"I believe in hyaluronic acid more than marriage, because it works every time." This is a classic line by Samantha, one of the heroines in the once popular American drama "Sex and the City".
When appearance economy is popular, medical beauty is naturally a hot topic. As the leader of hyaluronic acid "Women's Moutai", Aimeike, the stock price has soared since it went public in September 2020. In less than a year, the market value level has achieved a leap of more than three times, reaching a historical high of 170 billion yuan, and then it has fallen all the way and adjusted to this day. However, compared with the other two Huaxi Biology and Haohai Biotechnology, the "Three Musketeers of Medical Beauty", the valuation of Aimeike is still much higher after the pullback.
Figure 1: The price-to-earnings ratio trend of the "Three Musketeers of Medical Beauty" Data source: wind 36Kr compiled
With the pullback of stock prices, the market's doubts about Aimeike's high valuation are becoming more and more serious. Faced with market doubts, this article tries to answer the following three questions in order to clarify Aimeike's investment logic:
What is the core driving force of Aimeike's product matrix?
Is Aimeike's high growth myth sustainable?
Now it seems that Is Aimeike worth buying?
1. Hi-body supports most of Aimeike's Jiangshan
At present, Aimeike mainly sells various types of hyaluronate (hyaluronic acid) products, including dermal fillers, facial implant line products, derivative cosmetics, etc. According to the data in the 2021 interim report, Aimeike achieved operating income of 633 million yuan, a year-on-year increase of 161.87% by selling the above products; and achieved net profit of 425 million yuan, a year-on-year increase of 195.42%.
Figure 2: 2018-2021 Aimeike main financial data Data source: wind 36Kr compiled
If divided according to product categories, the company's medical beauty-grade hyaluronic acid products can be divided into two categories: gel injection and solution injection. 2021H1, the revenue of solution injection products (including HiTi and YiMi) reached 476 million yuan, contributing 75.2% of the revenue. Due to product iteration, Yimei's revenue accounted for less than 1% as early as 2019. Therefore, in the current revenue structure, HiTi contributed nearly 70% of the company's revenue.
Figure 3: 2021H1 Aimeike revenue composition Data source: wind 36Kr compiled
In terms of profitability, the company's medical beauty-grade hyaluronic acid products have little difference in gross profit margins, both around 93%. The gross profit margins of solutions (including Hi-body) are relatively slightly higher, while the gross profit margins of smaller cosmetics and facial implant lines are generally low.
In short, compared with other products, HiTi is larger, has faster growth rate and is more profitable. Considering that the company's research products are still some time before they go public, it will not immediately contribute its performance, so in the short term, HiTi is the core factor that determines the company's growth.
2. The ceiling of the Hi-body is high
Hi-body is a typical non-surgical light medical beauty project. Compared with surgical projects, non-surgical projects have the characteristics of low single-time price, low risk, and low trauma, so the market acceptance is high. On the other hand, as a hyaluronic acid project, the characteristics of high frequency and low price and high repurchase rate ensure considerable user stickiness.
According to Frost Sullivan data, from 2016 to 2020, the CAGR of China's medical beauty hyaluronic acid terminal products reached 24.0%, with a market size of 5.77 billion yuan in 2020, and it is expected that it will continue to grow rapidly with a CAGR of more than 20% in the next five years. Therefore, at the industry level, the high growth of hyaluronic acid itself is a major support for Hi-body to maintain high growth in the future. According to the indications of
points, Hi-body is mainly used to solve transverse neck lines, while Hi-body panda needle aims at the periorbital track. In 2020, the market size of neck striae was 444 million yuan. It is estimated that the market size of neck striae in Hi-body will reach 1.842 billion yuan in 2025, with a 5-year CAGR as high as 33%.
In the periorbital market, due to the scarcity of compliant products and the penetration rate is lower than that of the neckline market, a higher conversion rate is expected in the target user group. Moreover, with broad market space as support, Panda Needle is also expected to seize this market blue ocean with its compliance and price advantages.
In general, the neck and eye socket markets have excellent growth potential, which is also the current market consensus. As a scarce compliant product, HiTian has its own relatively high user stickiness and high-frequency consumption characteristics, the future ceiling is still very high.
3. Where is the company's core competitiveness?
1, exclusive advantages under compliance
In China, HiTian belongs to Class III medical devices and must pass the review and approval of the State Food and Drug Administration before it is launched. Since the research and development, clinical and registration application cycles of injection-based hyaluronic acid medical beauty products usually take 2-5 years, there are not many compliant products at present.
Therefore, whoever has the first-mover advantage of the policy guarantees.
In the domestic neck mark market, HiTi is the only certified product, and public information shows that no relevant competitors have submitted their applications to the Drug Administration. Therefore, HiTian has an exclusive period of at least 2 years and has a clear first-mover advantage. With the continuous advancement of consumer education, the penetration rate of Hi-body has increased and the market size has expanded. Its profitability will be further improved on the basis of the incremental market for medical beauty.
Figure 4: Application process and time of medical devices Data source: Guoyuan Securities Research Institute
2, channel, marketing advantages
Compared with the traditional medical industry, medical beauty has strong consumption attributes. From the perspective of demand, in traditional medical services, patients' medical needs are usually triggered by their own diseases, which are highly demanding and necessitative; in medical beauty services, consumers' medical needs usually start from their own aesthetic needs and are triggered by marketing, which has relatively high autonomy and optionality. In terms of academic promotion, since the medical beauty industry is dominated by non-public medical beauty institutions, and the extensive intervention of private capital has made the profit ranking of products more advanced, so the use of related products in the medical beauty program is mainly driven by cost, and doctors have low sales decision-making power.
Based on the marketing attributes of medical beauty, Aimeike has established an efficient and stable B-end channel network through the sales model of "direct sales as the main and distribution as the auxiliary". As of the end of 2020, it has achieved full coverage of 5,000 medical beauty institutions in 31 provinces, cities, and autonomous regions.
In addition, in order to strengthen the B-end channels, Aimeike has established the "Quanxuan College" education platform, and provided technical training for medical beauty institutions by forming training teams such as experts. This not only cultivates doctors' habits of using Hi-Teacher, thereby improving the stickiness of B-end customers, but also professional market education can help companies improve brand awareness and acceptance and establish brand barriers.
In terms of financial performance, from 2017 to 2021, excluding the impact of the hindered promotion of the epidemic product, sales expenses related to Aimeik channel promotion showed a steady increase with the increase in sales scale and marketing varieties.
Compared with sales expenses, the company's revenue grew faster, and the sales expense ratio decreased by nearly 9.5 percentage points between 2018 and 2021Q3, reflecting strong cost control capabilities.
Compared with its peers, Huaxi Biology and Haohai Biotechnology's marketing is mainly aimed at the C-end, while global medical beauty leaders Allijian and Aimei are aimed at the B-end. Because B-end customers have higher stickiness and stronger stability, the sales expense rate is also relatively low, but because medical beauty products are driven by costs, the sales expense rate will also be relatively unstable.
Figure 5: Sales expense rate of comparable companies from 2018 to 2021 Data source: wind Aimeike prospectus compiled by 36Kr
3, technical advantages
At present, the domestic approved hyaluronic acid medical beauty products are mainly divided into two categories: filler hyaluronic acid and skin care hydrating needles. Among them, the filler hyaluronic acid has a large molecular weight and high crosslinking degree, so it has a high hardness and viscosity, and is mainly used for subcutaneous filling such as anti-wrinkles; the water-light needle has a small molecular weight, a low crosslinking degree, and is easy to be decomposed and absorbed, and is mainly used for moisturizing and rejuvenating skin.
Hi body is based on water-light needles in the ingredients, and a variety of complex ingredients (such as amino acids, L-carnosine, etc.), so it has the effect of filling and moisturizing skin rejuvenation. Therefore, the more complex technical path makes HiTi's product premium relatively higher.
In addition, the company is still continuing to tap the commercial potential of Hi-body, and has developed Hi-body derivative products such as Panda Needle and Hot Bubble Needle in the past two years, successfully expanding its application to tracks such as periorbital and water light.
is based on multi-indications and one-stop diagnosis and treatment thinking. The company also provides a variety of joint medical beauty solutions to improve the stickiness between consumers and institutions. For example, the Hi-body beauty and fine sculpture solution uses the product combination of "tight love + panda needle" to achieve periorbital rejuvenation through thread burying + filling.
Figure 6: The timeline of the company's launch of HiTi derivative products Data source: Guoyuan Securities Research Institute
4. Now it seems that Is AiMeke worth buying?
From the development trend of hyaluronic acid medical beauty products, compliance and high-end are the general trend. Starting from 2017, relevant national departments have successively issued documents to promote legality and compliance with medical beauty. The standardization of the medical beauty market has squeezed the living space of black medical beauty, and the market space of formal certified products will be continuously opened under the protection of laws and regulations.
As the leader of the domestic medical beauty industry, Aimeike is the company that has obtained the most hyaluronic acid-related certificates. As of now, the company has a total of 7 related registration certificates. The company will fully enjoy the growth dividends brought by compliance with the medical beauty market, and its certified ability will also become the company's most powerful weapon for competition in the medical beauty market.
Figure 7: Aimeike's certified products and related information Data source: 36Kr compiled
However, in terms of price, Aimeike's products are mainly aimed at the mid-range market. The products in this price range are not as competitive as high-end products because of their innovative attributes and brand influence, so the competition for high-end products is more intense. Due to limited downstream medical resources, there is also heterogeneous competition among different products, thus diverting end customers.
In addition, medical beauty products are iterated quickly, the dividend period of new products is relatively not that long, and the profit margin of terminal products is not as good as that of high-end products, and R&D costs and sales expenses will greatly erode the company's profits.
According to the company's prospectus, in 2020, Aimeike's market share reached 27.2% in sales, ranking first; while the sales volume was only 17.3%, ranking third, and the top 2 were occupied by foreign manufacturers.
Therefore, if the company can gain a larger market share based on the advantage of user numbers and through high-end and differentiated product matrix.
Figure 8: Price band of main hyaluronic acid injection injection products Data source: Haitong Securities Research Institute
In terms of expanding the product matrix, Aimeike mainly enters more tracks faster through mergers and acquisitions. In June 2021, Aimeikan acquired a 25.4% stake in South Korea's botulinum toxin medical beauty company Huons Bio at a premium of nearly 74 times, aiming to create a second growth curve. In addition, the company cooperated with Nobot Bio and Rongzhi Bio to develop liraglutide injection and deoxycholic acid, and laid out weight management business.
The changes in Aimeike’s stock price reflect the changes in the market’s expectations. During the rising stock price last year, the market was optimistic about the high growth brought by the high-frequency consumption and high repurchase characteristics of Aimeike hyaluronic acid medical beauty products. In addition, the market also gives high premiums to the company's certain advantages in first-mover, technology, channels, etc.
's high financial growth also fulfilled market expectations, and the company's research botulinum pipeline also gave enough room for imagination in the capital market. Holding the idea of missing a man’s Moutai, but not missing a woman’s Moutai. In addition, the overall market style at that time was super matched with medical beauty, what we saw was the surge in valuation.
However, as transactions become more crowded, the safety margin becomes lower and lower, the market is gradually returning to rationality. Investors began to reflect on whether Aimeike's performance growth can still maintain high growth after the base, whether the expectations for botulinum toxin are injected too early, etc. When expectations change marginally and are accompanied by huge valuation pressure, stock price adjustment is inevitable.
At this point in time, Aimeike is returning to its fair value. As mentioned above, benefiting from the general trend of medical beauty compliance, HiTi has a two-year exclusive sales window in the neckline market, and HiTi maintains high growth relatively certainly, which supports the company's performance to continue to maintain high growth.
Therefore, based on the current market value calculation, it is conservatively assumed that the company's future performance growth rate is lower than the current value and will decline year by year. It can be seen that when the profit base starts to start in 2022, the company will begin to have the ability to significantly digest valuations, which is the same trend reflected by Wind's consistent expectations.
Figure 9: Aimeike valuation estimate from 2021 to 2023 Data source: wind 36Kr compiled
Overall, the prospects for medical beauty are beautiful and it is a good business. As the leader of the medical beauty industry, Aimeike has considerable investment value in the long run. However, Aimeike's performance is relatively insufficient to support the current valuation level. The continuous adjustments since the second half of 2021 also reflect investors' perception of Aimeike's current value to a certain extent.
Figure 10: 36Kr Finance
*Disclaimer:
The content of this article only represents the author's views.
The market is risky, so you need to be cautious when investing. In no event shall the information or opinions expressed in this article constitute investment advice to anyone. Before deciding to invest, investors must consult professionals and make careful decisions if necessary. We have no intention to provide underwriting services to the parties to the transaction or any services that are required to hold a specific qualification or license to engage in.
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