Bloomage Biotech(SH:688363) SPDB International·2024-08-26 08:03Investment Rating - The report maintains a "Hold" rating for the company and lowers the target price to RMB 48.9 [1][2]. Core Views - The company experienced a revenue decline of 18.1% in Q2 2024, with a significant drop in net profit attributable to shareholders by 56% year-on-year, indicating that a return to growth will take time [1]. - Adjustments in the functional skincare product line are ongoing, with a 30% year-on-year revenue decline in the first half of 2024. Despite some improvements in the brand structure, revenue for the leading brand, Runbaiyan, still fell by over 10% [1]. - The company anticipates a sequential growth in the second half of 2024 due to new product launches and increased marketing efforts for major sales events like Double Eleven [1]. - Revenue from raw materials and medical aesthetic products has supported overall revenue during the decline in functional skincare, with raw material revenue growing by 11% year-on-year in the first half of 2024 [1]. - The report projects a recovery in profit margins due to reduced promotional expenses and cost control measures, despite a temporary increase in sales and management expense ratios [1]. Financial Summary - The company's revenue is projected to decline from RMB 6,359 million in 2022 to RMB 5,880 million in 2024, with a year-on-year change of -3.2% [2][7]. - Net profit attributable to shareholders is expected to recover slightly from RMB 593 million in 2023 to RMB 597 million in 2024, reflecting a minimal year-on-year increase of 0.7% [2][7]. - The price-to-earnings (PE) ratio is projected to be 42.7x in 2024, decreasing to 30.3x in 2025 [2][7]. - The return on equity (ROE) is expected to decline from 8.7% in 2023 to 8.2% in 2024, before recovering to 10.7% in 2025 [2][7].