We are the largest provider of traditional beauty services and the fourth largest non-surgical aesthetic medical service provider in China with a market share of 0.2% and 0.6%, respectively, as measured by revenue in 2021. Our diversified service offerings cover traditional beauty services, aesthetic medical services (including both (i) non-surgical aesthetic medical services such as energy-based services and injection services and (ii) surgical aesthetic medical services) as well as subhealth assessment and intervention services that are all personalized to serve our clients’ health and beauty desire. Such service industries have been under increased regulatory oversight in recent years, including laws and regulations related to false advertising, false efficacy claims, kickbacks and rebates. We operate multiple chain brands in China’s beauty and health management service industry, including BeautyFarm (美麗田園), our flagship brand established in 1993, and three other brands, namely, Palaispa (貝黎詩), Neology (研源) and CellCare (秀可兒).
According to Frost & Sullivan, driven by the increasing disposable income per capita of Chinese population and elevated self-awareness of appearance, the size of China’s traditional beauty service market reached RMB403.2 billion in 2021, and is projected to grow at CAGR of 5.3% to RMB640.2 billion in 2030. The size of non-surgical aesthetic medical service market reached RMB97.7 billion in 2021, and is forecasted to reach RMB415.7 billion in 2030, with a CAGR of 17.5% from 2021 to 2030, according to the same source.
We provide standardized services to our clients across all of our stores. Supported by our proprietary in-house training system, digitalized platform and supply chain management, we are able to trace and monitor our service performance in a timely manner. Our client visits increased from 819,382 in 2019 to 1,054,952 in 2021 at a CAGR of 13.5%. Many clients became our members after their initial visits, and we consider our enlarging group of active members as the foundation to our success. In 2021, our direct stores had 77,356 active members (defined as those members who used our services at least once during the relevant period) which increased by 12.5% from 2020. An active member may purchase different types of services within our service network in a year and could become our active member under different service offerings. Our active members on average made 10.8 visits and spent RMB20,832 in 2021 as compared with 10.2 visits and RMB20,151 average spending in 2020. During the six months ended June 30, 2022, our direct stores served 60,956 active members, who on average made 5.9 visits and spent approximately RMB10,736.
We believe that the following strengths contribute to our success and differentiate us from our competitors, including:
‧ Nationwide store network, diversified brand portfolio and constant evolution of business model supported by nationwide stores network. As one of the domestic chain brands in China’s beauty and health management service industry, we have provided traditional beauty services to clients for nearly three decades. We have established the most extensive store network in China in terms of the number of cities covered by direct stores in the traditional beauty service market, as of June 30, 2022, according to Frost & Sullivan. Additionally, we have provided aesthetic medical services under CellCare (秀可兒) since 2011 and subhealth assessment and intervention services under Neology (研源) since 2018. As of June 30, 2022, our overall service network comprised 352 stores, including 177 direct stores as well as 175 franchised stores. Among the 177 stores we directly owned, 84 stores were located in tier-one cities and 73 stores were located in new tier-one cities. As of June 30, 2022, we had 154 direct stores and 175 franchised stores provided traditional beauty services under BeautyFarm (美麗田園) and Palaispa（貝黎詩), 18 direct stores provided aesthetic medical services under CellCare (秀可兒), and five stores provided subhealth assessment and intervention services under Neology (研源).
‧ Standardized services supported by digitalized platform. We apply digitalized tools to provide clients with personalized services and to improve operational efficiency. We had developed 37 proprietary information management systems as of the Latest Practicable Date. Our integrated service platform is capable of consolidating and processing operational data accumulated from various systems across our store network. We also apply data mining and data analytics to obtain valuable insights to profile our clients’ transaction patterns, consumption habits, and lifetime client value. Such tech-enabled enhancements allow us to customize our services according to clients’ needs so as to maintain their stickiness and identify cross-selling opportunities. In addition, we are one of the earliest adopters of mobile reviewing system, where our clients are able to review and comment on our services in real-time. Moreover, our digitalized client relationship management (“CRM”) system is thorough, convenient and prompt, offering a fast feedback mechanism for client inquiries, appointments, complaints and post-service reviews.
‧ Experienced service personnel. Our service personnel at our stores are vital to the quality of our services and our competitiveness. As of June 30, 2022, we had a total of 1,898 service personnel (including registered physicians, trained therapists, nurses, and store directors) nationwide. We have established two BeautyFarm Training Centers (美麗田園培訓中心) in Shanghai and Wuhan, which provide our service personnel with pre-work and ongoing training. Since their establishment, our BeautyFarm Training Centers (美麗田園培訓中心) have provided over 13,000 sessions to our service personnel.
In addition, our business growth in the past was also attributable to strategic acquisitions, our visionary and seasoned management, and strong shareholder support. Our business grew continuously in 2019, 2020 and 2021. Our total revenue increased by 7.0% from RMB1,404.8 million in 2019 to RMB1,503.3 million in 2020, and further increased by 18.5% to RMB1,780.7 million in 2021. We recorded a net profit of RMB147.4 million in 2019, RMB152.2 million in 2020, and RMB208.3 million in 2021 at a CAGR of 18.9% from 2019 to 2021. Due to the adverse impact of recurrence of COVID-19 (“Recurrence”) in 2022, especially the strict lockdown in Shanghai, our revenue decreased by 12.3% from RMB836.8 million for the six months ended June 30, 2021 to RMB734.3 million for the six months ended June 30, 2022; our net profit decreased from RMB105.1 million for the six months ended June 30, 2021 to RMB19.8 million for the six months ended June 30, 2022. Excluding the effects of share-based compensation expenses and listing expenses, our adjusted profit (non-HKFRS measure) for the six months ended June 30, 2021 and 2022 would be RMB108.0 million and RMB50.6 million, respectively.
Source: Beauty Farm Medical (02373) Prospectus (IPO Date : 2022/12/30) |