Aimec is the head company of domestic hyaluronic acid industry. In terms of gross profit rate, AMEC is not only higher than Huaxi biological, but also close to Guizhou Maotai (600519. SH). However, under the premise of gradual upgrading of supervision, the industry competition tends to be fierce. Aimec is facing challenges due to its single product structure.
Gross profit rate comparable to Maotai
According to the prospectus, AMECs IPO is expected to raise 1.935 billion yuan. In terms of investment projects, AMEC will invest in the second phase construction project of implantable medical device production line, the innovation and transformation research and development center of medical materials and medical devices and new product research and development project, the construction project of gene recombinant protein R & D and production base, and the R & D project of botulinum toxin type A for injection There are 8 construction and R & D projects in total, and another 600 million yuan is expected to be used to supplement working capital.
In fact, AMECs liquidity on its books is quite abundant, and there is no need to supplement it. According to the financial statements, as of the end of 2019, AMECs total assets were 744 million yuan, including 565 million yuan of current assets; the total liabilities of the same period were 81 million yuan, including 67 million yuan of current liabilities. AMECs asset liability ratio is only 10.88%, and the current ratio is 8.4 times. It can be said that the companys finance is not under much pressure.
Perfect financial indicators are derived from the excellent earning power of aimike products.
Aimecs main products are sodium hyaluronate series products, commonly known as hyaluronic acid. The products are mainly for the repair of wrinkled skin on the face and neck. Judging from the gross profit rate index, the earning power of aimike products is comparable to that of Maotai. From 2016 to 2018, AMECs comprehensive gross profit margin exceeded 85%, and in 2019, its gross profit margin further increased to 92.63%, even slightly exceeding the 91.3% gross profit margin of Guizhou Maotai. The companys explanation is that the product R & D and approval cycle is long and the industry entry threshold is high. This is also reflected in Huaxi biology, which also takes hyaluronic acid as its main product. In the past three years, its gross profit margin has reached 75.40%, 79.94% and 79.66% respectively.
Data source: wind, interface news research department
The main reason for the further increase of AMECs gross profit rate is the reduction of unit cost and tax rate. Take the product avery, which contributes the highest income of aimec, as an example. In 2019, the unit price of the product increased from 300.52 yuan to 310.83 yuan, up 3.43% year on year. The unit cost decreased by 21.60% from 38.79 yuan to 30.41 yuan. As a result, the gross profit rate of avelay products increased from 87.09% to 90.22%.
Another reason for the rise in gross profit rate is the change of tax rate. According to aimekos prospectus, the companys main products have been changed to be collected by simple method since January 1, 2019, and the VAT rate has been reduced from 16% to 3%. Except for Yimei one plus one and Yimei products, the tax inclusive price of the companys products remains stable. Therefore, in 2019, the price excluding tax of Everest, HiTi and bonida products generally increases.
While enjoying the tax preference, AMEC still maintains the stability of the terminal product sales price. At the same time, the increase of output further dilutes the unit cost of the product, thus further increasing the gross profit rate.
In this way, hyaluronic acid seems to be a good business. But can investors really rest assured?
In the prospectus, AMEC pointed out that the company has a single product structure. As of December 2019, the companys largest two products, the injection of modified hyaluronic gel (Ai Fu Lai) and injection of sodium hyaluronate compound solution (HI body) revenue amounted to 210 million yuan and 240 million yuan, accounting for 39% of the total revenue and 43%, accounting for more than 80% of the total.
Among them, modified gelatin for injection (Ai Fu Lai) has always been a mainstay product for Ai Mei customers. In 2016, the product revenue amounted to 102 million yuan, accounting for 72.27%. Since 2017, the revenue share of the product has gradually dropped to less than 40%.
At present, almost all products of the company are sodium hyaluronate products. The company believes that at present, the hyaluronic acid market is getting better, and the average gross profit rate of the leading products is relatively high. Many enterprises are attracted to enter the domestic market through independent research and development or merger and acquisition. The industry competition will gradually intensify, and the gross profit rate level is at the risk of decline. At the same time, if the company can not properly cope with the competition of new market entrants, the companys operating performance may not be able to maintain the growth trend.
In terms of customers, the companys customers are mainly non-public medical institutions. By the end of 2019, AMECs income in public medical institutions was only 1.767 million yuan, while that in non-public medical institutions was 355 million yuan, accounting for 99.46%.
There is a big difference between medical beauty products and conventional drugs or medical devices. The sales of the latter are mainly affected by the superposition of national medical insurance policy, hospital decision-making process and the judgment of the doctor in charge. Medical beauty products are mainly affected by product compliance, safety, repair effect, brand, price and business cooperation with manufacturers.
In addition, the decision-making power of medical beauty institutions is larger than that of doctors. Therefore, medical beauty products are less directly sold to doctors, but mainly used to develop marketing programs with medical institutions. As the medical and aesthetic products are more sensitive to the needs of end consumers, it also puts forward higher requirements for the market-oriented competition of products.
In the sales end, aimex adopts the mode of direct selling as the main and distribution as the auxiliary. The company believes that such a model can be more involved in the product promotion and terminal sales of medical beauty agencies, so as to improve the satisfaction of customers and end consumers. At present, the companys revenue direct sales mode accounts for about 64%.
Wild growth is a hidden worry
Data sources: AMECs prospectus (declaration draft), frost Sullivan analysis
The other side of the coin is the barbaric development of the medical and aesthetic industry over the years. The cases of violation of laws and regulations in medical and American institutions are also emerging in an endless stream, among which the frequency of unqualified professional qualification is the highest. On November 11, 2019, the National Health Commission announced 10 typical cases of illegal medical cosmetology in 2019, including 3 cases practicing without license, 1 case lending license, and 1 case still engaging in diagnosis and treatment activities without license verification. Therefore, medical cosmetology is also included in the national supervision and random inspection in 2019 and the special rectification of medical disorder jointly carried out by 8 departments. Because most of the downstream customers of medical consumables suppliers such as aimike are non-public medical institutions, the phenomenon of non-compliance is more prominent. Under the background of stricter industry regulation, investors should pay attention to the impact of policy changes on company fundamentals. Source: interface news editor: Yang Bin_ NF4368
The other side of the coin is the barbaric development of the medical and aesthetic industry over the years. The cases of violation of laws and regulations in medical and American institutions are also emerging in an endless stream, among which the frequency of unqualified professional qualification is the highest. On November 11, 2019, the National Health Commission announced 10 typical cases of illegal medical cosmetology in 2019, including 3 cases practicing without license, 1 case lending license, and 1 case still engaging in diagnosis and treatment activities without license verification.
Under the background of stricter industry regulation, investors should pay attention to the impact of policy changes on company fundamentals.