20250328-招银国际-巨子生物-02367.HK-Strong_Performance_in_2024_6页_1mb

Giant Biogene (2367 HK) Summary

Core Content and Performance Highlights

Giant Biogene reported strong performance in 2024, with revenue increasing by 57.2% year-over-year (YoY) to RMB5.539 billion. The company's revenue growth was driven by its skincare products and medical dressings, which saw increases of 62.5% and 41.5% YoY, respectively. The skincare segment now accounts for a larger proportion of total revenue, leading to a slight decline in gross profit margin (GPM) from 83.6% in 2023 to 82.1% in 2024.

Online revenue grew by 70.0% YoY, contributing 71.6% of total revenue in 2024. However, the selling expense ratio increased by 3.2 ppts to 36.3%, primarily due to rising marketing costs on platforms like Tmall and Douyin. This led to a decline in attributable net profit margin (NPM) by 4 ppts to 37.2%.

Product Portfolio and Market Expansion

Comfy

• Revenue increased by 62.9% YoY to RMB4.5bn in 2024.
• The revenue proportion of collagen sticks and dressings dropped below 30%, while other products showed solid growth.
• Focus Cream generated over RMB200mn in 2024 and is expected to double in revenue this year.
• In 2M25, Comfy's total GMV on Tmall, JD.com, and Douyin rose by 60% YoY, with the lotion/cream category increasing by over 240% YoY.
• This indicates successful category expansion and the ability to create blockbuster products.

Collgene

• Revenue increased by 36.3% YoY to RMB840mn, with 2H24 growth of 50.1% YoY.
• Online GMV on Tmall, JD.com, and Douyin increased by 103% YoY in 2024, and by over 180% YoY in 2M25, showing a significant acceleration in growth.
• The offline revenue accounted for only 30% of total revenue in 2024, indicating a strong shift towards online sales.

Approval Delays and Strategic Position

• The injectable product targeting moderate to severe neck wrinkles received priority approval in December 2024.
• The product targeting forehead lines and crow's feet, expected to be approved in 1Q25, remains pending.
• Despite the approval delays, the company is preparing for commercialization and expanding its medical aesthetics team.
• Giant Biogene leverages its brand strength and distribution network in medical aesthetics, which includes medical dressings and the newly launched "Intensive Repair" portfolios, to maintain its competitive position.

Investment Recommendation and Target Price

• Maintain BUY recommendation.
• The target price is raised to HK$79.96, based on a 9-year DCF model with WACC of 10.9% and terminal growth rate of 3.0%.
• The target price is 18.5% above the current price of HK$67.45.
• The company is well-positioned for long-term growth in the medical aesthetics market, with four injectable products in the application phase and nearing commercialization.

Financial Overview

Revenue and Profitability

• Revenue is projected to grow at 28.9% in 2025, 30.6% in 2026, and 28.2% in 2027.
• Adjusted net profit is expected to increase to RMB3,748mn in 2027.
• Net profit margin is expected to decline from 38.8% in 2024 to 31.4% in 2027, reflecting the impact of rising selling expenses and the expansion of product lines.

Valuation Metrics

• P/E ratio is projected to decline from 30.0 in 2024 to 17.3 in 2027.
• P/B ratio is expected to fall from 8.7 in 2024 to 4.8 in 2027.
• ROE is expected to decrease from 35.9% in 2024 to 30.5% in 2027.

Risk and Sensitivity Analysis

• Terminal value is projected to be RMB111,461mn in 2027, with FCFF increasing from RMB2,225mn in 2025 to RMB9,046mn in 2027.
• Sensitivity analysis shows that equity value decreases with higher WACC and lower terminal growth rates.
• At a WACC of 10.9% and terminal growth rate of 3.0%, the equity value is estimated at RMB74,545mn.

Peer Comparison

• Giant Biogene's P/E, P/B, and P/S ratios are in line with or lower than peers, indicating potential undervaluation.
• The rating is BUY, suggesting positive outlook on its long-term growth prospects.
• Comfy and Collgene are the key subsidiaries driving growth, with Comfy showing strong category expansion and Collgene demonstrating accelerated online growth.

Shareholding and Market Data

• Juzi Holding Co., Ltd. holds 56.5% of the shares.
• Market capitalization is HK$69,871.7 million.
• Average 3-month total return is HK$199.8 million.
• 12-month price performance is shown in a graph, but not included in the text.

Analyst Certification and Disclosures

• The research analyst certifies that the views expressed reflect personal opinions and that no compensation is tied to the report.
• No trading activity by the analyst or their associates within 30 days prior to the report's issue date.
• No liability is assumed for any loss or damage incurred from reliance on the report.
• Investors are advised to consult professional financial advisors for investment decisions.
• CMBIGM is not a registered broker-dealer in the U.S. and does not provide tailored advice.

Summary of Key Figures

Conclusion

Giant Biogene continues to show robust growth in both skincare and medical aesthetics segments, driven by online expansion and product diversification. Despite a decline in GPM and NPM, the company remains well-positioned for future growth with four injectable products nearing commercialization. The BUY recommendation and raised target price reflect confidence in its long-term potential.