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会员
机构：中金公司
研究员：Qianye LIN/Junhao FAN/Zhengfu LIU
We recently attended Mingyue Optical Lens’ seminar about myopia control among children and adolescents, during which the firm also disclosed the clinical follow-up data on Qingsongkong Pro. We reaffirm our optimism towards the growth prospects of Mingyue’s myopia control and prevention products.
Comments
Three-month clinical results show that Qingsongkong can effectively control the lengthening of eye axis, and we suggest paying attention to more follow-up data. During the three-month clinical, the experimental group (in which subjects wore glasses with defocus incorporated multiple segments lenses) reported average increase in axis length of 0.06mm, 0.03mm less than the control group (in which subjects wore glasses with common single-vision lenses). The diopter changes of the two groups were similar, and the clinical trial team thinks it may be because the timeframe was relatively short. We believe Mingyue disclosing clinical trial results more frequently (most peers announce clinical data once a year) can help the firm accumulate technological strength and allow consumers to better understand the efficacy of the new Qingsongkong product. We suggest keeping an eye on more clinical results over a longer period of time.
Penetration of defocus incorporated lenses continues. Mingyue estimates that 70% of its clients have started sales of defocus incorporated lenses. Marketing of these products was slowed by COVID-19 resurgence in 2Q22, but already regained strong momentum after the pandemic was brought under control in June. The firm worked with cross-sector partners to improve service capabilities, and set up an independent team to expand medium-to-large or chain medical distributors. Moreover, Qingsongkong’s effectiveness in controlling eye axis lengthening during the three-month trial was well recognized by professional eye healthcare institutions, which should help facilitate the marketing in the future. Mingyue recently announced strategic cooperation with Eye Valley in optical technology, myopia control and prevention, and functional optical lenses.
We remain upbeat on growth prospects of the firm’s myopia control products. China’s myopia prevention and control market boasts strong demand potential, and the penetration of related products remains low.
Mingyue provides a wide variety of value-for-money myopia control lenses.
We think its new products will likely offer higher gross margin than existing ones and may become a new growth driver. Meanwhile, the firm’s updates to common lenses (e.g., addition of new functions) should help sustain earnings growth. We think demand for glasses lenses will recover after the pandemic eases and 3Q is the typical peak season, boosting swift earnings growth for Mingyue.
Financials and valuation
We leave our earnings forecast unchanged. The stock now trades at 52x 2023e P/E. We are upbeat on the firm’s leadership in the domestic lens market and the growth prospects of its defocus incorporated lenses. We maintain OUTPERFORM and lift TP by 25% to Rmb65, implying 59x 2023e P/E, offering 14% upside.
Risks
New product expansion disappoints; industry competition intensifies.