“Women’s Maotai” loves beautiful guests

In the era of “appearance level is justice”, the medical beauty industry is developing rapidly, and hyaluronic acid, which was once affordable only for celebrities, is now being purchased by more and more ordinary women.

This tuyere quickly in the stock market set off a towering waves.

Since its listing on September 28, 2020, the stock price of AIME (300896.SZ) has soared from 118.27 yuan per share to 1331.02 yuan per share in less than half A year, becoming the third stock in the A-share market to break through 1,000 yuan, and its market value has also reached nearly 160 billion yuan.

AIMEI is a “hyaluronic acid giant”, which investors call the “Moutai for women”. Behind the 100 billion market capitalization is more than 90% of the gross profit margin. For amecc and even the whole hyaluronic acid market, how long can the “windfall” last?

In this regard, analysts believe that the industry’s windfall profits are destined to be temporary. Ao Hushan, a member of the National Committee of the Chinese People’s Political Consultative Conference, chief physician of Fuwai Hospital of the Chinese Academy of Medical Sciences, and secretary general of the Chinese Society of Cardiothoracic and Vascular Anesthesia, told China Newsweek that the “excessive profits” of medical beauty is caused by the shortage of supply. With the advance of supply-side reform, the problem of insufficient supply of high-quality medical beauty products may gradually ease.

And that’s exactly what happened. Since the Year of the Ox in the Chinese lunar calendar, AMIC’s share price has suddenly started to plummet, losing 40% of its market value at one point.

Boom bust

When it comes to the most closely watched stock on the market, it is almost certainly Moutai, whose share price has doubled in the past year. However, in fact, from the growth multiple, price per share and so on, “women’s Maotai” Aimeke’s increase is more amazing.

Since its listing last year, AMIC’s share price has soared more than tenfold from 118.27 yuan to as high as 1331.02 yuan in less than half a year, a much faster rise than Moutai’s.

Not only have they risen more, they have fallen more.

After reaching its peak on February 18, AImec’s share price suddenly began to fall sharply. As of 11:30 am on March 4, AImec’s share price was 788 yuan, which was down 40% from its highest price.

This time love beauty guest share price plummeting, still have to start from its large dividend plan.

On the evening of February 8, iMec announced its 2020 annual dividend plan. After calculation, the proposed dividend amount is as high as 421 million yuan, accounting for about 95.68% of the company’s annual net profit in 2020.

According to the dividend plan, the company’s actual control of Jian Jun will become the biggest winner of the dividend. Data show that Jian Jun directly holds 30.96% of the equity of AImeke, and his limited partners Zhixing Jun Investment, Danrui Investment and Customer First Investment respectively hold 6.41%, 4.85% and 4.28% of the equity of AImeke.

Launching such a generous dividend plan in its first year as a public company, iMedia quickly fell into controversy and received a letter of concern from the Shenzhen Stock Exchange the next day.

Shenzhen Stock Exchange required AMIC to explain the main consideration, determination basis and rationality of the profit distribution plan, and whether it matched with the company’s performance growth, etc. In addition, the proposal of the profit distribution plan, the company’s planning and decision-making process, as well as the measures taken by the company in the confidentiality of information, and whether the relevant measures are complete.

In response to the Shenzhen Stock Exchange inquiry, on February 22, AImeikai insisted that the high proportion of dividends “is reasonable.”

According to the announcement of AIMEI, the company’s dividend payment is considered because the company is in the rapid growth period of the medical beauty market, the company’s sustainable growth performance is considered, and the company has sufficient cash and no financing plan for the time being.

On profit distribution being a secret, Amy guest comments, the company in the profit distribution plan in planning process, strictly abide by the relevant information confidentiality system, and in front of the insider information disclosure the information of insider control in minimum range, and require all insiders shall not be in any form without external leaks the plan, and shall properly keep carrying inside information file.

But the capital markets did not buy it, and its share price briefly plunged by nearly 40%.

In this regard, the person in charge of Ameikai told China News Weekly that this is a normal market correction.

However, some analysts point out that stock market performance is ultimately based on performance, which may be the root cause of its rise and fall.

Can $700 million in revenue justify a $100 billion market?

In fact, there has been a lot of controversy about the value of AMIC’s share price.

In the release of large dividend plan at the same time, love the United States also announced the 2020 annual report forecast. The report shows that in 2020, the company achieved an operating income of 709 million yuan, up 27.18% year on year, and the net profit attributable to shareholders of the listed company was 440 million yuan, up 43.93% year on year.

On the one hand, it is only 700 million yuan in revenue, and on the other hand, it is 100 billion yuan in market capitalization, which has aroused widespread doubts.

Gong Tao, chairman of Shenzhen-based CJH Capital, told China Newsweek that AMIC’s previous share price rise was partly due to market speculation. As of December 31, 2020, a total of 153 institutions held a total of 7,240,200 shares, accounting for 27.84% of the outstanding share capital. “This ratio and the number of companies speaks volumes about the institutional preference for the stock, which is the root cause of the bubble.”

On the other hand, there are few listed medical beauty companies in China, and the company’s products generally make huge profits. A hyaluronic acid product with a cost of several tens of yuan is sold to thousands or even tens of thousands of yuan. Ordinary investors are so crazy about high gross profit that they give “Aimeke” the name of “Women’s Maotai” to prove its scarcity.

In fact, love the United States guest “profiteering” has a long history.

Data show that the gross profit margin of AIME has never been lower than 85% since 2014. In 2020, its gross profit margin will reach 92.17%, which is not only higher than the average gross profit margin of the medical beauty industry, but even higher than the 91.33% of Kweichow Moutai (in the first three quarters of 2020).

Such a high gross profit margin, and AIMEC deep in the field of hyaluronic acid inseparable.

The medical beauty industry chain is divided into upper, middle and lower reaches, of which the upper reaches are raw material suppliers, equipment suppliers and medical beauty product manufacturers, the middle reaches are medical beauty institutions and the lower reaches are consumers. Data from Industrial Brokerage and Financial Research Institute show that the gross margins of Shangyimei product manufacturers are as high as 88-90%, making it a veritable profit-making industry.

According to data, AImec’s hyaluronic acid products account for 99% of its revenue. Take AIME’s flagship product “Hi-ti” for example. According to the prospectus, the average selling price of this product in 2019 is 353 yuan/piece, and the gross profit rate is 93%. According to this calculation, the actual cost is only 25 yuan/piece.

And this is not the highest gross profit margin AIMEI customer products. The average selling price of “Bonida” under AMIC is 2,547 yuan/piece, and the gross profit rate is an astonishing 98.7%. Based on this calculation, the cost price is 33 yuan/piece.

In this regard, the person in charge of AIMEI told China News Weekly that most of the biomedical materials companies support the operation mode of long-term R&D investment with a high gross profit level. Medical beauty injection products have a long period from project approval to approval, and the risk of commodity transformation is also large. In the early stage, enterprises need to invest a lot of human, financial and material resources to support product research and development and commercial transformation. It is a typical industry with strict industry supervision, high technical barriers, long research and development cycle and strong resource investment.

On the other hand, consumers feel that the “windfall profits” are more due to the high terminal price of Yimei products. Terminal price adds a lot of industrial chain costs, including business costs, customer acquisition costs, doctors’ service fees, etc., so it should not be simple to compare the product cost price of upstream manufacturers with the terminal price.

Profits may be unsustainable

Although the gross margin of the hyaluronic acid track is higher, there are more variables.

Amy guest pointed out in the prospectus, the company almost all products are sodium hyaluronic acid products, hyaluronic acid market at present, the leading product average gross margin level is higher, attract more enterprises through the way of independent research and development or acquisition into the domestic market, industry competition will gradually intensified, level of gross margin decline in risk.

In Gong Tao’s opinion, the domestic medical beauty market is indeed very large, but the number of similar small and medium-sized companies in China is relatively large, the product structure is relatively similar, the proportion of R&D investment is relatively low, and the price competition is increasingly fierce. Therefore, the huge profits in this industry are destined to be only temporary.

Ao Hushan, a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), chief physician of Fuwai Hospital of the Chinese Academy of Medical Sciences and secretary general of the Chinese Society of Cardiothoracic and Vascular Anesthesia, told China Newsweek that the high gross profit margin in the field of medical beauty is, to some extent, caused by short supply and demand. At present, the supply of health products in China seriously lags behind the health demand of consumers, especially most high-end medical device products are controlled by foreign countries. The medical beauty industry is no exception. The supply-side reform of the health industry will be a huge source of strength. With the advance of supply-side reform, the problem of insufficient supply of high-quality medical products may gradually ease.

It is worth noting that the other two giants of hyaluronic acid, Huaxi Biotechnology and Haohai Biotechnology, have not only done hyaluronic acid after being listed, but are now expanding their business and enriching their revenue.

Huaxi Biotech not only produces APIs, but also sells medical beauty products, functional skin care products, color cosmetics, etc. The product range of Haohai Biophys is more extensive, involving ophthalmology, plastic and wound care, orthopedics, anti-adhesion and hemostasis four plates.

“In the short term, the scale of the injection and filling product market will be further expanded as the penetration rate of medical beauty products increases,” the company told China Newsweek. “It has not reached the ceiling yet, and the company still has a lot to do.” In the long term, the company is committed to creating a richer medical beauty product line and improving its competitiveness in the market through product mix. Currently, the company is developing projects including but not limited to Botox, polylactic acid and other products.

Botox and polylactic acid are synthetic products, and YiMei’s future lies in stem cell technology, Gong said. “Hyaluronic acid, botulinum toxin and polylactic acid are contemporary technologies, while stem cell technology is the next generation technology. The technical requirements, implementation conditions, costs are higher, but it is more natural and has no side effects than hyaluronic acid.”

The troubles don’t stop there.

Recently, China Securities Regulatory Commission (CSRC) Beijing Supervision Bureau disclosed that Wang Gang, the spouse of Goulina, vice president of AimeKe, engaged in short-term trading behavior, which violated Article 44 of the Securities Law, and took supervision and management measures to Goulina by issuing a warning letter.

According to the previous announcement of iMeKe, Gulina and Wang Gang have deeply reflected on the above behaviors, promised to avoid such incidents from happening again, and will hand over RMB 48,200 (net income after deduction of taxes) from the above transactions to the board of directors of the company in accordance with relevant regulations.

It remains to be seen how long the “profiteers” of AMIC and even the whole hyaluronic acid industry can continue.