@gtjas.com 证书编号 S0880513120002 S0880522120004 S0880521120001 （ [ Table_PicQuote] 中 本报告导读： 52周内股价走势图 国 公司旗下可复美、可丽金 38大促高增，明星单品胶原棒维持强势趋势，可丽金大膜 巨子生物 恒生指数 王面膜亮眼，看 ...

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 48.84, indicating a potential upside of 25.1% from the current price of HKD 39.05 [1]. Core Insights - The company has shown strong online sales performance, particularly during promotional events, with significant growth in its key brands, especially 可复美 and 可丽金 [1][2]. - The report highlights that the online sales growth is expected to continue, driven by the company's strong product offerings and market positioning [1]. - The financial projections indicate a steady increase in revenue and net profit over the next few years, with sales expected to reach RMB 4,358 million in FY24E and RMB 5,590 million in FY25E [15][16]. Sales Performance - In February 2024, the online sales of 可复美 reached RMB 2,143.6 million, showing a year-on-year growth of 51.9% [1]. - The brand ranked seventh in terms of GMV among beauty brands during a recent promotional event, achieving sales of RMB 2,385.69 million [2]. - The report notes that the sales growth for 可丽金 was robust, with a year-on-year increase of 463.9% in February 2024 [1]. Financial Projections - The company is projected to achieve a net profit of RMB 1,607 million in FY24E, with a growth rate of 23.1% [15][16]. - The gross margin is expected to remain stable around 83.8% for FY24E [15]. - The report anticipates a steady increase in free cash flow, reaching RMB 1,364 million in FY24E [13]. Market Positioning - The company is well-positioned in the beauty and skincare market, with its products performing strongly on major e-commerce platforms like Tmall and Douyin [1][3]. - The report emphasizes the importance of the company's innovative product launches and marketing strategies in maintaining its competitive edge [1]. Valuation Metrics - The DCF model values the company's equity at RMB 43,735 million, translating to a per-share value of HKD 48.84 [13][14]. - The report indicates a favorable valuation with a P/E ratio projected to decrease from 41.4 in FY23E to 21.8 in FY26E, suggesting potential for growth [19].

Investment Rating - Maintains a "Buy" rating with a target price of HKD 48.84 [1] Core Views - The online sales growth of Juzi Bio's key brand, ClassiFace, continues to show strong momentum, with a 140.5% YoY increase in January 2024 across major e-commerce platforms [1] - ClassiFace's sales on Tmall and Douyin grew by 160.5% and 185.8% YoY, respectively, in January 2024 [1] - The brand KeLiJin also demonstrated robust growth, with a 65.7% YoY increase in sales across platforms, driven by strong performance on Douyin (646.5% YoY growth) [1] - Juzi Bio is expected to launch 2 new injectable collagen products in 2024, which could further boost its performance [1] Financial Performance - Revenue is projected to grow from RMB 3,375 million in FY23E to RMB 5,590 million in FY25E, with a CAGR of 28.3% [2] - Net profit is expected to increase from RMB 1,305 million in FY23E to RMB 1,972 million in FY25E [2] - Gross margin remains stable at around 83.7%-83.8% from FY23E to FY25E [2] E-commerce Performance - In January 2024, the beauty and skincare industry saw a 7.9% YoY growth on Tmall and Taobao, while Douyin experienced an 80.0% YoY increase [1] - ClassiFace's facial serums and creams showed exceptional growth, with sales up 431% and 1,161% YoY on Tmall and Taobao, respectively [1] - KeLiJin's facial serums and creams also grew significantly, with sales up 916% and 486% YoY on Tmall and Taobao [1] Product Pipeline - Juzi Bio launched new skincare products in late 2023 and early 2024, including the ClassiFace Order Essence and KeLiJin Collagen Eye Cream [1] - The company has 4 injectable collagen products in development, with 2 expected to be approved in 2024 [1] Valuation - The target price of HKD 48.84 is based on a 9-year DCF model with a WACC of 11.4% and a terminal growth rate of 3.0% [1] - The stock offers a potential upside of 35.9% from the current price of HKD 35.95 [3]

Group 1 - The core point of the article is that Juzhi Biotechnology (02367) has seen a significant stock price increase following its inclusion in the MSCI China All Shares Index, which will take effect after the market closes on February 29, 2024 [1] - Juzhi Biotechnology is recognized as a leader in the domestic recombinant collagen industry, leveraging strong academic and research capabilities to achieve breakthroughs in recombinant collagen preparation technology [1] - The market for recombinant collagen is projected to grow substantially, with retail sales expected to rise from 10.8 billion yuan in 2021 to 108.3 billion yuan by 2027, reflecting a compound annual growth rate (CAGR) of 46.9% [1] Group 2 - The company is positioned as a frontrunner in the recombinant collagen sector, with significant technological barriers to entry [1] - Juzhi Biotechnology's brands, Kefu Mei and Keli Jin, are expected to continue expanding their market share through a diverse product matrix and comprehensive channel strategies [1] - The company's successful positioning in the medical aesthetics sector is anticipated to enable it to rapidly capture opportunities in the recombinant collagen injection market [1]

Financial Performance - For the six months ended June 30, 2023, the company's revenue reached RMB 1,605.7 million, representing a 63.0% increase compared to RMB 984.9 million in the same period of 2022[9]. - Gross profit for the same period was RMB 1,351.0 million, up 61.2% from RMB 838.3 million year-on-year[9]. - The company's profit before tax was RMB 775.6 million, reflecting a 51.2% increase from RMB 513.1 million in the previous year[9]. - Net profit for the six months ended June 30, 2023, was RMB 666.0 million, a 52.3% increase from RMB 437.2 million in the same period of 2022[47]. - Basic earnings per share increased by 48.9% to RMB 0.67, while diluted earnings per share rose by 61.0% to RMB 0.66[48]. Revenue Breakdown - Revenue from professional skincare products was RMB 1,197.0 million, accounting for 74.5% of total revenue, up from 62.4% in the previous year[27]. - Revenue from the Kefu Mei brand reached RMB 1.228 billion, representing a growth of 101.0% compared to the same period in 2022[18]. - The Keli Jin brand achieved revenue of RMB 321 million, reflecting a growth of 6.4% compared to the same period in 2022[19]. - Revenue from health food and other products was RMB 10.9 million, a decrease from RMB 24.1 million in the previous year[27]. - Revenue from sales to distributors was RMB 522.6 million, a 10.2% increase year-on-year, accounting for 32.5% of total revenue[32]. Research and Development - Research and development expenses amounted to RMB 34.0 million, an increase of 80.8% year-on-year, with R&D spending accounting for 2.1% of revenue, up 0.2 percentage points[12]. - The company has authorized and applied for a total of 86 patents, with 6 new patents added during the reporting period[13]. - The company launched several self-developed raw materials for new products, including a rare ginsenoside CK monomer with significant anti-inflammatory effects[14]. - The company is leading the establishment of industry standards for recombinant collagen protein materials in the cosmetics sector, marking a milestone in the standardization of this industry[13]. Assets and Equity - The total assets of the company as of June 30, 2023, were RMB 3,878.0 million, a 23.6% increase from RMB 3,138.2 million at the end of 2022[10]. - The total equity increased to RMB 3,517.5 million, up 24.0% from RMB 2,837.0 million at the end of 2022[10]. - As of June 30, 2023, the company's current assets amounted to RMB 1,557.5 million, a 17.0% increase from RMB 1,331.0 million at the end of 2022[58]. Sales and Marketing - The direct sales channel generated revenue of RMB 1.083 billion, accounting for 67.5% of total revenue, while the distribution channel contributed RMB 523 million, making up 32.5%[22]. - During the 618 promotional event, the Kefu Mei collagen stick sold over 35 million units, with GMV increasing by over 700% year-on-year[17]. - The Kefu Mei brand's collagen dressing was ranked TOP1 in the Tmall wound dressing category during the 618 event[16]. - The company expanded its sales network to approximately 1,400 public hospitals and 2,200 private hospitals and clinics across China[22]. Operational Efficiency - The company continues to expand its production capacity to strengthen its end-to-end manufacturing capabilities[11]. - The company added 2 new collagen production lines, 2 cosmetic production lines, and 1 medical device production line during the reporting period[23]. - The company aims to improve operational efficiency and user engagement through refined channel operations and content marketing strategies[25]. Cash Flow and Investments - Net cash from operating activities for the six months ended June 30, 2023, was RMB 692,895 thousand, significantly up from RMB 311,408 thousand in the same period of 2022, indicating an increase of about 122%[105]. - Cash flow from investment activities for the six months ended June 30, 2023, was a net outflow of RMB 472,404 thousand, compared to a net outflow of RMB 175,761 thousand in 2022[106]. - The company incurred RMB 186,961 thousand in capital expenditures for property, plant, and equipment during the six months ended June 30, 2023, compared to RMB 42,605 thousand in 2022[106]. Corporate Governance - The board of directors has adopted corporate governance practices in compliance with applicable codes, although it has not separated the roles of chairman and CEO[69]. - The company has adopted a restricted share unit plan allowing for a maximum of 19,000,000 shares to be granted, representing approximately 1.91% of the total issued share capital[66]. - The company aims to align employee incentives with shareholder interests through the restricted share unit plan[82]. Employee and Management - The company has a total of 1,023 full-time employees as of June 30, 2023, with 36.7% in production, 13.0% in R&D, 33.0% in sales and marketing, and 17.3% in general and administrative roles[64]. - The total remuneration for key management personnel was RMB 9,185 thousand for the six months ended June 30, 2023, compared to RMB 7,591 thousand for the same period in 2022, reflecting a 21.0% increase[133].