China-Singapore Jingwei, July 7 (Yan Shuxin, Lin Wansi) Recently, the confinement center SAINT BELLA (hereinafter referred to as St. Bella), where female artists such as Qi Wei and Gina lived, submitted a report to the Hong Kong Stock Exchange, and the confinement package of more than 100,000 yuan at every turn made St. Bella gain the title of "Hermes" of the confinement center.
But high-end confinement centers are not profitable. According to the prospectus, from 2021 to 2023, Santa Bella's net profit will have a cumulative loss of 773 million yuan.
Are confinement centers a good business?
Confinement from 160,000?
In recent years, more and more young mothers have chosen to have confinement in confinement centers. According to the Frost & Sullivan report, the market size of the confinement center industry in Chinese mainland has grown rapidly between 2018 and 2023, with a compound annual growth rate of 22.7%. Among them, the growth rate of the high-end market segment is higher than that of the mass market segment.
Santa Bella is positioned as a high-end confinement center. Santa Bella was founded in 2017 by Xiang Hua, a post-85 generation who is 37 years old this year.
According to the prospectus, Xiang Hua graduated from the University of Oxford in the United Kingdom with a bachelor's degree and completed a master's degree in engineering in July 2010. Prior to founding Santa Bella, he worked in the Asia M&A & Corporate Finance Group and the Asia Healthcare Group at UBS AG Hong Kong Branch, where he gained experience in M&A and capital markets, particularly in the healthcare services and medical device sectors. Xiang Hua's last position in the Group was as a Director.
At present, Santa Bella has a total of 59 high-end confinement centers, covering 21 cities including Shanghai, Guangzhou, Shenzhen and Hangzhou, and its three major brands are "Santa Bella", "Little Bella" and "Bella Isla".
According to the Frost & Sullivan report, in 2023 Santa Bella has the largest network of high-end confinement centers in China, and Santa Bella is the largest postpartum care and repair group in terms of revenue generated by ultra-high-end confinement centers in 2023.
How high-end is Santa Bella? The most intuitive manifestation of this is the fee.
On July 4, Zhongxin Jingwei consulted a Santa Bella maternal and child care center in Beijing as a consumer, and a package price list sent by the online customer service staff showed that the store has four major packages, namely 28 days, 42 days, and 56 days of "Joy Package", "Classic Package", "Chic Package" and "Queen Package", of which "Joy Package" is the most basic package, with a fee starting from 188,800 yuan, and the most expensive is the "Queen Package", with a fee of 388,800 yuan.
Price list of a Santa Bella maternal and child care center in Beijing Source: provided by the interviewee
In addition, the store has also launched two "100-day accompaniment" services on the basis of the above four packages, with a total service days of 100 days, covering 28 days, 42 days or 56 days of in-house services, as well as resident and hospital paternity services, of which "100 days accompanying Pro" is a nurse stationed at home, and "100 days accompanying SO" is its own nurse stationed at home, and the former charges are higher. Taking the "Queen Package" as an example, if you choose the "100-day On-the-go Pro" service, the minimum fee is 496,800 yuan (28 days) and the maximum is 848,000 yuan (56 days) depending on the number of days in the museum.
According to the customer service staff, the packages at different prices are mainly different from the room type, the amount of maternity and health care, the number of maternal and child products, value-added services, etc., and the service content and standards are unified.
In addition, according to the operating data of the confinement center disclosed in the prospectus of Santa Bella, from 2021 to 2023, the average contract value (hereinafter referred to as the daily unit price) of each postpartum care service room of the Santa Bella brand confinement center per night (hereinafter referred to as the daily unit price) is 6,726 yuan, 6,740 yuan, and 6,887 yuan respectively, and the daily unit price of small Bella is 2,975 yuan, 3,328 yuan, and 3,478 yuan respectively.
Screenshot of the Santa Bella prospectus
If calculated based on the number of 28 days in the museum, last year, the unit price of confinement in San Bella was 192,800 yuan, and the unit price of small Bella was 97,400 yuan.
Saint Bella is known as the "Hermes of the mother and child world" by the outside world, and Xiang Hua also mentioned in a recent interview with the media that the Saint Bella confinement center refers to the playing methods of some luxury brands.
"Referring to the brand strategies of LVMH, Kering and L'Oréal, their high-end lines will maintain brand tonality and restraint, not more open, not GMV, but the pursuit of ultimate quality, focus on long-term value, and then through the brand premium ability of high-end products to do transformation, Santa Bella does the same thing." Xiang Hua said.
Xiang Hua also mentioned that many celebrities and top KOLs with more than one million fans will give priority to Santa Bella, and Santa Bella has also served hundreds of successful and outstanding entrepreneurs.
Zhongxin Jingwei also saw on the official website of Santa Bella that Santa Bella's check-in customers include Qi Wei, Tang Yixin, Gina, Medina and other actresses.
Source: Screenshot of Santa Bella's official website
The loss in three years is more than 700 million
From the perspective of business, the confinement center is the core business of Santa Bella Group, and the revenue of the confinement center business in 2023 will be 468 million yuan, accounting for 83.5%; The home care service business and the women's health functional food business both accounted for about 8%.
Although the core business is the core business, the gross profit margin of the confinement center is not high compared to other businesses.
In 2023, the gross profit margin of the confinement center will be on par with that of home care services, both at 34.1%, which is lower than the gross profit margin of the women's health functional food business of 63.3%.
According to the prospectus, the confinement center in Santa Bella is mainly located in high-end hotels, and some of the Santa Bella centers are located in single-family villas. Santa Bella said its asset-light strategy, including its flexible lease arrangements with hotels, not only helps with rapid expansion, but also minimizes capital expenditures, allowing the new centre to have a short payback period.
However, under the asset-light situation, Santa Bella is still under considerable cost pressure. According to the prospectus, from 2021 to 2023, the rental cost and related costs of the confinement center in San Bella will be 71 million yuan, 123 million yuan, and 126 million yuan respectively, accounting for 27.5%, 26.1%, and 22.5% of the current income respectively; In the same period, the amount of labor costs was 54 million yuan, 105 million yuan and 121 million yuan respectively, accounting for 20.85%, 22.25% and 21.61% of the current revenue respectively.
With continuous expansion, Santa Bella's operating income continued to rise, but it faced consecutive years of losses.
From 2021 to 2023, Santa Bella recorded revenue of $259 million, $472 million and $560 million respectively, with losses of $122 million, $412 million and $239 million respectively for the year and a three-year loss of $773 million, with consolidated gross profit margins of 30.6%, 29.9% and 36.5% respectively.
According to Santa Bella, the increase in revenue was mainly due to the expansion of the confinement center network, which not only directly led to the growth of the confinement center business, but also contributed to the growth of the home care business due to the corresponding increase in the customer base. The net loss was mainly due to a loss in the fair value of financial instruments issued to investors.
After adjustment, in 2021 and 2022, Santa Bella lost 29.868 million yuan and 44.628 million yuan respectively, and turned around in 2023 with a profit of 20.772 million yuan.
Santa Bella said that the adjusted loss in 2021 and 2022 was mainly due to the fact that a large number of confinement centers are in the performance ramp-up stage, and the rapid expansion of the confinement center network has brought huge expenses. With the growth of the business, the expansion of the geography, the investment and innovation of the technological infrastructure, and the further expansion of the range of services, Santa Bella cannot guarantee that it will remain profitable in the future.
Despite the uncertainty of the "money" landscape, Santa Bella has still won the favor of star investment institutions, including Tencent, Chinese Life, Sun Hung Kai Company, Gaorong Capital and others. Among them, Tencent holds 11.61% of the shares, and Gaorong Capital holds about 8.26% of the shares.
Is it still a good business?
In fact, it is not Santa Bira that the company has performed poorly, Aidigong, known as the "first share of the confinement center", also lost 178 million Hong Kong dollars in 2022, and although the adjusted profit in 2023 turned into a profit, the revenue fell by 18.06%.
Some relatively small confinement centers are constantly "running away" and "closing stores".
According to iiMedia Research's "2023-2024 Analysis Report on Big Data and Industry Trends in the Operation of China's Confinement Centers", most of the confinement centers are asset-heavy. First, the confinement center has a large site, and it is necessary to build functional areas such as baby rooms, swimming rooms, and postpartum rehabilitation centers, and the rental cost is high. Second, in order to provide better services, bedding and baby care products in confinement centers generally use mid-to-high-end brands, which occupy a certain cost. Third, driven by the maternal and infant industry, the expenditure on soft services such as professional confinement nannies and nursing staff has also risen. Under the influence of these problems such as the continuous growth of fixed costs, it is difficult to guarantee the profitability of the confinement center.
Santa Bella also mentioned in the prospectus that the company's operations require a large number of employees, service providers and other personnel, including nursing specialists, babysitters and other qualified personnel. From 2021 to 2023, the company's total labor costs (including staff and service provider costs for the confinement center business and home care service business) accounted for 30.6%, 33.1% and 34.3% of the total cost of sales, respectively. Santa Bella expects the company's labor costs to continue to increase.
iiMedia Consulting analysts believe that at the current stage, the corporate positioning of the confinement center continues to diversify, expanding from high-end to mid-to-high-end. Driven by the positioning of enterprises, the confinement center has gradually radiated from first-tier cities to other lower-tier cities. On the other hand, in order to better win the recognition of consumers, the confinement center is also seeking a differentiated path in its own hardware resources and software resources. While continuously improving the existing maternity and childcare services, some confinement centers provide more value-added services to seek service differentiation.
Wen Zhihong, an expert in the chain management industry and general manager of Hehong Consulting, said in an interview with Sino-Singapore Jingwei that the core reason for the high cost and expense of the confinement center is the high cost and expense, first, the high cost of marketing and customer acquisition, and the low repurchase rate; Second, the hard investment of confinement centers is relatively high, some confinement centers use self-built properties, and some confinement centers directly lease four-star and five-star hotels, and the hard investment of housing rent is relatively high; Third, the salary investment of employees is higher, because the confinement center needs employees to provide relatively professional services, the quality of service personnel is high, and the service chain is long, resulting in although the confinement center charges high, there are not many companies that make money.
In addition, Wen Zhihong also pointed out that the confinement center and home care industry is small, and the market share of truly institutionalized companies is not large. Most of the confinement centers belong to regional institutions, even if some have formed a cross-regional or national scale, but they are mainly franchised, and the revenue scale for the headquarters will not be particularly large, so it is not easy for this industry to run out of large companies.
It should be noted that there is still some chaos in the confinement center industry.
According to the Santa Bella prospectus, the operating entity of a confinement center under the company, Beijing Beikang Zeen, was administratively punished by the competent authorities in September 2021 and June 2022 respectively for engaging in unlicensed medical practice, with fines of 3,000 yuan and 15,000 yuan respectively, and the relevant rectification has been completed.
In 2022, the news that "the confinement center was fined 30,000 yuan for adding party ginseng in chicken soup" also sparked heated discussions. According to the punishment information of the regulatory authorities, in May 2022, law enforcement officers of the Market Supervision and Administration Bureau of Haishu District, Ningbo City, found during an on-site inspection that a confinement center called Zhejiang Ciyue Health Management Co., Ltd. Ningbo Branch had one jar of traditional Chinese medicine such as motherwort, salt eucommia, wheat winter, and codonopsis in the back kitchen. The "Qi and Blood Soup" on the package service item of the confinement club is to add Codonopsis ginseng and tangerine peel to the chicken soup for pregnant women. Upon inquiry, Codonopsis is not a substance that is both a food and a Chinese medicinal material.
According to the iiMedia Research report, there is currently no clear management norm for the domestic confinement center industry, especially for health qualifications, catering service licenses, etc. The uneven quality of employees leads to the inability to guarantee the quality of service, and the market order is relatively chaotic, which requires comprehensive and high-quality talents, including professional service talents such as nurseries and confinement nurses, as well as operation and management talents, to promote the healthy development of the industry.
(For more reporting clues, please contact the author of this article, Yan Shuxin: [email protected]) (Sino-Singapore Jingwei APP)
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