(Source: Silver Persimmon Finance).

Since its listing in 2019, Bloomage Biotech has been continuously increasing its investment in R&D, and as of the first three quarters of 2024, Bloomage Biotech has invested more than 1.7 billion yuan in R&D, and its R&D investment in the beauty industry has always been in the forefront.

On February 6, Bloomage Biotech (688363. SH) stock price came out of a "U" shaped reversal intraday and closed up more than 1.5%, attracting market attention. This performance coincides with the key point in the company's 2024 performance forecast - despite the year-on-year decline in net profit for the whole year, the market seems to attach more importance to its strategic layout of "accumulation and development": behind the net profit of 146 million yuan to 175 million yuan for the whole year, more than 400 million yuan of one-time investment is aimed at management efficiency improvement, production capacity upgrading and emerging track slots. In the context of the deep adjustment of the consumer healthcare industry, the biotech company is trading short-term performance pains for long-term growth momentum, can its transformation logic be verified?

In the 2024 annual performance forecast released at the end of January, Bloomage Biotech said, "The company is in a critical transition period, gradually solving a number of key operation and management problems, significantly improving management efficiency, and laying a solid foundation for the company's sustainable development in the future." According to the announcement, in 2024, the company is expected to achieve a net profit of 146 million yuan to 175 million yuan, a decrease of 418 million yuan to 447 million yuan compared with the same period last year, a year-on-year decrease of 70.47% to 75.36%, and earnings per share of 1.23 yuan. The decline in performance was mainly due to the large number of one-time expenses such as management change expenses and impairment provisions in the business transformation stage.

Among them, in 2024, the organizational structure upgrade, salary system reform, consulting company fees and equity incentive expenses of management reform will exceed 70 million yuan; Promote the transformation of the supply chain, improve the production efficiency and intelligence level, and implement the production capacity layout in many places, and the related expenses have increased by more than 100 million yuan; invested more than 100 million yuan in strategic innovation businesses such as regenerative medicine and functional food; A large impairment provision of about 210 million yuan was made for related assets with signs of impairment.

Bloomage Biotech mentioned in the performance forecast that although management changes and strategic upgrades have brought short-term performance pressure, in the long run, these measures will bring greater development space to the company. Bloomage Biotech regards 2024 as the first year of its own transformation, and has carried out in-depth internal management reforms, and it can be seen from the data that the overall operating quality of Bloomage Biotech under the management reform has been steadily improved, and the business health and asset quality have improved.

As of the first three quarters of 2024, Bloomage Biotech has invested more than 1.7 billion yuan in R&D, and its R&D investment in the beauty industry has always been in the forefront.

Whether it is investment in the transformation of the supply chain or investment in R&D, this is a slow variable for the company, and it needs to be extended for a long time to see the final effect.

Returning to the specific business level, the four major business segments of Bloomage Biotech - raw material business, medical terminal business, functional skin care products business and functional food business are like four-wheel engines, jointly driving the company's business development. The raw materials business provides bioactive raw materials such as hyaluronic acid for the downstream, and its sales volume in Europe, Japan, the Americas and other places continue to grow driven by the localization operation of the internationalization strategy, further consolidating its leading position in the global bioactive substances market. In December 2024, Bloomage Biotech's new cosmetic raw material N-hyaluronyl glutamate sodium was successfully recorded, and 5 effective cosmetic raw materials have been filed so far, and the self-developed PDRN raw material will enter the market in 2025, which is expected to become the next explosive raw material after hyaluronic acid.

Bloomage Biotech's medical terminal business covers medical products in the fields of medical cosmetology, orthopedics, ophthalmology, etc., maintaining a rapid growth trend. Its medical aesthetic brand Runzhi has launched two new products, "Runzhi Gege" (sodium hyaluronate composite solution for injection) and "Runzhi Feiran" (cross-linked sodium hyaluronate gel for injection), and at the same time accelerated the medical aesthetic pipeline and enriched the product line through endogenous and epitaxial methods. Everbright Securities believes that the launch of new products will effectively boost the revenue growth rate of the company's medical aesthetic business in 2025, and with the increase in the proportion of medical aesthetic business in the company's revenue and profit, its role in driving the overall performance will be more significant.

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functional skincare business is direct-to-consumer and has launched diversified skincare brands and products such as Biohyalux and Quadi, which has achieved rapid growth and contributed most of the company's revenue. However, due to various factors such as intensified market competition, industrial cycle fluctuations and strategic adjustments, the adjustment is still continuing. Bloomage Biotech is continuously consolidating its business foundation from process to organization and operation, talent training, product system construction, etc., and the announcement said that the business is expected to bottom out in 2025. Shenwan Hongyuan believes that due to the relatively high proportion of skin care products, it will have a greater impact on the company's performance, and if it can bottom out, it will smoothly drive the company out of the painful period.

In terms of functional food business, in June 2024, Bloomage Biotech Health Food Headquarters officially settled in Hangzhou, committed to the research and development of functional products that can solve health problems such as appearance, body management, immune improvement, and energy supplementation.

So far, the chain of Bloomage Biotech's four major business segments has continued to improve, synergize with each other, empower each other, and build an innovative industrial ecology in the field of life and health.

In addition, the company has formally incorporated ESG into its long-term development strategy, established an ESG management system with its own characteristics, enhanced its brand image and sense of social responsibility, and won more trust and support for international market expansion. In terms of innovative business, the company continues to maintain forward-looking R&D investment, focuses on cutting-edge science and technology, provides guarantee for sustainable development and enhances medium and long-term competitiveness, and actively deploys emerging businesses such as regenerative medicine and functional food, which is expected to open up new growth space.

Minsheng Securities believes that although Bloomage Biotech's management reform and R&D investment have brought short-term performance pressure, it will bring more room for development in the long term, and it looks forward to the inflection point after the follow-up adjustment. Shenwan Hongyuan also pointed out that the company firmly implements reforms, improves management efficiency, and lays the foundation for sustainable development in the future.

Talking about the future development, Zhao Yan, chairman and president of Bloomage Biotech, said: "Based on the business model of the whole industry chain, we can quickly find application scenarios after the material is produced. At the same time, due to the basic research and applied basic research of glycobiology and cell biology, we know how substances can promote cell regeneration at the cellular level and realize the precise regulation of cells, so once the application field is pushed, it can drive the development of the entire industry. ”

It can be seen that Bloomage Biotech is transforming the ultimate pursuit of technology into the underlying logic of business ecology. While the market is still debating whether it has lost its "medical aesthetic halo", the company has quietly switched to the new narrative of "biotech platform".