on January 30, huaxi biology (688363), one of the three swordsmen of medical beauty, suddenly fell without obvious negative results. it once fell more than 14% in intraday trading and finally closed down 10.62. Huaxi biological related people to the Beijing Business Daily reporter exclusive response, said the company's share price fell should be due to the financing of the forced liquidation. With the increasingly fierce competition in the hyaluronic acid industry, the halo of Huaxi Bio's "first hyaluronic acid stock" has faded, and the company's stock price has hit a record low since it was listed for more than four years. In the past period of time, Huaxi biological "botulinum toxin" business failed, and set his sights on the recombinant collagen market. Under the decline in net profit, how Huaxi Bio reorganizes its collagen business through layout and tells a "new story" of medical beauty is worth looking forward to by investors.

the stock price fell more than 14% in intraday trading

On January 30, the stock price of Huaxi Bio, which had no public information recently, suddenly fell sharply, falling more than 14% during the session, which investors did not expect.

The trading market showed that on January 30, Huaxi Bio opened 0.81 lower, with an opening price of 64.79 yuan per share. After the opening, the stock price dropped all the way, and once fell more than 14% during the session. After the opening in the afternoon, Huaxi Bio's share price fell slightly. As of the close, Huaxi Bio reported 58.38 yuan per share, closing down 10.62 percent, with a total market capitalization of 28.12 billion yuan, an all-day turnover of 0.383 billion yuan, and a turnover rate of 3.28 percent.

in response to the sharp drop in Huaxi bio's share price, Huaxi bio-related people exclusively responded to the beijing business today reporter that it should be the sharp drop in the share price caused by the forced liquidation of the financing plate.

Yang Delong, chief economist of Qianhai Open Source Fund, said in an interview with a reporter from Beijing Business Daily that the forced liquidation of financing orders refers to some investors who have leveraged financing. After the stock price drops sharply, they cannot make up the margin, and they will be forced to liquidate. Passively sell all the stocks in the position, which may cause the price of related stocks to accelerate.

Yang Delong further stated that this round of market declines is relatively large, and investors who leverage through financing are facing relatively large pressure to close their positions, especially for some stocks with relatively large financing. The probability is greater. Once the liquidation is forced, investors' funds may face the risk of loss. It is recommended that investors use spare money to invest and invest rationally, beware of the risk of forced liquidation.

It is worth mentioning that on January 30, Huaxi Bio hit a low of 55.6 yuan per share, a record low for the company's share price. According to the data, Huaxi Bio has been on the Science and Technology Innovation Board since November 6, 2019. In the two years before listing, the company's stock price has been rising, once rising to 315.36 yuan per share (post-restoration price). However, since July 2021, Huaxi Bio's share price has gradually declined, falling more than 80% from its all-time high.

Hard to hide the performance decline

As one of the three swordsmen of medical beauty, the industry often compares Huaxi Biology with Aimee and Haohai Biology. Judging from the operating conditions in the first three quarters of 2023, Huaxi Bio could not hide its declining performance and became the only company among the three musketeers whose net profit declined in the first three quarters of last year.

Financial data show that in the first three quarters of 2023, Huaxi Bio achieved operating income of about 4.221 billion yuan, down 2.29 per cent from the same period last year, while the corresponding attributable net profit was about 0.514 billion yuan, down 24.07 per cent from the same period last year.

On the other hand, there is a relatively large net profit gap between Huaxi Biology and Aimei. Financial data show that in the first three quarters of last year, Aimei achieved operating income of about 2.17 billion yuan, an increase of 45.71 percent over the same period last year, while the corresponding attributable net profit was about 1.418 billion yuan, an increase of 43.74 percent over the same period last year. In terms of Haohai Biotech, the net profit level of Haohai Biotech is inferior to Huaxi Bio, but the net profit growth rate is faster. Haohai Shengke's operating income in the same period was about 1.982 billion yuan, an increase of 25.23 percent over the same period last year, and the corresponding attributable net profit was about 0.327 billion yuan, an increase of 102.04 percent over the same period last year.

Regarding the reasons for the decline in net profit in the first three quarters of 2023, Huaxi Bio said that it was mainly due to the decline in the company's operating income and comprehensive gross profit margin. In the company's 2023 semi-annual report, Huaxi Bio mentioned that in the first half of 2023, the company's functional skin care business achieved revenue of 1.966 billion billion yuan, down 7.56 percent from the same period last year, accounting for 63.92 percent of the company's main business income, with a gross profit margin of 74.49 percent, down 4.25 percentage points from the same period last year.

According to the data, raw materials business, medical terminal business, functional skin care products business and functional food business are the four major business segments of Huaxi Bio. Among them, functional skin care business is Huaxi Bio accounted for the largest business. In the first half of 2023, the brand sales of Huaxi's bio functional skin care business declined across the whole line, which also brought pressure to the company's operation to a certain extent.

Huaxi Bio said that in terms of operation, in the first half of 2023, affected by weak consumption and conservative consumer purchase intentions, the optional consumer goods market represented by skin care products was affected to a certain extent, and the flow dividend slowed down. The cost is getting higher, and the internal organizational structure and operation management need to be further upgraded. The company took the initiative to make strategic adjustments to reduce the speed of development, resulting in a decline in sales revenue growth. The company will adhere to strategic determination and enhance key capabilities, so as to enhance its core competitiveness, create large single products and large single product series on the product side, and increase the proportion of large single products and large single product series; The channel side optimizes the channel structure and increases the proportion of its own channels. The brand end sharpens the acute angle of the brand and focuses on the mental occupation of the core users, thus laying a solid foundation for moving to the next step.

Power to the field of recombinant collagen

under the weak performance growth, Huaxi biology is looking for new growth points.

in 2022, huaxi biology will formally enter the field of animal-derived collagen industry by acquiring a controlling stake in Beijing yierkang biological engineering co., ltd. Since then, collagen has become a high-frequency word for the company's external voice. For example, the company's 2022 annual report shows that the collagen project has entered the pilot test, is steadily advancing, and is carrying out mass production planning. In the future, we will focus on the basic research of recombinant collagen, hatch more recombinant collagen terminal product projects, and enrich the layout of recombinant collagen terminal products.

Huaxi Biology said in response to investors' questions in December last year that the collagen water light products developed by the company are in the preclinical research stage. At the same time, with the help of synthetic biology technology, the company has successfully developed recombinant human collagen raw materials with its own intellectual property rights.

Earlier, Huaxi Bio said that the company completed the launch of a recombinant type III human collagen raw material product (medical device grade) in August 2023, which has the effects of repairing, promoting wound healing and promoting collagen regeneration. In addition, the company has collagen-related research layout in Class III medical device injection products, medical dressings (masks) and functional skin care products, and will gradually launch related products.

In the view of Zhang Xinyuan, head of research at the Kefang think tank, in China, the market scale of restructured collagen beauty products is growing year by year, and the market prospect is broad. However, the competition on the track is becoming increasingly fierce, and many domestic and foreign companies have laid out, developed and promoted related products. Zhang Xinyuan said that the production and purification of recombinant collagen requires high technical requirements, large R & D investment and long cycle. Domestic enterprises need to make continuous breakthroughs in technology research and development to improve product quality and performance. It is suggested that domestic enterprises should actively carry out technological innovation, improve product quality and strengthen brand building in order to seize market share and promote the healthy development of the industry. At the same time, enterprises also need to strengthen cooperation with the government and scientific research institutes to jointly promote the formulation of industry standards and the optimization of the policy environment.

Beijing Business Daily reporter Ding Ning