Core Viewpoint - The A-share market is experiencing a low level of restricted stock unlocks, with significant implications for companies like Huaxi Biological and Baotong Energy [1][2]. Summary by Sections Restricted Stock Unlocks - This week, 30 companies had restricted stocks unlocked, totaling 887 million shares with a market value of 26.032 billion yuan [1]. - Huaxi Biological (688363.SH) accounted for a significant portion, with 284 million shares unlocking, representing 58.86% of its total share capital and a market value of approximately 17.01 billion yuan [1][2]. - Four companies had unlocks exceeding 1 billion yuan, including Huaxi Biological, Baotong Energy (001376.SZ), Lei'ao Planning (300989.SZ), and Nasda (002180.SZ) [1]. Shareholder Actions - Guoshou Chengda plans to reduce its holdings in Huaxi Biological by up to 12.042 million shares, or 2.5% of total shares, aiming to raise around 700 million yuan [2]. - Following the announcement of the reduction plan, Huaxi Biological's stock price has declined by 25% [2]. Financial Performance - Huaxi Biological has seen a decline in both revenue and net profit since 2023, with a reported net profit of 593 million yuan in the previous year, down approximately 39% year-on-year [2]. - For the first three quarters of this year, the company reported revenue of 3.875 billion yuan, a decrease of 8.21%, and a net profit of 362 million yuan, down about 30% [2]. - The third quarter's net profit was the lowest since the company's listing, with figures of 243 million yuan, 98 million yuan, and 20 million yuan for the three quarters respectively [2]. Business Transformation - Huaxi Biological has initiated a transformation in its medical aesthetics business since 2021, which has reportedly entered a positive development phase by 2023 [4]. - The company's main business, functional skincare products, has seen a revenue drop from over 70% of total revenue in 2022 to around 60% in 2023, with a 29.74% decline in revenue for the first half of 2024 [4]. - The chairman indicated that the company is undergoing a phased adjustment across various aspects, including brand development and product structure, which may take time to show results [4]. Market Impact - The unlocking of shares from Baotong Energy, which has 169 million shares unlocking, is expected to impact its stock price significantly due to the involvement of 275 shareholders [5]. - Baotong Energy's stock price has dropped from a peak of 49.40 yuan to 15.98 yuan, although it still shows a 250% increase from its issue price of 4.56 yuan [5]. - The overall market for restricted stock unlocks includes various types, with a focus on original shareholders and equity incentive shares [6].

Investment Rating - The report maintains a "Recommended" rating for the company, with a current price of 60.00 CNY [4]. Core Views - The company has faced short-term performance pressure due to organizational changes and is advised to focus on quality improvement and efficiency enhancement post-adjustment [2]. - The company is a leader in hyaluronic acid, with a solid foundation in raw materials, and the medical beauty business is expected to grow rapidly driven by the "Runzhi" brand [2]. - The company is focusing its R&D on glyco-biology and cell biology, which are expected to provide rich application scenarios for aging intervention and regenerative medicine [2]. Financial Performance Summary - For the first three quarters of 2024, the company achieved revenue of 3.875 billion CNY, a year-on-year decrease of 8.21%, and a net profit attributable to shareholders of 362 million CNY, down 29.62% [2]. - The gross profit margin for the first three quarters of 2024 was 73.93%, with a net profit margin of 9.34% [2]. - The company expects net profits for 2024-2026 to be 511 million CNY, 745 million CNY, and 997 million CNY, with year-on-year growth rates of -13.7%, +45.7%, and +33.8% respectively [3][5]. Sales and Cost Structure - The sales expense ratio for the first three quarters of 2024 was 42.09%, a decrease of 3.92 percentage points year-on-year, while the management expense ratio increased to 10.92%, up 3.34 percentage points [2]. - The R&D expense ratio was 8.08%, reflecting an increase of 1.52 percentage points year-on-year [2]. Product Development and Market Strategy - The skincare business is undergoing product upgrades and new launches based on the latest research, including the introduction of new products like collagen tightening cream and CT50 anti-gravity cream [2]. - The medical terminal business is expanding its product line, with new offerings such as neck wrinkle injections and lip fillers, enhancing the company's position in the anti-aging market [2]. Long-term Growth Potential - The company is expected to see a rebound in performance in the medium to long term, with a projected increase in net profit driven by strategic adjustments and product innovation [2][3].

Investment Rating - The report maintains a "Hold" rating for Huaxi Biotech (688363 CH) with a target price of RMB 62 1, implying a potential upside of 3 7% from the current price of RMB 59 9 [2][9] Core Views - Huaxi Biotech's functional skincare business and management restructuring are still ongoing, leading to a 7 1% YoY decline in 3Q24 revenue and a 77% YoY drop in net profit attributable to shareholders [1] - The company's skincare business is expected to take a longer time to complete its transformation, with 3Q24 skincare revenue down 22% YoY, though the decline narrowed from 1H24 (-30%) [1] - The medical aesthetics business is driving growth, with 3Q24 revenue up 10% YoY, supported by new product launches and clear channel strategies [1] - Management expenses rose significantly in 3Q24 due to increased backend costs and consulting fees, leading to a 5 1ppt decline in core operating profit margin [1] Financial Performance and Forecasts - Revenue for 2024E is projected at RMB 5,741 million, down 5 5% YoY, with net profit attributable to shareholders expected to decline 30 6% YoY to RMB 411 million [4][5] - The company's gross margin improved to 72 4% in 3Q24, up 1 3ppt YoY, driven by higher-margin medical aesthetics products [1] - Operating cash flow is expected to improve, with 2024E operating cash flow projected at RMB 917 million, up from RMB 700 million in 2023 [6] Business Segments - Skincare business: Revenue declined 22% YoY in 3Q24, but the company has launched new products focusing on functional sugar and cell biology, aiming to stabilize Q4 revenue [1] - Medical aesthetics business: Revenue grew 10% YoY in 3Q24, with new products expected to drive further growth in 2025 [1] - Raw materials business: Revenue remained flat in 3Q24, while the medical terminal business became the only growth driver [1] Valuation and Market Performance - The target price of RMB 62 1 is based on an upward revision due to the rising valuation center of the cosmetics industry [1] - The company's PE ratio for 2024E is 70 1x, reflecting the market's expectation of future growth [4] - The stock's 52-week price range is RMB 44 7-84 6, with a current market cap of RMB 28,843 million [2]

Investment Rating - The report maintains an "Outperform the Market" rating for the company [3][10][12] Core Views - The company's revenue for the first three quarters of 2024 was 3.875 billion yuan, a year-on-year decrease of 8.21%, with a net profit attributable to shareholders of 362 million yuan, down 29.62% year-on-year. The third quarter alone saw revenue of 1.064 billion yuan, a decline of 7.14% year-on-year, and a net profit of 20 million yuan, down 77.44% year-on-year [5][10] - The company is undergoing a transformation in its skincare business and internal management changes, which have temporarily impacted performance. However, the introduction of new medical beauty products and adjustments in the skincare business are expected to lead to a gradual recovery in future performance [5][10] - The medical terminal business has shown strong growth, with a 45% increase in the first three quarters, driven by an improved product matrix and increased coverage of medical beauty institutions [5][10][11] Financial Summary - The company's gross margin in the third quarter was 72.38%, an increase of 1.25 percentage points year-on-year, benefiting from a higher proportion of high-margin medical beauty products [6][10] - Operating cash flow for the first three quarters was 274 million yuan, a year-on-year increase of 16.67%, indicating good cash flow conditions [6][10] - The report projects a decline in net profit for 2024-2026, with revised estimates of 534 million yuan, 636 million yuan, and 775 million yuan for those years, respectively, reflecting ongoing adjustments in the brand and organizational structure [10][11]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company reported a revenue of 3.875 billion yuan for the first three quarters of 2024, a year-on-year decrease of 8.21%, and a net profit attributable to shareholders of 362 million yuan, down 29.62% year-on-year [2] - The cosmetic business is undergoing adjustments, with a significant decline in functional skincare revenue, which was 1.4 billion yuan in the first half of 2024, down 30% year-on-year. The company is focusing on developing major products and series around six categories of substances [2] - The medical beauty business is growing rapidly, with skin-related medical product revenue reaching 600 million yuan in the first half of 2024, a year-on-year increase of 70%. New products targeting neck and lip treatments were launched in October 2024 [2] - The increase in operating expenses significantly impacted net profit margins, with the net profit margin for the first three quarters of 2024 at 9.34%, down 2.84 percentage points year-on-year [2] - The company is a global leader in the hyaluronic acid industry, and despite short-term pressures on growth due to strategic adjustments in the skincare segment, the profit forecasts for 2024-2026 have been revised downwards [2] Summary by Sections Financial Performance - Total revenue for 2022 was 6.359 billion yuan, with a year-on-year growth of 28.53%. In 2023, revenue decreased to 6.076 billion yuan, down 4.45%. The forecast for 2024 is 5.941 billion yuan, a further decline of 2.21% [1] - Net profit attributable to shareholders was 970.92 million yuan in 2022, decreasing to 592.56 million yuan in 2023, a drop of 38.97%. The forecast for 2024 is 541.67 million yuan, down 8.59% [1] - The latest diluted EPS is projected to be 1.12 yuan for 2024, with a P/E ratio of 53.98 based on the current price [1] Business Segments - The functional skincare segment is currently in a state of adjustment, with a focus on innovation and the development of new biological materials [2] - The medical beauty segment is expanding, with significant revenue growth and new product launches aimed at addressing specific cosmetic concerns [2] Profitability Metrics - Gross margin for the first three quarters of 2024 was 73.93%, an increase of 0.86 percentage points year-on-year. However, the net profit margin was pressured due to rising operating expenses [2]

Investment Rating - The report maintains a "Buy" rating for the company [2] Core Viewpoints - The company's performance is under pressure due to adjustments in its cosmetics business and management reforms, leading to a decline in revenue and net profit [3] - The cosmetics segment is dragging down revenue growth, while the medical terminal business is growing rapidly, supported by new product launches [4] - Management reforms have increased administrative expenses, impacting net profit margins [4] - The company is expected to achieve net profits of 530 million, 740 million, and 1 billion yuan in 2024, 2025, and 2026, respectively, with corresponding P/E ratios of 55x, 39x, and 29x [4] Business Performance Summary - Revenue for 24Q1-Q3 was 3.87 billion yuan, down 8.2% YoY, with net profit of 360 million yuan, down 29.6% YoY [3] - In 24Q3, revenue was 1.06 billion yuan, down 7.1% YoY, and net profit was 20 million yuan, down 77.4% YoY [3] - Gross margin for 24Q1-Q3 was 73.9%, up 1.3 percentage points YoY, while Q3 gross margin was 72.4%, down 0.4 percentage points YoY [4] - Sales expense ratio for 24Q1-Q3 was 42.1%, down 3.9 percentage points YoY, while administrative expense ratio increased by 3.3 percentage points to 10.9% [4] - R&D expense ratio for 24Q1-Q3 was 8.1%, up 1.5 percentage points YoY [4] Financial Forecasts - Revenue is expected to grow from 5.75 billion yuan in 2024 to 7.58 billion yuan in 2026, with a CAGR of 14.7% [5] - Net profit is projected to increase from 532 million yuan in 2024 to 1 billion yuan in 2026, with a CAGR of 37.2% [5] - EPS is forecasted to rise from 1.10 yuan in 2024 to 2.08 yuan in 2026 [5] Business Segment Analysis - The raw materials business showed steady growth, driven by food-grade product expansion [4] - The medical terminal business grew rapidly, supported by new medical aesthetic products [4] - The cosmetics business faced challenges due to weak consumer demand and internal brand adjustments [4]

Investment Rating - The report maintains a "Buy" rating for the company [2][7] Core Views - The company has shown significant growth in its medical beauty business, and there are expectations for the results of its third strategic upgrade to materialize [2][4] - The company’s revenue for the first three quarters of 2024 was 3.87 billion yuan, a year-on-year decrease of 8.2%, with a net profit attributable to the parent company of 360 million yuan, down 29.6% year-on-year [3][4] - The medical beauty business has been highlighted as a key growth area, with new product launches expected to enhance market presence [5][7] Summary by Sections Revenue Performance - The company reported a revenue of 1.06 billion yuan in Q3 2024, a year-on-year decrease of 7.1%, and a net profit of 2.026 million yuan, down 77.4% year-on-year [3][4] Business Segments - The raw materials business remains stable, while the medical beauty segment has shown notable growth despite some slowdown due to macroeconomic factors [4][5] - The skincare business is undergoing a strategic transformation, with new products launched that leverage advanced technologies for skin health [4][5] Financial Metrics - The gross margin for the first three quarters of 2024 was 73.9%, an increase of 0.9 percentage points year-on-year, driven by a higher proportion of high-margin medical beauty revenue [5][6] - The company’s expense ratio for the first three quarters of 2024 was 60.9%, up 1.3 percentage points year-on-year, with a focus on controlling sales expenses [6][7] Future Outlook - Revenue forecasts for 2024-2026 have been adjusted to 5.63 billion, 6.56 billion, and 7.68 billion yuan respectively, reflecting downward revisions of 9%, 8%, and 11% [7] - The company is expected to enhance its competitive advantage in R&D and product offerings through its strategic focus on synthetic biology and regenerative medicine [7]

Investment Rating - The report maintains an "Outperform" rating for the company, indicating a positive outlook compared to the market [5][8]. Core Insights - The company reported a revenue of 3.875 billion yuan for the first three quarters of 2024, a year-on-year decline of 8.21%, and a net profit attributable to shareholders of 362 million yuan, down 29.62% year-on-year [5][6]. - The gross margin remains stable at 73.93%, while the net profit margin has decreased to 9.34% [6][8]. - The company is focusing on biological research and product innovation, launching new products in regenerative medicine and aesthetic medicine [7][8]. - The cosmetics segment is undergoing transformation, with a focus on hyaluronic acid and cell biology research, aiming for improved performance in the skincare market [8]. Financial Summary - For the first three quarters of 2024, the company reported a revenue of 38.75 billion yuan, a decrease of 8.21% year-on-year, and a net profit of 3.62 billion yuan, down 29.62% year-on-year [5][13]. - The projected net profits for 2024 to 2026 are revised to 5.12 billion yuan, 6.32 billion yuan, and 7.46 billion yuan, respectively, with corresponding price-to-earnings ratios of 57, 46, and 39 [8][9]. - The company’s total revenue for 2023 was 6.076 billion yuan, with a projected revenue of 5.992 billion yuan for 2024, indicating a slight decline [9][15].

Investment Rating - The report maintains a "Buy" rating for the company [4] Core Views - The company is undergoing an adjustment phase, with revenue and profit under pressure, leading to a downward revision of earnings forecasts. The expected EPS for 2024-2026 is projected at 1.08 (-0.43), 1.59 (-0.55), and 2.01 (-0.69) yuan respectively. The overall cost reduction potential is significant, and the company has substantial room for profit improvement compared to peers in the medical beauty sector. A PS valuation method is used, with a target price raised to 78.86 (+16.05) yuan, reflecting a market sentiment recovery [2][4] Financial Summary - For Q1-Q3 2024, the company's revenue, net profit attributable to the parent, and net profit excluding non-recurring items were 387.5 million, 36.2 million, and 32.7 million yuan, respectively, showing declines of 8%, 30%, and 25% year-on-year. Q3 figures were 106 million, 2 million, and 1.1 million yuan, with year-on-year declines of 7%, 77%, and 85% [2] - The gross margin for Q3 2024 was 72.4%, up 1.2 percentage points year-on-year, primarily due to an increase in the proportion of high-margin medical terminal business. The net profit margin was 1.7%, down 5.7 percentage points year-on-year, attributed to revenue decline and rigid expense rates [2] - The company’s sales, management, and R&D expense ratios for Q3 2024 were 42.5%, 16.6%, and 10.6%, showing year-on-year changes of -3.1, +6.6, and +2.7 percentage points respectively [2] Business Performance - The medical beauty segment performed relatively well, with medical terminal revenue expected to grow approximately 45% year-on-year for Q1-Q3 2024. The company’s new medical beauty products are set to launch in Q4 2024, with expectations for significant growth in 2025 [2] - The company is focusing on two main directions: glyco-biology and regenerative medicine, with new skincare products being launched. The management team has been adjusted, and the company is concentrating on precise cell regulation and self-repair mechanisms [2]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is undergoing an organizational management transformation, which is expected to lead to a return to growth after a challenging third quarter due to a sluggish consumer environment and ongoing changes [1][3] - The company reported a revenue of 3.875 billion yuan for the first three quarters of 2024, a decrease of 8.2% year-on-year, and a net profit of 362 million yuan, down 29.6% [1] - The third quarter alone saw revenues of 1.064 billion yuan, down 7.1%, and a net profit of 204 million yuan, down 77.4% [1] - The earnings forecast for 2024-2026 has been revised downwards, with expected net profits of 563 million yuan, 722 million yuan, and 901 million yuan respectively [1] Summary by Relevant Sections Financial Performance - For the first three quarters of 2024, the gross margin was 73.9%, an increase of 0.9 percentage points [2] - The sales expense ratio improved to 42.1%, down 3.9 percentage points, indicating enhanced operational efficiency [2] - Research and development expense ratio increased to 8.1%, reflecting a commitment to R&D investment [2] - Management expense ratio rose to 10.9%, up 3.3 percentage points [2] Business Developments - The company has completed the "Hua Xi Bio Intermediate Product Transformation Center," which can support various bioactive raw materials for small-scale commercial production [2] - The self-developed "Sodium Hyaluronate Injection Compound Solution" received approval, marking a significant milestone in the medical aesthetics sector [2] - New product launches in September, including "Run Bai Yan Collagen Tightening Cream" and "Quadi CT50 Anti-Sagging Cream," are anticipated to help revive the functional skincare segment [2][3] Future Outlook - The company is focused on internationalization to maintain its global market share in hyaluronic acid and is enhancing its product structure through foundational R&D [3] - New product releases in October aim to expand the product matrix and tap into niche markets [3] - The company expects its four major brands in functional skincare to return to growth after the adjustment period [3]