Zhongyin Securities released a research report stating that the performance of leading medical beauty companies is still maintaining good growth, and the average product price has not shown price pressure. The continuously enriched product matrix is expected to bring growth in the future. The penetration rate of China's medical beauty market is still lower than overseas, and the medical beauty market is still in a growth period. The medical beauty subdivision market is still expanding, and there is room for "external roll-up" in emerging fields. Hyaluronic acid injection products are expected to achieve rapid growth with the acquisition of medical beauty institutions. The potential market space for hyaluronic acid injection is relatively large, and there is room for differentiated competition among various manufacturers.

Upstream enterprises in the medical beauty industry chain have strong discourse power and maintain steady growth. In terms of performance, upstream manufacturers of medical beauty in China showed high prosperity in 2023, and the prosperity continued until the first quarter of 2024. The gross margin and profit level of upstream medical beauty manufacturers are also relatively stable, and the ex-factory price of products has not shown obvious pressure. The concentration of upstream medical beauty industry is much higher than that of downstream. Downstream institutions have little bargaining power facing upstream manufacturers, and downstream competition "drains" contribute little to downstream profits, but can help upstream products achieve rapid growth. In addition, as consumers' awareness becomes increasingly mature, the importance of the quality of medical beauty products in the decision-making process is becoming higher, and downstream institutions' dependence on products is also increasing.

The penetration rate of China's medical beauty industry is still lagging behind overseas, and the market is still in a growth stage. Looking at the global medical beauty market, the medical beauty market in areas where medical beauty is relatively mature is also maintaining steady growth. However, China's medical beauty industry is still in the growth stage and still has a certain distance from the "mature stage." According to the "Insight Report on the Chinese Medical Beauty Industry in 2023" by AER Jian and Deloitte, China's medical beauty industry is expected to maintain high-speed growth of 15% from 2023 to 2027, and the injection medical beauty market and photoelectric project market are expected to maintain growth of 20%-30% from 2023 to 2027.

There is growth potential in all subdivisions of the medical beauty industry, and there is room for "external roll-up" in emerging fields. Hyaluronic acid injection products are relatively mature and are often used by downstream institutions as drainage projects, and are expected to achieve rapid growth with the acquisition of medical beauty institutions. In addition, hyaluronic acid injection is widely used and has a large potential market space, and there is room for differentiated competition among various manufacturers. For a long time, China's high-end hyaluronic acid market has been occupied by imported products, but Chinese manufacturers are expected to gradually acquire high-end market share through product upgrading and differentiation. The development of regenerative medical beauty market in China is still in its early stages. Regenerative medical beauty injection products are longer lasting and more natural in effect, and are often targeted at the high-end market due to their higher threshold. Currently, there are few approved regenerative medical beauty products in China, and they have a short time on the market, but there is still room for growth. There is still blue ocean space in the collagen injection market, and the approved products are mainly animal-derived. Recombinant collagen injection products have obvious advantages compared to animal-derived products, and their process thresholds and prices are relatively high. Approved recombinant collagen injection products are scarce.

Main risks faced by the rating: Price fluctuations of the products; Project production progress falling behind expectations; Downstream demand falling behind expectations.

Risks of intensified competition, consumer pressure due to economic fluctuations, and regulatory policy changes.