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EuroEyes

2024-05-02软库中华金融服务M***

AI智能总结

EuroEyes (Ticker: 01846.HK) is rated "Buy" with a target price of HKD 6.92 per share, based on resilient demand for lens exchange surgeries across four regions and a strategic focus on mergers and acquisitions (M&A). In 2023, EuroEyes achieved record turnover of HKD 714.3 million, marking a YoY increase of approximately 17.0%, and reported adjusted gross profit of HKD 339.4 million, representing a YoY increase of 23.2% with a gross profit margin increase of 2.4 percentage points to 47.5%. Adjusted net profit climbed sharply by 40.0% YoY to nearly HKD 141.7 million, with an adjusted net profit margin of 19.8%.

Despite falling slightly short of estimations due to operational capacity constraints at the London Vision Clinic and a delay in new clinic launches, EuroEyes demonstrated strong resilience amidst European economic stagnation and a patchy Chinese recovery. Lens exchange surgeries showed robust demand, with revenue increasing by approximately 37.1% to HKD 371.8 million, resulting in an overall capacity utilization rate increase of 2.9 percentage points to 25.6%.

EuroEyes plans to leverage its intensive M&A approach to accelerate expansion through acquisitions of renowned private practices or well-established local brands across Europe, America, and the Asia Pacific region, aiming to complete these acquisitions within the next 24 months. The company also announced a share buyback scheme to repurchase up to 3% of outstanding shares, approximately 10 million shares by June 6, 2024.

For comparison, peers such as Aier Eye, He Eye, Bright Eye, Clarity Medical, and Chaoju Eye Care have market caps ranging from HKD 129,968.8 million to HKD 2,724.0 million, with price-to-earnings ratios between 3.3 and 111.7 times, and price-to-book ratios between 1.1 and 6.1 times.

EuroEyes' revenue breakdown shows strong regional contributions, with Germany leading at approximately HKD 312.5 million, followed by the PRC at HKD 214.1 million, Denmark at HKD 270.8 million, and the UK at HKD 335.5 million.

The company's gross profit and gross profit margin were HKD 630.8 million and HKD 604.8 million, respectively, indicating a significant portion of revenue was generated through various business functions including rental of ophthalmic equipment, sales of pharmaceutical products, provision of vision correction services, and refractive laser surgery, with lens exchange surgery being the largest contributor at 52.1%.

EuroEyes aims to capitalize on the aging demographic trend towards increased demand for trifocal lens exchange surgery, reinforcing its role as a key driver of future organic growth. With the opening of new clinics in Germany and consultation centers in Beijing and Shanghai, EuroEyes is poised for sustainable growth, despite maintaining a cautious stance on the feasibility and timing of ambitious M&A plans given current global market instability.

EquityResearchDepartment T:+85225333700 E:research@sbichinacapital.com Address:4/F,HenleyBuilding,No.5Queen'sRoadCentral,HongKong EuroEyes(01846.HK) ResilientdemandforlensexchangesurgeriesacrossfourregionsandintensiveM&Astrategyaccelerateexpansion,maintaintheratingof“Buy”andtheTPremainsatHKD6.92/share Ticker(01846.HK) Recommendation Targetprice(HKD)Currentprice(HKD)Last12mthpricerange Marketcap.(HKD,bn) Buy 6.92 5.36 4.15–5.92 1.79 EuroEyes(01846.HK)reachedanall-timehighturnoverofHKD714.3mnin2023,markinganincreaseofabout17.0%YoY.TheGroup’sadjustedgrossprofitclimbed23.2%YoYtoHKD339.4mnin2023,withthegrossprofitmarginincreaseof2.4p.pto47.5%.Theadjustednetprofitofthe ︱ResearchDepartment Source:Bloomberg,SBICHINACAPITAL Performance(01846.HK) 6.00 5.80 5.60 5.40 5.20 5.00 4.80 4.60 4.40 4.20 4.00 1mth3mth12mth Change 16.3%8.3% 2.3% Relativechange 8.9%-6.4% 13.2% Source:Choice,SBICHINACAPITAL Groupascendedsharplyby40.0%YoYtonearlyHKD141.7mnin2023, representingaYoYincrementof3.3p.ptoa19.8%adjustednetprofitmargin. TheoverallperformanceofEuroeyes(01846.HK)in2023slightlyfellshortofourestimations,primarilyattributableto1.)diminishedoperationalcapacityatLondonVisionClinicin1H23duetothenecessityoftrainingnewsurgeons,compoundedbyapost-BrexiteconomicslowdownthatadverselyaffectedthedemandforrefractivelasersurgeriesintheUK,and2.)thepostponedlaunchofnewclinicsinHongKong,andinKielandWiesbaden,Germany,whichdeviatedfromourinitialexpectations.However,itisnoteworthythat,evenamidsttheeconomicstagnationacrossEuropeandpatchyrecoveryinChina,thedemandofpresbyopiacorrectiontreatmentsremainedrobustacrossfourregions,showinganotableinsensitivitytomacroeconomicpressures.Thisstrongdemandpropelledlensexchangesurgeriestoarecordhigh,withitsrevenuesurgingbyapproximately37.1%toHKD371.8mnandboostingtheoverallcapacityutilizationrateby2.9p.pto25.6%in2023. Lensexchangesurgeriesandnewclinicsoperationsdrivesustainedorganicgrowth Weforecasttheagingdemographicshiftwillincreasinglybolsterthedemandfortrifocallensexchangesurgery,reinforcingitsroleasaprimarydriveroftheGroup’sfutureorganicgrowth.TheKnightsbridgeclinic,openedinSep2023andfocusingonlensexchangesurgeries,isexpectedtoshortenitsramp-upperiodtobreakevenwithin6to9months,basedonitsstrongperformancein1Q24.Incontrast,theHongKongflagshipcliniconRussellStreet,aspreviouslyanticipated,faceshigheroperationalcostsandrequiresalongermarketassimilationperiod,withabreakevenprojectedwithin1to2years. TheGroupisalsolaunchingtwoclinicsinKielandWiesbaden,Germany,originallyslatedforlate2023openingsbutnowscheduledtoopenbytheendof1H24.Additionally,inresponsetotheresurgingbusinessmomentuminthePRC,theGroupwillproceedthisyearwiththepreviouslyplannedconstructionofconsultationcentersinBeijingandShanghaitofurtherenhancetheutilizationratesoftheexistingsurgicalcenters. IntensiveM&Aapproachaimstoaccelerateexpansion SincetheacquisitionofFreeVisGmbHandPMKinAugust2023,theGroupispoisedtobroadenitsoperationsinMannheim,Germany,whilesimultaneouslysolidifyingitspositionasamarketleaderwithintheregion.Concurrently,leveragingProf.Knorz’sextensiveindustrynetworkhasbeeninstrumentalinidentifyinglucrativeM&Aopportunities.Seekingtoenlargeitsglobalfootprint,theGroupplanstoallocateapproximatelyHKD500mntowardsanaggressiveM&Astrategy,targetingrenownedophthalmologists’privatepracticesorwell-establishedlocalrefractivebrandsacrossEurope,America,andtheAsiaPacificregion,withtheaimtocompletetheseacquisitionswithinthenext 24months.However,wemaintainacautiousstanceregardingtheGroup’sM&Atimeline,andwillcontinuetoanalyzethefeasibilityofexecutingacquisitionsatreasonableconsiderations. ResilientdemandforlensexchangesurgeriesacrossfourregionsandintensiveM&Astrategyaccelerateexpansion,maintaintheratingof“Buy”andtheTPremainsatHKD6.92/share TheoverallperformanceofEuroeyes(01846.HK)in2023slightlyfellshortofourestimations,primarilyduetotheacquiredLondonVisionnotreachingtheexpectedsalestargetandthepostponedlaunchofnewclinics.However,itisimpressivetoseethat,evenamidsteconomicstagnationacrossEuropeandapatchyrecoveryinChina,thedemandforpresbyopiacorrectiontreatmentsremainedrobustacrossfourregions,demonstratingnotableresiliencetomacroeconomicpressures.Weanticipatethattheshiftingdemographicstowardsanagingpopulationwillconsistentlystrengthenthedemandfortrifocallensexchangesurgery,furthercementingitspositionasakeycontributortotheGroup'sorganicgrowthmovingforward.Moreover,theGroupissettoopennewclinicsinKielandWiesbaden,Germany,withlaunchesmovedfromlate2023totheendof1H24,andisadvancingtheconstructionofconsultationcentersinBeijingandShanghaitoboostutilizationatitsexistingsurgicalcenters,respondingtorevitalizedbusinessmomentuminthePRC.Additionally,seekingtoenlargeitsglobalfootprint,theGroupplanstoallocateHKD500mninanaggressiveM&Astrategy,targetingrenownedprivatepracticesandbrandsinEurope,America,andAsiaPacific.Thisintensiveapproachaimstoaccelerateexpansionandcompletetheseacquisitionswithinthenext24months,althoughwemaintainacautiousstanceonthefeasibilityandtimingofthesea

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