"Hyaluronic acid king" is facing the most severe test since its launch.

On the evening of February 27, Bloomage Biotech (688363) released a performance report, and in 2024, the company will achieve operating income of 5370.8239 million yuan, a decrease of 11.60% over the same period of the previous year; The net profit attributable to the owners of the parent company was 164.3159 million yuan, a decrease of 72.27% over the same period of last year.

This is the first double-digit decline in revenue and net profit since Bloomage Biotech was listed in 2019, which can be said to be the worst annual report delivered by Bloomage Biotech since its listing, and it is also the largest decline in performance.

Source: company announcement

In fact, since hitting a new high of 970 million yuan in 2022, Bloomage Biotech's net profit has begun to decline, and the net profit attributable to the parent company in 2023 will decrease by 39% year-on-year, and the decline will accelerate in 2024.

When it comes to the reasons behind the double decline in revenue and net profit in 2024, we have to mention the functional skin care products business, which accounts for 49.29% of the main business, but it has become a "drag bottle" in the past two years. In the 2024 financial report forecast, Bloomage Biotech put the decline in the functional skin care products business as the first reason for the change in performance.

Specifically, Bloomage Biotech, which started with hyaluronic acid (hyaluronic acid), currently has four major skin care brands for the C-end, including Runbaiyan, Quadi, BM Muscle Active and Medrepair. In 2023, the functional skin care products business will achieve revenue of 3.757 billion yuan, a year-on-year decrease of 18.45%. In the first half of 2024, the business achieved revenue of 1.381 billion yuan, a year-on-year decrease of 29.74%. This continued into the second half of the year and was reflected in the full-year results. It is worth noting that since the beginning of 2023, Bloomage Biotech has not disclosed the specific revenue data of its four major brands.

At the same time, the sales expenses that have continued to rise in recent years have also "swallowed" Bloomage Biotech's net profit to a certain extent. In the early stage of the company's incubation of C-end brands, it was deeply bound to the head live broadcast e-commerce anchors, and the high traffic brought high voice to the brand, but the high marketing expenses also buried hidden dangers.

Previously, Bloomage Biotech also admitted that in order to continue to explore the online sales channels of terminal products and maintain the continuous growth of the exposure and customer acquisition of stores and products, the company increased the promotion investment of various e-commerce platforms and promoted the company's products and brands through new media marketing, so that the cost of online promotion services increased significantly.

According to the financial report data, from 2019 to 2022, Bloomage Biotech's gross profit margin remained around 80%, but the net profit margin showed an overall downward trend, falling from 31% to 15.12%, close to halving. In 2023, the company's gross profit margin will be 73.32%, down 4.77% year-on-year, and its net profit margin will be 9.59%, down 36.57% year-on-year.

From 2019 to 2022, Bloomage Biotech's sales expenses were: 521 million yuan, 1.099 billion yuan, 2.436 billion yuan and 3.049 billion yuan, except for a year-on-year increase of 25.17% in 2022, the growth rate of revenue and net profit in the rest of the periods increased by more than 100% year-on-year, and all exceeded the growth rate of revenue and net profit in each period. In addition, in the aforementioned periods, the company's sales expenses accounted for 27.65%, 41.75%, 49.24% and 47.95% of total revenue, respectively.

It is worth noting that the year-on-year decrease in government subsidies received by Bloomage Biotech last year was also an important reason. In the past, government subsidies accounted for a high percentage of corporate profits. For example, in 2023, Bloomage Biotech will receive subsidies of up to 129 million yuan from the government, accounting for 18.36% of the company's profits.

2024 is known as the "first year of change" by Bloomage Biotech, and Bloomage Biotech has carried out comprehensive changes from internal organizational structure to product strategy to corporate strategy. Bloomage Biotech said in its 2024 semi-annual report that "management change" is one of the main reasons for the pressure on its performance, but from a longer-term perspective, (management change) is the only way to transform and upgrade from high-speed growth to high-quality growth.

How long will the "labor pains" of a management change last for the company? No one may be able to give a concrete answer, but the pain for investors can be quantified.

In July 2021, after its listing, Bloomage Biotech once held the industry status of "leading medical beauty stocks", and the stock price of functional skin care products reached a maximum of 313 yuan per share, and the market value once reached about 150 billion yuan. Since then, the company's stock price has begun a long downward journey. As of the close of trading on February 27, the stock was quoted at 50.90 yuan per share, with the latest total market value of 24.52 billion yuan, which was more than eighty percent lower than the historical market value high.